2019 (9) TMI 717 - AT - Income Tax

Deduction u/s 54B - deduction neither been claimed by the assessee in the return of income nor has filed the revised return - case of assessee was picked up for scrutiny - CIT-A allowed the claim - HELD THAT - No merit in the appeal filed by Revenue, wherein the matter has been decided by the CIT(A) observing that the assessee would be entitled to the aforesaid deduction under section 54B of the Act, in view of the dictate of the Hon ble Bombay High Court in CIT Vs. Pruthvi Brokers Shareholders 2012 (7) TMI 158 - BOMBAY HIGH COURT . We find no error in the order of CIT(A) in this regard. CIT(A) was duty bound to allow the claim of assessee though not made in the return of income. It may be pointed herein itself that even the income from sale of agricultural land as either Long Term Capital Gains or Short Term Capital Gains, was never offered by assessee in its return of income. Assessing Officer computing income from capital gains in the hands of any assessee, then it is his duty not only to compute income under the respective heads but also to allow exemptions which are duly allowable to the assessee. CIT(A) had in all fairness directed the Assessing Officer to verify whether the assessee has fulfilled the conditions laid down in section 54B and had further observed that in case they are not so fulfilled, then no deduction under section 54B is to be allowed to the assessee. We find no error in the order of CIT(A) in this regard. - Decided against revenue.

Summary

Issues Involved:
- Allowability of deduction claimed under section 54B of the Income-tax Act, 1961.

Analysis:
1. Issue of Allowability of Deduction under Section 54B:
- The appeal filed by the Revenue challenged the order of CIT(A) allowing the claim of deduction under section 54B of the Act, even though it was not originally claimed by the assessee in the return of income nor in a revised return.
- The assessee had declared a significant profit from the sale of agricultural land, which was claimed as exempt income. However, the Assessing Officer sought clarification due to discrepancies in the declared income.
- The Assessing Officer disallowed the claim of the assessee based on the Supreme Court's ruling that any claim could only be allowed if a revised return was filed.
- The CIT(A), on the other hand, relied on a Bombay High Court decision and directed the Assessing Officer to verify if the conditions of section 54B were fulfilled by the assessee, stating that the claim should be allowed if conditions were met.
- The Tribunal upheld the CIT(A)'s decision, emphasizing that the jurisdictional High Court's ruling was binding, and the claim under section 54B should be allowed even if not originally claimed in the return of income.
- The Tribunal found no error in the CIT(A)'s order, stating that the Assessing Officer must compute income under relevant heads and allow applicable exemptions, as directed by the High Court.

2. Decision and Conclusion:
- The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the deduction claimed under section 54B of the Act, despite not being initially claimed by the assessee in the return of income.
- The Tribunal emphasized the importance of following the High Court's rulings and ensuring that eligible deductions are granted to the assessee, even if not explicitly claimed in the return of income.
- The Tribunal upheld the CIT(A)'s directive to verify the fulfillment of conditions under section 54B and to deny the deduction if conditions were not met, ensuring a fair assessment process.

This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments presented by both parties and the reasoning behind the Tribunal's decision in the case.