2015 (12) TMI 133 - AT - Income Tax

Deductions claimed u/s 54B and 54F denied treating capital gain as short-term capital gain (STCG) - CIT(A) confirmed the action of the AO by treating the capital gain arising from the transfer of the property as STCG as well as the entire income was assessed in the hands of the assessee-HUF - Held that - The documents filed by the assessee, being additional evidence, are very much relevant and crucial for adjudicating the matter of assessment of capital gain in the hands of the assessee. In view of the above facts and circumstances of the case as well as the observations made in the foregoing paragraph we are of the considered opinion that the issue of computation of capital gains as well as the deduction u/s 54B and 54F is required to be reconsidered along with the case of Smt.Kaveramma. Accordingly, the matter is set aside to the record of the AO for de novo consideration of the matter in the light of the fact as discussed above and the additional evidence filed by the assessee - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Denial of deductions claimed under sections 54B and 54F of the Income-tax Act, 1961.
2. Assessment of capital gains as short-term capital gains (STCG).
3. Treatment of properties as ancestral and belonging to a larger HUF.
4. Consideration of additional evidence for adjudication.
5. Reconsideration of the matter by the Assessing Officer.

Detailed Analysis:

Issue 1: Denial of deductions claimed under sections 54B and 54F:
The appellant, a Karta of an HUF, claimed deductions under sections 54B and 54F for the assessment year 2008-09. The Assessing Officer (AO) denied these deductions, treating the capital gain as STCG and rejecting the indexed cost of acquisition. The CIT(A) upheld the AO's decision, considering the properties as not eligible for the claimed deductions. The appellant argued that the properties were ancestral and part of a larger HUF, but the CIT(A) did not accept this contention. The Tribunal set aside the matter for reconsideration, emphasizing the need to examine the assessability of capital gains in the hands of other joint owners of the larger HUF.

Issue 2: Assessment of capital gains as short-term capital gains:
The AO assessed the capital gain as STCG, leading to the denial of deductions claimed by the appellant. The Tribunal noted that the properties in question were inherited and part of ancestral property. The settlement deed and court order confirmed that the appellant did not acquire any new title through compromise proceedings. The Tribunal directed a fresh assessment, considering the capital gains and deductions in conjunction with the case of another individual, Smt. Kaveramma, who was also involved in the property transactions.

Issue 3: Treatment of properties as ancestral and belonging to a larger HUF:
The Tribunal observed that one property was devolved to the appellant through a settlement deed and court order, indicating no new title acquisition. The property was deemed to belong to a larger HUF, not the appellant's HUF. The Tribunal stressed the need to assess capital gains in the hands of other joint owners of the property. Regarding another property, the Tribunal highlighted the importance of considering inheritance and partition in determining the date of acquisition for capital gains computation.

Issue 4: Consideration of additional evidence for adjudication:
The appellant submitted additional evidence under rule 29 of the IT Rules, including assessment orders and relevant documents. The Tribunal deemed these documents crucial for assessing capital gains and deductions. The Tribunal set aside the matter for fresh consideration by the AO, incorporating the additional evidence and ensuring the appellant's opportunity to be heard before a new order is passed.

Issue 5: Reconsideration of the matter by the Assessing Officer:
The Tribunal allowed the appellant's appeal for statistical purposes, directing the AO to reconsider the computation of capital gains and deductions under sections 54B and 54F. The Tribunal emphasized the importance of reevaluating the matter in conjunction with the case of Smt. Kaveramma, indicating a need for a comprehensive assessment considering all relevant factors and evidence presented.

This detailed analysis outlines the key issues addressed in the judgment, focusing on the denial of deductions, assessment of capital gains, treatment of properties, consideration of additional evidence, and the direction for reconsideration by the Assessing Officer.

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