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TMI Blog2024 (7) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... f the act. Accordingly we restore the whole issue back to the file of AO to compute the income of the assessee considering the provisions of section 41 (2) of the act and section 50C of the act, and thereafter from the capital gain, allow the claim of the assessee under section 54F of the act, if the other conditions are satisfied. Appeal of the assessee are restored back to the file of the learned AO to give the fact accordingly. - Shri Prashant Maharishi, AM For the Assessee : Shri K Gopal, AR For the Revenue : Shri R.R. Makwana, DR ORDER PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by Ms. Sonia Pathak Khanna (assessee / appellant) against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)], for A.Y. 2014-15 dated 6th February, 2024, wherein the appeal filed by the assessee against the assessment order dated 9th November, 2016, passed by the Income Tax Officer, Ward 25(1)(2), Mumbai (the learned Assessing Officer) under Section 143(3) of the Income-tax Act, 1961 (the Act), was dismissed. 02. Assessee is aggrieved with that has preferred this appeal raising following grounds:- General Ground: 1. The National Faceless Appeal Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the same may be deleted. 6. The NAFC failed to appreciate that the business premises sold by the Appellant were originally purchased by her on 09.03.2010. Therefore, the holding period of the said asset is more than 36 months, and the nature of the said asset is Long Term Capital Asset. Though the said asset was forming part of the a block of asset and the depreciation was claimed on the same for one year, the nature of the said asset was always remained as Long Term Capital Asset. Thus, the Appellant is entitled to claim the benefit of section 54F in respect of the capital gains arising from the sale of the said asset. Hence, the disallowance made by the AO and confirmed by the NFAC u/s 54F is unjustified and the same may be deleted. 7. The NFAC is not justified in relying on the decision in the case of Commissioner of Income Tax vs Sakthi Metal Depot Citation (2010) 232 CTR 279 (Ker) to confirm the disallowance of the claim u/s 54F of the Act without appreciating that the facts of that case are distinguishable from the facts of the present case. Thus, the said action of the NFAC is unjustified and the same may be set aside. 03. The brief fact of the case shows that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be deposited in capital gain account scheme which is not been deposited and therefore, the only proportionate exemption of capital gain is allowable to the assessee. 012. Further, the claim of the learned Assessing Officer is that as assessee has not shown any capital gain in the return of income and further has not claimed such exemption in the return, the deduction is not allowable. In view of the decision of Hon'ble Supreme Court in case of Goetze (India) Ltd. vs CIT 284 ITR 323. 013. Consequently, the assessment order under Section 143(3) of the Act was passed on 9 th November 2016, determining the total income of the assessee at ₹ 42,13,130/-. 014. On appeal before the first appellate authority, detailed submissions were made. The learned CIT (A) held that assessee has not claimed deduction under Section 54F of the Act in the original return of income but claimed through revised computation. Therefore, the learned Assessing Officer is correct in not admitting the fresh claim which was not in the return of income. On merits of the case, he considered the provisions of Section 50 and stated that assessee has earned short term capital gain and therefore, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully considered the rival contentions and perused the orders of the lower authorities. It is a fact that on sale of property, assessee did not disclose deemed capital gain in Schedule DEP of the return of income under capital gain was also not disclosed in the ITR filed by the assessee on 17 th July 2014. As sale deed was executed of the property on 13 th March 2013, according to the version of the assessee up to 26 th February 2014, assessee has invested ₹ 33,52,825/- in purchase of under construction flat at Pune. Therefore, capital gain is not chargeable to tax. It is also apparent that the assessee did not disclose any such information in Return of income. The capital gain is nil as well as any capital loss was not shown. However, the assessee submitted to the learned Assessing Officer that the impugned property sold on 13 th May 2013, for ₹ 57 lacs sold to M/s Sonai Pathak Khanna was purchased in A.Y. 2009-10 at a cost of ₹ 21,54,900/-. The index cost of acquisition is ₹ 32,01,663/- and therefore, capital gain of ₹ 24,98,337/- is derived. The assessee has made an investment in new house property of ₹ 34,42,215/- and therefore, there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of investment in new house property. Section 50 determines the gain arising from any asset as short term capital gain. Thus, it characterizes the gain and not the capital asset. Undoubtedly, the capital gain on by the assessee under section 50 C may be chargeable to tax as short term capital gain however as the impugned building was held for more than 36 months, the transfer of long-term capital asset has resulted into the above gain. Thus, the deeming fiction under section 50 may be restricted to the chargeability of gain as short-term capital gain but the asset remains a long-term capital asset and does not become a short-term capital asset by virtue of section 50 C of the act. 023. This aspect has been considered by the honourable Bombay High Court in case of CIT versus Ace builders private limited 281 ITR 210 with respect to exemptions under section 54E and decision of the honourable Supreme Court in case of CIT versus V S Dempo Co Ltd in 387 ITR 354. 024. Reliance by the learned CIT A on the decision of honourable Kerala High Court in case of CIT Shakthi Metal Depot 333 ITR 492 deals with the fact that when a depreciable asset is sold, the gain arising to the assessee shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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