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Issues involved: The judgment deals with the failure of authorities to consider the retrospective effect of an amendment to Section 32(i) and the classification of assets as short term capital assets for taxation.
Issue 1: Deduction of Interest and Capital Gain Classification The case involved the disallowance of the deduction of interest and the determination of whether the gain from the sale of depreciable fixed assets would be short term or long term following the insertion of explanation 5 to Section 32(i) u/s 54BC of the Act. The assessee claimed the deduction of interest amounting to Rs. 64,750, which was dismissed as not pressed. The ITAT directed the authorities to consider the claim after giving the assessee a reasonable opportunity. The assessee sold assets on which long term capital gain was determined and claimed exemption u/s 54EC. The ITAT directed a proper examination of the issue in light of the amendment to Section 32(i) with effect from 1.4.2003. The AO did not consider the issue, leading to a dispute regarding the classification of capital gains and the applicability of Section 50. Issue 2: Computation of Capital Gains and Applicability of Section 50 The AO considered the investment u/s 54EC as short term capital gain, leading to an appeal. The CIT(A) considered the applicability of Section 50 in respect of the assets sold and the computation of capital gains. The assessee argued that the capital gains were taxed in accordance with the IT Act and that the assets should not be deemed short term capital assets. The ITAT, after considering the facts and relevant legal precedents, held that the claim of deduction u/s 54EC was rightly claimed by the assessee based on the facts and figures presented. The order of the CIT(A) was set aside, and the AO was directed to accept the claim as returned by the assessee. Conclusion The appeal of the assessee was partly allowed, and the judgment was pronounced on 21.05.2013 by the Appellate Tribunal ITAT Kolkata.
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