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2021 (9) TMI 1014 - AT - Income TaxRectification u/s 254 - Disallowance of exemption u/s 54F -Tribunal denied the exemption under section 54F by following decision of Hon ble Karnataka High Court in case of CIT vs MJ Siwani 2015 (2) TMI 729 - KARNATAKA HIGH COURT - HELD THAT - In case of CIT vs McDowell and Co Ltd. reported 2008 (3) TMI 301 - KARNATAKA HIGH COURT following the decision of Hon ble Supreme Court in case of Honda Siel Power Products Ltd. vs CIT 2007 (11) TMI 8 - SUPREME COURT has held that the power under section 254 (2) of the Act cannot be exercised so as to review order passed by the Tribunal. Hon ble court held that application of principles laid down by the superior courts to the facts of the case even on an erroneous understanding of such principles, on recording of an erroneous finding by the Tribunal based on facts on record or formation of a conclusion on erroneous application of provision of law to the facts of a case, etc., cannot be held to be a mistake apparent from record warranting rectification by the Tribunal in exercise of its power under section 254 (2) of the Act. The issues has been decided on merits by following the view of Hon ble Karnataka High Court being the jurisdictional High Court. To reconsider this issue falls out of the purview of provisions u/s 254(2) of the Act and is beyond the scope of section 254(2).
Issues:
1. Eligibility of ?60 lakh under section 54 of the Act. 2. Disallowance of claim under section 54F. 3. Disallowance of exemption under section 54F. Eligibility of ?60 lakh under section 54 of the Act: The Appellate Tribunal noted that the assessee had earned capital gains of ?1,90,00,000 and took a loan of ?60,00,000 towards the purchase of a new house. The Tribunal observed that while the eligibility of ?40 lakh was already decided by the Ld.CIT(A), the eligibility of the remaining ?60 lakh was remanded back to the Ld.CIT(A) for a decision. However, the balance amount of ?90 lakhs was not addressed in the order. Consequently, the Tribunal directed the Ld.CIT(A) to decide on the eligibility of the remaining ?90 lakhs under section 54 of the Act. The issues raised by the Ld.AR regarding this matter were allowed. Disallowance of claim under section 54F: The Tribunal considered the issue of disallowance of claim under section 54F. It was mentioned that this issue had been remanded to the Ld.CIT(A) and no prejudice was caused to the assessee. Therefore, it was concluded that this did not amount to a mistake apparent on record, and the issue raised by the assessee was dismissed. Disallowance of exemption under section 54F: Regarding the disallowance of exemption under section 54F, the Tribunal denied the exemption by following a decision of the Hon'ble Karnataka High Court. The Tribunal cited a case where the High Court held that the power under section 254(2) of the Act cannot be exercised to review an order passed by the Tribunal. The Tribunal emphasized that the application of principles laid down by superior courts, even on an erroneous understanding, does not constitute a mistake apparent from the record warranting rectification by the Tribunal. The issue was decided on merits by following the view of the jurisdictional High Court. Therefore, the Tribunal dismissed the issue raised by the assessee, stating that reconsideration of this issue fell outside the purview of provisions under section 254(2) of the Act. The miscellaneous petition filed by the assessee was partly allowed in this regard.
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