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2024 (2) TMI 1163 - AT - Income TaxDisallowance of exemption claimed u/s 54EC - non filling ROI - assessee has neither filed return of income u/s 139(1) of the Act, nor in response to the notice issued u/s 148 - AO in the absence of return filed by the assessee has disallowed the exemption claimed - HELD THAT - As perused the provisions of section 54EC of the Act r.w.s. 139(1) of the Act and note that it has nowhere been provided that for claiming exemption u/s 54EC of the Act, the assessee has to file the return of income. Even at the time of hearing the Ld. DR has not brought our attention to such provision of the Act, suggesting that it is mandatory, for claiming exemption u/s 54EC of the Act, to file the return of income. Accordingly, we are not convinced with the findings of the Ld. CIT(A). Thus, we direct the AO to allow the exemption to the assessee on account of investment made in REC Ltd. as per the provision of law even if the assessee does not file the return of income. Ground of appeal of the assessee is allowed.
Issues involved:
The judgment involves the issue of disallowance of exemption claimed by the assessee under section 54EC of the Income Tax Act, 1961 for a specific amount. Details of the judgment: 1. The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of exemption claimed under section 54EC of the Act for a particular amount pertaining to the Assessment Year 2013-14. 2. The assessee contended that the exemption claimed under section 54EC was wrongly disallowed by the authorities as the assessee had not filed a return of income, citing investment in REC Bonds which are eligible for exemption under section 54EC. 3. The Assessing Officer (AO) disallowed the exemption claimed by the assessee under section 54EC due to the absence of a filed return of income, adding the claimed amount to the total income. 4. The Commissioner of Income Tax (Appeals) upheld the AO's decision, stating that since the claim was not made for seeking exemption under section 54EC in the Income Tax Return (ITR), the benefit of exemption was rightly denied. However, the AO was directed to consider the reasonable cost of acquisition with indexation based on details obtained from the sub-registrar office/appellant. 5. The assessee appealed against the decision of the Commissioner of Income Tax (Appeals). 6. During the appeal hearing, the Authorized Representative (AR) for the assessee argued that it is not mandatory to file a return of income under section 139(1) for claiming exemption under section 54EC. The AR also highlighted that certain investments made by the assessee were saved for calculating the income chargeable to tax under capital gain. 7. The Dispute Resolution (DR) supported the decisions of the authorities below. 8. The Appellate Tribunal considered the contentions of both parties and examined the provisions of section 54EC of the Act along with section 139(1). It was noted that there is no requirement in the Act mandating the filing of a return of income for claiming exemption under section 54EC. Therefore, the Tribunal directed the AO to allow the exemption to the assessee for the investment made in REC Ltd., even without the filing of a return of income. 9. Consequently, the appeal filed by the assessee was allowed by the Tribunal. Separate Judgment by Judges: No separate judgment was delivered by the judges in this case.
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