2017 (10) TMI 1079 - AT - Income Tax

Rejecting claim of relief U/s 54F - claim of exemption raised by an assessee u/s 54F in a belated return of income filed in compliance to a notice issued u/s 148 - Held that - Section 54F, neither provides as a pre-condition the requirement of filing of the return of income by the assessee within the stipulated time period, nor places any embargo as regards claim of such exemption in a case the return of income filed by the assessee involves some delay. We thus in the backdrop of our aforesaid observations are of the considered view that now when the assessee had raised the claim u/s 54F in the return of income filed by her in compliance to notice u/s 148, therefore, it was obligatory on the part of the A.O to have deliberated on the entitlement of the assessee towards claim of exemption u/s 54F, on merits. We do not find ourselves to be in agreement with the observations of the A.O that the claim towards exemption u/s 54F raised by the assessee in her return of income was liable to be scrapped solely for the reason that the filing of such return of income involved some delay. As we observe that as the assessee had during the course of the hearing of the appeal submitted complete details as regards his entitlement towards claim of exemption u/s 54F, which we find had been reproduced by the CIT(A) in his order dated. 29.03.2013, therefore, the A.O is directed to verify the genuineness and veracity of the claim of the assessee in the backdrop of the said facts and figures provided by the assessee. That in case the facts and figures provided by the assessee are found to be in order, then claim of exemption u/s 54F, as raised by the assessee shall be allowed. Needless to say, the A.O shall during the course of the set aside proceedings afford an opportunity of being heard to the assessee to substantiate his aforesaid claim. The Ground of appeal no. 1 raised by the assessee is allowed for statistical purposes.

Summary

Issues Involved:

1. Rejection of claim of relief under Section 54F of the Income-tax Act, 1961.
2. Levy of interest under Sections 234B and 234C of the Income-tax Act, 1961.

Detailed Analysis:

1. Rejection of Claim of Relief under Section 54F:

The assessee filed an appeal against the order of the CIT(A)-29, Mumbai, which arose from the order passed by the A.O under Section 251 read with Section 143(3) of the Income-tax Act, 1961. The primary contention was the rejection of the claim of relief under Section 54F. The assessee had filed her return of income for A.Y. 2003-04 in response to a notice issued under Section 148, declaring taxable income after claiming exemption under Section 54F for long-term capital gains from the sale of shares. The A.O initially rejected the claim, deeming the share transactions as not genuine and thus disallowing the exemption under Section 54F.

Upon appeal, the CIT(A) held the transactions as genuine and deleted the additions made by the A.O. However, the A.O, while giving effect to the CIT(A)'s directions, still rejected the exemption claim under Section 54F, citing that the return was filed beyond the stipulated 30-day period after the notice under Section 148 was served. The CIT(A) upheld this decision, interpreting that the exemption was to be allowed "as per law," not summarily.

The Tribunal analyzed whether a claim under Section 54F in a belated return filed in response to a notice under Section 148 is allowable. It concluded that a return filed beyond the specified period does not render it invalid. The statutory provision under Section 54F does not mandate filing the return within the stipulated time as a precondition for claiming the exemption. The Tribunal found that the A.O should have deliberated on the merits of the exemption claim rather than dismissing it solely due to the delay in filing. Consequently, the Tribunal set aside the CIT(A)'s order and directed the A.O to verify the genuineness of the claim based on the provided details and allow the exemption if the facts are in order. The ground of appeal regarding Section 54F was allowed for statistical purposes.

2. Levy of Interest under Sections 234B and 234C:

The assessee also contested the levy of interest under Sections 234B and 234C, which are consequential to the primary issue. Since the main issue regarding the exemption under Section 54F was remanded back to the A.O for reconsideration, the Tribunal also restored the matter of interest levy to the A.O for necessary adjustments based on the final determination of the exemption claim.

Conclusion:

The appeal was allowed for statistical purposes, with the Tribunal directing the A.O to re-examine the exemption claim under Section 54F on its merits and make necessary adjustments regarding the interest under Sections 234B and 234C. The order was pronounced in the open court on 15.09.2017.