The Commissioner of Income Tax-IV, V. Rajiv Talwar,

ITTA/291/2014

AI Insights

The case involves an appeal by the Commissioner of Income Tax-IV, Hyderabad against the decision of the Tribunal which allowed an exemption under Section 54 of the Income Tax Act, 1961 to Rajiv Talwar for the assessment year 2006-07. The core issue was whether the Tribunal's order was perverse and whether it was correct in law to direct the Assessing Officer to grant the exemption. The Tribunal had found that the respondent utilized the sale proceeds from the transfer of assets within the stipulated period, which was the basis for the exemption. The High Court, after reviewing the facts and the Tribunal's decision, agreed with the Tribunal's findings and dismissed the appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 718888 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 24-04-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: J V PRASAD
• Keywords: Capital Gain; Exemption; Long Term Capital Asset; Residential house
• Section: 54; 45

Judgement Text

" THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.291 of 2014 DATED:24.4.2014 Between: Commissioner of Income Tax-IV, Hyderabad. … Appellant And Rajiv Talwar, Secunderabad. ….Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.291 of 2014 Judgment: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is preferred against the judgment and order of the learned Tribunal dated 29.12.2010 in relation to the assessment year 2006-07 and is sought to be admitted on the following suggested questions of law: 1. Whether on the facts and in the circumstances of the case the order of the Tribunal is not perverse ? 2. Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in directing the Assessing Officer to grant exemption of Rs.1,15,42,683/- under Section 54 of the Act ? We have heard Mr.J.V. Prasad, learned counsel for the appellant and gone through the impugned judgment and order of the learned Tribunal. The learned Tribunal, on fact, found that the sale proceeds on account of transfer of assets have been utilized within the period as mentioned in Sub-Section (1) of Section 54 of the Income Tax Act, 1961 (for short ‘the Act’). Hence, the benefit of exemption claimed was allowed. We have seen Sub-Section (1) of Section 54 of the Act, which is set out herein: “Subject to the provisions of sub-section (2), where in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long term capital asset being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head “Income from house property” (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this Section, that is to say,___ (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed hereafter in this Section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under Section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under Section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of capital gain. It appears that Section 54 requires that sale proceeds by way of capital gain have to be utilized within the period mentioned therein. On fact, it was found correctly. Therefore, the learned Tribunal has correctly decided the matter. We, therefore, do not find any reason to interfere with the impugned judgment and order of the learned Tribunal. Hence, the appeal is dismissed. Consequently, the miscellaneous applications, if any pending, shall also stand dismissed. No costs. __________________ K.J. SENGUPTA, CJ _________________ SANJAY KUMAR, J 24th April, 2014 PNB "