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TMI Blog2015 (11) TMI 1303X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 3,04,44,615 as against the returned income of Rs. 43,59,730/-. The Assessing Officer made disallowances including impugned two disallowances viz. first disallowance of loss incurred on account of F&O transaction in foreign currency in stock exchange and second disallowance of claim of exemption u/s 54F of the Act by holding that the assessee was owner of more than one property. The aggrieved assessee carried the matter before the first appellate authority and both these grounds were allowed and impugned additions deleted. Now, the aggrieved revenue is before this Tribunal in this second appeal with the ground as reproduced hereinabove. Ground No. 1 4. Apropos ground no.1, ld. DR submitted that the ld. CIT(A) has erred on the facts and circumstances of the case and in law in allowing the notional loss of Rs. 37,73.273/- on F&O foreign currency transaction. Ld. DR supporting the action of the Assessing Officer submitted that in view of the specific clarification contained in Board's Instruction No. 3/2010 dated 23.3.10, the impugned loss claimed by the assessee under the business head was rightly treated as notional loss and the same was not allowed to be set off from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 dated 23rd March, 2010 such losses are not allowable. On the other hand the appellant has contended that this is an actual loss incurred during the year on the transactions done on recognized stock exchange in foreign currency and this is not a notional loss and accordingly the above instruction of Board is not applicable. In support of his contention, the appellant has filed copy of the transactions ledger with M/s PACE Financial Services and PACE Financial Stock Broking. The same is filed at page 197 to 199 of the paper book. The appellant has also filed copy of bank statements running with HSBC Bank where from the payments have been made to the brokers. It has been further contented that in any case this being a loss incurred during the year is an allowable loss. 1 have perused the facts and on going through the same. It is observed that the appellant has entered into these F&O transactions during the year. In respect of the various transactions entered into by the appellant he has incurred loss of Rs. 2,32,10,575/- and earned profit of Rs. 1,94,37,302/-. Thus there is an actual loss of Rs. 37,73,273/- during the year in such transactions. Against this the appellant has made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y holding that as per Circular regarding notional loss is not applicable to the transaction which was undertaken by the assessee as F&O transaction. On logical analysis of the order of the first appellate authority on this issue, we reach to a logical conclusion that the Assessing Officer made addition regarding the Board Circular which is not actually applicable to the facts and circumstances of the present case, therefore, the CIT(A) was right in concluding this issue in favour of the assessee. We are unable to see any perversity or any other valid reason to interfere with the order of the ld. CIT(A). Accordingly, ground no. 1 of the revenue fails. Ground No.2 9. Apropos ground no.2, ld. DR contended that the Learned CIT(A) has erred on facts and circumstances of the case and in law in allowing the claim of Rs. 2.00.87,987/- without the assessee fulfilling the conditions prescribed under section 54F of the Income tax act, 1961 because the assessee made a claim without verifying the pre-conditions prescribed under the said provisions. Ld. DR took us through relevant part of the assessment order and submitted that after detailed deliberations and consideration of the assessee's s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was submitted before the authorities below. Learned counsel of the assessee submitted that the Assessing Officer did not properly consider the submissions and explanation of the assessee that the rental income for the whole year has been shown by the assessee because the implication of the clubbing provision as per section 64(1) of the Act and only showing the rental income does not mean that the assessee continues to be the owner of the gifted property. Learned counsel of the assessee placed reliance on the decision of ITAT Mumbai 'B' Bench in the case of Smt. Maya A. Ajwani vs ITO-7(2)(4), Mumbai (2015) 56 taxmann.com 255 (Mumbai-Trib.) and submitted that in the similar set of facts and circumstances, it was held that gift of house to husband prior to the date of transfer of original asset other than any residential house cannot be disregarded for the purpose of reckoning assessee's eligibility for deduction u/s 54 of the Act even if the assessee along with her husband continue to reside in the same house after gift. The ITAT Mumbai also held that section 64(1)(iv) will not operate to nullify gift and would operate only to club income from gifted house in the hands of donor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not correct. The second contention of the Assessing Officer that the appellant is showing the rental income in his hand and thus appellant is taking a contradictory stand. Firstly by merely showing rental income in his hands, the appellant can't become owner of the property. Secondly one needs to find out the reasons for showing such rental income in his hands. There is no dispute to the fact that appellant was owner of this flat till 29th January, 2009 and accordingly rental income upto that date in any case is to be assessed in his hands. Further appellant having gifted this flat to his wife on 29th January, 2009 thereafter the appellant despite not being owner of the flat, still the rental income from such income is to be clubbed in his hand in view of the provisions of Section 64(1 )(iv) of the Act. Thus there is no contradiction as alleged by the A.O. The explanation of the appellant in this regard is found to be correct that it is not his rental income. It is because of the clubbing of income provision that income earned is being included in his hands under Section 64(1 )(iv). This does not mean that the appellant is the owner of the property. The contention of the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant was first deposited in the mutual fund and then appellant has not been able to prove the source of the investment in respect of the investment made in the capital gain scheme. Further he has held that the amount to be deposited in Capital Gain Scheme be the same amount as realized from the sale of original assets. In this regard the Assessing Officer has cited the judgment of the Bombay Bench in the case of Milan Sharat Ruparel vs. ACIT 121 TTJ 770 (Mum) whereby it was held that investment of capital gain account scheme should not come from the borrowed funds. On going through the facts I notice that the above contention of the Assessing Officer is not correct. Further there is no requirement under the law that the appellant should deposit the money received on sale of original capital asset in the Capital Gain Scheme. The only requirement is that the money should be deposited in the capital gain account scheme before the due date of filing return. Admittedly in this case there is no dispute that the money has been deposited before the due date of filing the return. However the contention of the Assessing Officer that the capital gain realized has been first utilized for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Smt. Maya wherein it was held that section 64(1)(iv) will not operate to nullify gift and would operate only to club income in the hands of donor assessee. 14. At this juncture, it is also relevant to note that the assessee is the owner of only one property i.e. JPH-03, Central Park, Sector 4, having 50% of share as per conveyance deed available at assessee's paper book pages 96 to 119 after sale of property on 2.2.2009 out of which impugned capital gain accrued to the assessee. In these facts and circumstances, the CIT(A) was right in concluding that during the course of assessment proceedings, the assessee filed the relevant details of capital gain and its utilization along with copies of the bank account statement and from these details, it is amply clear that the money of capital gain has been deposited in mutual fund and on redemption of the mutual fund, it has been deposited in the capital gain account scheme. It was also noticed that the assessee on sale of original assets has deposited the proceeds in his bank account. From there, he deposited the money temporarily with mutual funds and before the due date of deposit in Capital Gain Scheme, encashed the mutual fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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