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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 27.11.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13.
The various grounds raised
by the assessee are as under: “Ground 1:
1. On the facts and circumstances of the case, and in Law, the Ld. CIT(A) erred in confirming the addition of Rs.6,96,760/- by ignoring the rectification u/s 154 filed by the assessee, reasoning that Assessee did not file the revised return.
2. The Ld. CIT (A) failed to appreciate the facts that: a) The assessee had e-filed rectification u/s 154 of the Act. b) The issues were apparent mistake while efiling which does not warrant any revision of return.
Ground 2 (without prejudice to Ground no.1):
On the facts and circumstances of the case, and in Law, the Ld. CIT(A) erred in confirming the addition of Rs.40,00,000/- by way of not allowing deduction u/s 54EC of the Act.
2. The Ld. CIT (A) failed to appreciate the facts that: a) The assessee was eligible for claiming deduction u/s 54EC of the Act. b) The CIT(A) confirmed the addition based on technical mistake made the assessee while filing the return of income. c) The CIT (A) confirmed the addition disregarding the legal merits of the case. d) The CIT (A) confirming the addition is against the principle of natural justice not in conformity with the principle of substance over form.
3. The appellant therefore prays that the addition of Rs.40,00.000/- may kindly be deleted. 4. The appellant therefore prays that the addition of Rs.40,00,000/- may kindly be deleted.”
We would like to mention that neither assessee nor its authorised representative appeared to attend the hearing nor any application seeking adjournment was filed before us despite service of notice. We are therefore proceeding to dispose of the appeal after considering the merits of the case and hearing the Ld. D.R.
The issue raised in first ground of appeal is against the confirmation of addition of Rs.6,96,760/- by the Ld. CIT(A) as made by the AO.
The facts in brief are that the assessee is engaged in the business of non banking finance company and during the year earned deemed capital gain under section 50 of the Act on sale of residential property and claimed exemption under section 54EC of Rs.40,00,000/- by filing return of income electronically on 30.09.2012 after declaring an income of Rs.4,01,087/-. The 3 M/s. S.P. Investrade (India) Ltd. assessee had sold the flat for a consideration of Rs.48 lakhs which was purchased on 14.05.1992 and was shown in the schedule of fixed assets claiming depreciation thereon under section 32 of the Act. The WDV of the said flat as on 01.04.2011 was Rs.2,28,718/- and the sale has resulted into capital gain under section 50 of Rs.45,58,782/- against which a deduction under section 54EC was claimed at Rs.40 lakhs on account of investment in Bonds of Rural Electrification Corporation Limited (REC Bonds) on 19.03.2012. At the time of filing the return, the assessee did not fill up the column qua the claim of exemption u/s 54EC of the Act properly, however, the transaction was duly shown in the return filed by the assessee. Thereafter, the assessee moved rectification which was not considered and a demand of Rs.6,96,760/- was raised by the AO by ignoring the rectification application under section 154 of the Act. The ACIT CPC raised a demand of Rs.6,96,760/- vide rectification order passed under section 154 of the Act dated 22.02.2013 without considering the application of the assessee filed under section 154.
In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee on the ground that in order to claim under section 54EC of the Act, the assessee has to fill up various columns in the return of income which has not been filled and therefore AO CPC rightly rejected the application filed by the assessee seeking deduction of Rs.40 lakhs under section 54EC of the Act and thus dismissed the appeal.
After hearing the Ld. D.R. and perusing the material on record, we find that the assessee factually erred in filling the 4 M/s. S.P. Investrade (India) Ltd. various columns in the return of income qua the claim of exemption under section 54EC of the Act to the tune of Rs.40 lakhs which resulted into creation of demand of Rs.6,96,760/-. The rectification application moved by the assessee is also rejected and it is against this rejection of application, the Ld. CIT(A) dismissed the appeal of the assessee.
There is no dispute as to the exemption allowable to the assessee under section 54EC of the Act in respect of depreciable assets which has held for a period of more than six months by the assessee as has been held by the jurisdictional High Court in the case of ITO vs. Ace Builders Pvt. Ltd. 281 ITR 210 (Bom) and various other decisions by various judicial forums. Now the question before us whether the assessee is entitled a claim of Rs.40 lakhs which was not correctly claimed as the assessee has wrongly and inadvertently filled some columns which resulted into non granting/rejection of exemption under section 54EC of the Act. Thereafter, the assessee has made this claim by way of rectification which was also not accepted ACIT CPC and appeal was also dismissed by the Ld. CIT(A). Now the issue before us is whether a claim which is legally and lawfully admissible to the assessee under the Act could be denied on the sole issue that the return of income was not correctly filed nevertheless the claim was made by way of rectification application by the assessee. In our opinion, there is no bar in admitting such claims which are inadvertently left out while filling up the income tax return form but thereafter claimed by way rectification application. We are of the considered view that n due to some technicality some columns were left blank and thus the assessee can not be denied the benefit of beneficial provision
5 M/s. S.P. Investrade (India) Ltd. as provided under section 54EC of the Act. Under these circumstances are inclined grant relief to the assessee reversing the order of Ld. CIT(A) and the AO is directed accordingly.
In the result, the appeal of the assessee is allowed. 9.
Order pronounced in the open court on 17.09.2018.