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Before: Shri Abraham P. George & Shri Duvvuru RL Reddy
आयकर अपील�य अ�धकरण, ‘‘डी’’ �यायपीठ, चे�नई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी अ�ाहम पी. जॉज�, लेखा सद�य एवं �ी धु�वु� आर.एल रे�डी, �या�यक सद�य के सम� Before Shri Abraham P. George, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member आयकर अपील सं./I.T.A.No.2553/Chny/2017 �नधा�रण वष�/Assessment Year:2014-15 Smt. Kanchan Singhvi, The Income Tax Officer, No. 156, Mint Street, Sowcarpet, Vs. Non Corporate Ward 5(1), Chennai 600 079. Chennai. [PAN: ABHPS2435F] (अपीलाथ� /Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से / Appellant by : Ms. Nithya Sankaran, C.A. ��यथ� क� ओर से/Respondent by : Shri B. Sagadevan, JCIT सुनवाई क� तार�ख/ Date of hearing : 11.04.2018 घोषणा क� तार�ख /Date of Pronouncement : 27.04.2018 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 5, Chennai, dated 20.09.2017 relevant to the assessment year 2014-15.The only effective ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming the addition of long term capital gain of ₹.18,69,390/-
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by denying the exemption under section 10(38) of the Income Tax Act, 1961 [“Act” in short].
Brief facts of the case are that the assessee is an individual, earning income from finance and investments. She has filed her return of income on 21.08.2015 admitting total income of ₹.5,70,460/-. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny and the assessee filed all details against statutory notices. The assessee sold long term capital assets, which are shares in listed companies through Recognised Stock Exchange by paying STT. The consequent sale consideration and capital gains are to the tune of ₹.26,44,959/- and ₹.18,69,390/-. According to section 10(38) of the Act, shares sold in recognized stock exchange by paying STT which give rise to long term capital gains are exempt from capital gains tax under the Act. However, since the assessee has not claimed in her return filed under section 139(1) of the Act, the Assessing Officer was of the opinion that fresh exemption cannot be allowed based on any computation sheet when no revised return was filed by claiming allowable exemption. Accordingly, the Assessing Officer held that the assessee is not entitled to claim deduction
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under section 10(38) of the Act and thus, added the same to the total income of the assessee.
The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee and by following the decision in the case of Goetze (India) Ltd. v. CIT 284 ITR 323 (SC), the ld. CIT(A) confirmed the addition.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee vehemently argued that the inadvertent omission to fill a column in the return of income would not make the long term capital gain taxable which is otherwise exempt under section 10(38) of the Act . It was further submission of the ld. Counsel that the assessee is an individual and engaged in small investments in shares having much knowledge over the Income Tax Act. It is a mere ignorance and by taking advantage of the assessee, the assessee denied exemption and prayed that the assessee shall be allowed exemption under section 10(38) of the Act.
Per contra, while supporting the orders of authorities below, the ld. DR has submitted that in the absence of any revised return filed by the assessee within the time stipulated under section 139 of the Act, the
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authorities below have constrained to allow exemption under section 10(38) of the Act.
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. The assessee has failed to make entries in the separate column provided in the return where exemptions under section 10(38) of the Act could have been claimed. The column where the claim has to be specified was left blank in the return. Therefore, the Assessing Officer denied the claim of exemption under section 10(38) of the Act, which was confirmed by the ld. CIT(A).
6.1 In this case, the assessee is eligible to claim exemption under section 10(38) of the Act since the assessee sold the shares in recognized stock exchanges by paying STT, which gave rise to long term capital gains. The assessee failed to fill the relevant column provided in the return where exemption could be claimed. However, the assessee capitalized the capital gains in the books and the same is not in dispute. The Income Tax Act/Rule cannot be used as a weapon to put tax burden on the assessee. Vide Circular No. 14(XL-35) of 1955, dated April 11, 1955, the CBDT directed the Department ‘to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing
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reliefs…. When there is a clear cut provision for claiming exemption under section 10(38) of the Act, the assessee should have been guided appropriately rather than denying the exemption.
6.2 Both the authorities below have relied on the decision in the case of Goetze (India) Ltd. v. CIT (supra). We have carefully gone through the judgement of the Hon’ble Supreme Court and found that the decision of the Hon'ble Supreme Court is relating to the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim. Further, in the case of Shri Chandrashekhar J. Bahirwani vs. ACIT in ITA Nos.7810/M/2010 & 6599/M/2012 vide order dated 17.06.2015, by following the decision in the case of CIT v. Pruthvi Brokers and Shareholders Pvt. Ltd." (2012) 349 ITR 336 (Bom.) as well as in the case of Gujarat Gas Ltd. vs. JCIT 245 ITR 84 (Guj.), the Mumbai Benches of the Tribunal, granted relief in respect of Capital Gains which were inadvertently included in the return. The Tribunal observed as follows: "Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the
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appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law."
6.3 Under the above facts and circumstances and respectfully following the decisions referred hereinabove, we delete the addition and direct the Assessing Officer to allow exemption under section 10(38) of the Act to the assessee.
In the result, the appeal filed by the assessee is allowed. Order pronounced on the 27th April, 2018 at Chennai.
Sd/- Sd/- (ABRAHAM P. GEORGE) (DUVVURU RL REDDY) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, the 27.04.2018 Vm/- आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant, 2.��यथ�/ Respondent, 3. आयकर आयु�त (अपील)/CIT(A), 4. आयकर आयु�त/CIT, 5. �वभागीय ��त�न�ध/DR & 6. गाड� फाईल/GF.