Sri. Zameer Mirja V. The Joint Commissioner of Income Tax Spl Range, II Bangalore

ITA/1090/2006

AI Insights

The case involves Sri. Zameer Mirja, the appellant, who sold a residential property in the assessment year 1996-1997 and claimed a net capital gain. The appellant had initially claimed exemptions under Sections 54 and 54F of the Income Tax Act for reinvesting the sale proceeds into another property and a capital gain account. Disputes arose over the correct application of these exemptions, particularly concerning a sum of Rs.20,00,000 which was initially claimed under Section 54F but later contested. The Assessing Officer and subsequent appellate authorities adjusted the exemptions granted, leading to the appellant's challenge in the High Court. The court's decision to remand the matter for re-evaluation emphasizes the need for a thorough examination of the facts and correct application of the law regarding capital gains and exemptions.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 822139 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 07-08-2012
• Assessment Year: misc
• Other Referred Cases: Fathima Bai Vs. Income Tax Officer (2009) 32 DTR (Kar) 243
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M THIRUMALESH
• Assessee Lawyers: A SHANKAR
• Keywords: Capital Gain; Capital Gain Account Scheme; Exemption; Rectification Order
• Section: 143(3); 154; 254(2); 54; 54F; 45; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 07TH DAY OF AUGUST 2012 BEFORE: THE HON’BLE MR.JUSTICE K.SREEDHAR RAO AND THE HON’BLE MR.JUSTICE B.MANOHAR ITA NO 1090/ 2006 BETWEEN SRI.ZAMEER MIRJA AGED ABOUT 47 YEARS, R/AT.NO.44, MAYFAIR APARTMENTS, NO.31, BERLIE STREET, LANGFORD TOWN, BANGALORE. ... APPELLANT (BY SRI.A.SHANKAR, ADVOCATE) AND THE JOINT COMMISSIONER OF INCOME TAX SPL RANGE, II BANGALORE. ... RESPONDENT (BY SRI.M THIRUMALESH, ADVOCATE) **** THIS I.T.A. FILED U/S.260-A OF I.T.ACT, 1961 ARISING OUT OF ORDERS DATED 02-05-06 AND 2 03-02-06 PASSED IN MISC.P.NO.48/BANG/06 AND ITA NO.22/BANG/04 FOR THE ASSESSMENT YEAR 1996- 97, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE ITAT IN MISC.P.NO.48/BANG/06 MARKED AS ANNEXURE-A DTD:02-05-06 AND ITA NO.22/BANG/04 DATED 03-02-06 MARKED AS ANNEXURE-C AND DIRECT THE RESPONDENT ASSESSING OFFICER TO COMPUTE THE GAIN LIABLE TO TAX U/S.45 OF THE ACT AND TO GIVE CONCESSIONS/EXEMPTION AS PRESCRIBED U/S.54 OF THE ACT, IN THE INTEREST OF JUSTICE AND EQUITY. THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY, SREEDHAR RAO, J., DELIVERED THE FOLLOWING: J U D G M E N T The assessee sold the residential house in the assessing year 1996-1997 and the net capital gain from the same is Rs.1,38,17,596/-. The assessee had entered into an agreement with one Sri.Surat Prasad for the purchase of property at Koramangala and had paid a sum of Rs.20,00,000/- as advance. From out of the sale realisation of the property sold, the assessee deposited a sum of Rs.57,50,000/-, a part of the sale realisation in 3 the capital gain account. The transactions with Sri.Surat Prasad fell out. The assessee after litigation in the Courts obtained refund of Rs.20,00,000/- from Sri.Surat Prasad. From out of the said amount Rs.17,40,000/- was invested in the capital gain account immediately. The assessee purchased a residential flat for a sum of Rs.66,08,630/- . The assessee in the returns has sought deduction of Rs.51,63,464/- towards exemption under Section 54F. The Assessing Officer allowed the exemption by an order passed under Section 143(3) dated 17.02.1999. 2. The Assessing Officer later on issued notice under Section 154 on the ground that the exemption granted under Section 54F is incorrect and that the assessee would be entitled to exemption only under Section 54 and the exemption granted towards Rs.20,00,000/- was disallowed. CIT appeals confirmed the order of the Assessing Officer, so also the Appellant 4 Tribunal confirmed the rejection of exemption granted in respect of Rs.20,00,000/-. However, under Section 54F granted partial relief to an extent of Rs.6,67,493/-. 3. The assessee made an application Misc. Petition No.48/Bang/06 (in ITA No.221/Bang/04) under Section 254(2) of the IT Act i.e, for rectification to grant exemption to an extent of Rs.57,50,000 + 20,00,000 = 77,50,000/ instead of Rs.51,63,464/-. Misc. petition was dismissed. Aggrieved by the said order, assessee is in appeal before this Court. 4. The following substantial question of law has been formulated in the memorandum of appeal and on reconsideration of the substantial question of law, following substantial question of law is framed for consideration: “Whether the assessing officer while passing rectification order under Section 154 should have to give benefits to assessee 5 available under Section 54, even though there is no claim made by the assessee to that effect”? 5. Learned counsel for the appellant submits that, the Appellant Tribunal has committed a mistake in declaring that the assessee is entitled to benefit under Section 54, but while computing the benefit has followed the Section 54F. Thus states that, it has resulted in wrong computation of the benefit under Section 54. 6. The learned counsel for the appellant further submitted that, the Assessing Officer in the course of rectification order assumes that the amount invested in the capital gain account scheme, has to be given due deduction while computing the benefit, whether or not assessee makes an application to that effect and also when the assessee has made wrong calculation and claims lesser benefits, it is the duty upon the Assessing Officer to grant benefit entitled to under law. 6 7. The learned counsel for the respondent strenuously submitted that, the fact that whether the assessee had invested Rs.20,00,000/- in the capital gain account within the prescribed time is the fact to be considered and also it is further to be found out that, whether the assessee fulfills all the requirements of Section 54 to claim benefits under the said Section, the said aspect requires further investigation of the facts by the Assessing Officer. 8. Keeping in view all the submissions made at the bar, the order of the Tribunal is set aside. The matter is remanded to Assessing Officer for fresh consideration. The assessing Officer shall also keep in mind the decision of this Court in Fathima Bai Vs. Income Tax Officer reported in (2009) 32 DTR (Kar) 243 with respect of deposit of Rs.17,40,000/- in the capital gain account scheme as to whether it is within the stipulated period. The Assessing 7 Officer shall consider the claim of the assessee for deductions under Section 54 as required under law. 9. Accordingly, ITA is allowed. Sd/- JUDGE Sd/- JUDGE KSR/DR "