2020 (7) TMI 692 - HC - Income Tax

Exemption u/s 54 - Whether date Viz., 27.02.2002 cannot be considered as the date of acquisition, while remitting the matter back to the Commissioner of Income-tax (Appeals) for fresh consideration? - HELD THAT - Since the tribunal has remanded the matter for fresh consideration to the CIT(A), and in the meantime, the Hon'ble Supreme Court in Sanjeev Lal's case 2014 (7) TMI 99 - SUPREME COURT has rendered a decision, it would be just and proper to permit the CIT(A) to take a decision on merits in its entirety instead of remanding the matter for a limited purpose. We do not propose to render any finding as regards the effect of decision in the case of Sanjeev Lal cited supra on the assessee's case and leave it to the decision of the CIT(A) to consider the same and take a decision, in accordance with law. Tax Case Appeal is allowed and the observations made by the tribunal that the date of acquisition cannot be taken as 27.02.2002, is set aside and the matter is remanded to the CIT(A), to take a fresh decision on merits and in accordance with law.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for Assessment Year 2004-05. Interpretation of the date of acquisition for exemption under Section 54 of the Act.

Analysis:
The appeal was admitted based on the substantial question of law regarding the date of acquisition under Section 54 of the Income Tax Act. The tribunal remanded the matter to the Commissioner of Income Tax (Appeals) to reconsider the issue of the assessee's claim for exemption. The tribunal rejected the assessee's argument due to writ petitions challenging the proceedings under Section 269UD(1) of the Act, leading to the opinion that the date of acquisition cannot be considered as 27.02.2002.

The appellant argued citing the Supreme Court's decision in Sanjeev Lal Vs. Commissioner of Income-Tax, Chandigar, which recognized a valid transfer even with an agreement to sell and subsequent delays in executing the sale deed. This argument was supported by similar decisions in the High Courts of Bombay and Gujarat, granting relief to the assessee based on the timing of the sale deed execution.

The High Court allowed the Tax Case Appeal, setting aside the tribunal's finding on the date of acquisition and remanding the matter to the CIT(A) for a fresh decision considering the recent legal developments. The Court emphasized allowing the CIT(A) to make a comprehensive decision on merits instead of a limited remand, leaving it open for the assessee to address all issues on law and facts. The substantial question of law was answered in favor of the assessee, with no costs awarded.