2015 (8) TMI 264 - AT - Income Tax

Exemption u/s.54EC - LTCG - AO submitted that the ld.CIT(A) was not justified in allowing the exemption of ₹ 1 crore as there is an amendment in the Act, whereby the limit of investment is restricted to the extent of ₹ 50 lacs - Held that - If the assessee is able to keep the six months limit from the date of transfer of capital asset, but, still able to place investment of ₹ 50 lakhs each in two different financial years, we cannot say that the restrictive proviso will limit the claim to ₹ 50 lakhs only. Since assessee here had placed ₹ 50 lakhs in two different financial years but within six months period from the date of transfer of capital assets, assessee was definitely eligible to claim exemption upto ₹ 1 Crore. The same view has been taken by Ahmedabad Bench of this Tribunal in the case of Aspi Ginwala & Others (2012 (4) TMI 195 - ITAT AHMEDABAD ). We are, therefore, of the opinion that the assessee has to succeed in this appeal. Claim of the assessee for exemption upto ₹ 1 Crore has to be allowed in accordance with Section 54EC of the Act. - Decided in favour of assessee. CIT(A) directing the Assessing Officer to allow the deduction of ₹ 81,48,754/- from LTCG and of ₹ 18,51,246/- from the STCG and tax the balance LTCG of ₹ 23,97,146/- and STCG of ₹ 5,44,587/- - Held that - Respectfully following the ratio laid down by the Hon ble Gujarat High Court in the case of CIT vs. Polestar Industries(2013 (11) TMI 910 - GUJARAT HIGH COURT ), this ground of Revenue s appeal is rejected. - Decided in favour of assessee. Disallowance of expenditure - CIT(A) allowed claim - Held that - Heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has given a detailed finding on fact in his order. The finding of the ld.CIT(A) has not been controverted by the ld.Sr.DR by placing any contrary material on record, therefore we do not find any reason to interfere with the order of the ld.CIT(A) - Decided in favour of assessee.

Summary

Issues:
1. Exemption u/s.54EC - Limit of investment
2. Deduction of LTCG and STCG
3. Allowance of expenses debited in P&L Account

Exemption u/s.54EC - Limit of investment:
The appeal by the Revenue questioned the order of the Ld.Commissioner of Income Tax(Appeals)-III, Rajkot regarding the exemption u/s.54EC. The Revenue contended that the ld.CIT(A) erred in directing the Assessing Officer to allow the exemption of Rs. 1 crore instead of Rs. 50 lakhs, citing an amendment in the Act. The ld.CIT(A) referred to a High Court case and various tribunal decisions to support the exemption of Rs. 1 crore, allowing investments in two consecutive financial years within six months of transfer resulting in capital gain. The Coordinate Bench in a related case also supported the exemption up to Rs. 1 crore. The Tribunal upheld the ld.CIT(A)'s decision, dismissing the Revenue's appeal.

Deduction of LTCG and STCG:
The Revenue's appeal also challenged the direction of the ld.CIT(A) to allow deductions from LTCG and STCG, taxing the balance LTCG and STCG amounts. The ld.Counsel for the assessee supported the ld.CIT(A)'s order, referencing judgments of the Jurisdictional High Court favoring the assessee. The Tribunal, following the High Court's decisions, rejected the Revenue's appeal on this ground.

Allowance of expenses debited in P&L Account:
Regarding the allowance of expenses amounting to Rs. 6,09,870/- debited in the P&L Account, the ld.CIT(A) had given a detailed finding, restricting the disallowance to Rs. 10,90,223/- instead of the claimed amount of Rs. 17,00,093/-. The ld.Counsel for the assessee supported the ld.CIT(A)'s decision. The Tribunal upheld the ld.CIT(A)'s order, as the ld.Sr.DR did not provide any contrary material, resulting in the rejection of the Revenue's appeal on this ground.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the orders of the ld.CIT(A) on all grounds related to the exemption u/s.54EC, deductions of LTCG and STCG, and the allowance of expenses debited in the P&L Account. The judgments of the High Court and the detailed findings of the ld.CIT(A) played crucial roles in the Tribunal's decision-making process.