JAI HARI INVESTMENT,NEW DELHI vs. ITO WARD-52(1), NEW DELHI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the addition made by the CPC was hyper-technical. Since the income was duly mentioned as exempt in the return and the exemption itself was not disputed by the department, the assessee's claim for exemption could not be denied solely for not being in a specific column.
What were the facts?
The assessee, a partnership firm, claimed exempt income of Rs. 19,15,525 from long-term capital gains on sale of shares where STT was paid. The CPC added this amount back because it was not shown in the appropriate column of the return of income.
What were the issues?
Whether an assessee's claim for exempt income can be denied due to not being reported in a specific column of the return of income, when the exemption itself is not disputed by the department.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI M BALAGANESH
ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:
This is an appeal by the assessee against order dated 01.09.2022 passed by National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2019-20.
The dispute in the present appeal is confined to addition of an amount of Rs.19,15,525.
Briefly, the facts are, the assessee is a resident partnership firm.
For the assessment year under dispute, the assessee filed its return of income on 27.11.2020. While processing the return of income, the Centralized Processing Centre (CPC) made upward adjustment to the income declared by the assessee by adding back an amount of Rs.19,15,525, which the assessee claimed as exempt income. The reason for such adjustment being, the assessee has not shown it as exempt income in the appropriate column provided in the return of income. Against the intimation issued under Section 143(1) of the Act carrying out such adjustment, the assessee preferred an appeal before the first appellate authority. However, the addition was upheld.
We have considered rival submissions and perused the material available on record.
Before us, learned counsel appearing for the assessee submitted that in the year under consideration, the assessee had earned exempt income by way of long term capital gain on sale of shares on which Security Transaction Tax (STT) was paid. He submitted, the claim of exempt income was made in the return of income filed for the assessment year under consideration. He submitted, since, no specific column is provided in the return of income for STT paid long term capital gain, the assessee did not show the exempt income in Schedule E1.
Having taken note of the aforesaid submission of the assessee, we find, in the return of income filed for the impugned assessment year, the assessee had duly mentioned the STT paid long term capital gain and claimed it as exempt. Only because the exempt income was not shown in the appropriate column in the return of income, the CPC made the adjustment and the first appellate authority has upheld it. In our view, learned Commissioner (Appeals) has taken a hyper technical view on the issue considering the fact that the income earned of Rs.19,15,525 is exempt from taxation is not disputed by the department. Merely because it was not mentioned in a particular column of the return of income, assessee’s claim cannot be denied.
More so, when in the return of income, the assessee has offered it as exempt income.
In view of the aforesaid, we delete the addition of Rs.19,15,525.
In so far as ground no.3 is concerned, the Assessing Officer is directed to verify assessee’s claim and pass consequential order in accordance with statutory provisions.
Ground no.4 being consequential in nature, does not require any specific adjudication.
In the result, the appeal is allowed as indicated above.
Order pronounced in the open court on 18th May, 2023.
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