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2020 (5) TMI 12 - ITAT MUMBAIDeduction u/s 54F - Clubbing of exempt long term capital gain income of minor children - HELD THAT:- Lower authorities have not disputed the date of acquisition and sale of assets, nature of asset and the period of holding, at the hand on the minors. There is no dispute that the gains earned by minors were invested in CGAS. After the investment made by minor children u/s 54F left no chargeable capital gain which could be clubbed u/s 64(1A) in hands of assessee. The coordinate bench of Kolkata Tribunal in Rajeev Goyal [2012 (6) TMI 139 - ITAT KOLKATA] held that in case of clubbing of income of minors child, deduction u/s 54EC is to be allowed on minors’ income from LTCG separately and only net income is to be clubbed. In Madan Lal Bassi [2003 (11) TMI 292 - ITAT CHANDIGARH-A] Chandigarh bench of Tribunal also held that u/s 45(1), any profits or gains arising from the transfer of a capital asset are chargeable to income-tax. Save as otherwise provided in various sections including section 54F - If section 54F is applied, only the amount of capital gains found taxable after application of above provisions can be charged to income-tax. Therefore, to find out whether there is any profit or gain chargeable to tax u/s 45(1), the provisions of both the sections are to be read together. Section 54F cannot be read in isolation. Tribunal the AO / CIT(A) was not justified in denying the exemption of capital gain to the minors, which was invested in capital gain accounts scheme (CGAS). We direct the AO to allow exemption with regard to the capital gain earned and invested on behalf of both the minors in CGAS. Denial of exemption u/s 54F - AO denied the exemption u/s 54 to the assessee by taking view that the assessee is owner of more than one residential house on the date of transfer of shares from which the assessee earned LTCG - HELD THAT:- The entire benefit/gain earned by assessee was invested in CGAS. The assessee further claimed that neither the possession of the asset was given nor conveyance deed was executed. Thus, interest in the asset was transferred. We have noted that there is no clarity about the facts whether the assessee owned any other residential house or not, in the order of AO as well as CIT(A). Therefore, we deem it appropriate to restore this issue to the file of AO to decide the issue afresh. The assessee is also directed to bring all the facts with clarity before AO.
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