Exemption under section 54E of the Income-tax Act cannot be denied to the assessee on account of the fiction created in section 50. It is true that section 50 is enacted with the object of denying multiple benefits to the owners of depreciable assets. However, that restriction is limited to the computation of capital gains and not to the exemption provisions.
CIT can review the grant of registration at any time because the words used in the provision are, and subsequently the Commissioner is satisfied, which means that registration can be reviewed at any given point of time. There is no question, that once the registration is granted, the issue of registration becomes functus officio.
From a reading of the provisions of section 50C(2), it is clearly mandated that if an assessee challenges or objects to the Assessing Officer adopting the guideli ne value of the property for stamp duty purposes in place of the stated consideration in the sale deed for the purposes of computing LTCG, then the Assessing Officer ought to refer the property for valuation to the Valuation Officer of the Income-tax department.
Plain reading of provisions of section 11(2)(b) lays down that 85 per cent of the income is to be applied to charitable purposes or set apart and the moneys accumulated or set apart can be invested or deposited in the forms or modes specified in sub-section (5). Clause (x) of sub-section (5) to section 11 prescribes one of the modes of investment as ‘investment in immovable property’.
It thus remains an undisputed fact that no addition has been made on the reasons recorded for reopening the completed assessment. Now, what is to be seen is as to whether, as contended by the assessee, since no addition has been made on the reasons recorded, no reasons for reopening the completed assessment survive and, consequently, the completed assessment could not have been reopened, or whether in spite of no addition having been made qua the reasons recorded, those reasons still survive and the reopening on the basis of those reasons is in order, as maintained by the department.
The assessee had submitted that direct salary cost should be considered and indirect overhead cost should not be considered as concerned employees performed insignificant role for the credit monitoring assistance done for the overseas associate enterprises. However, it is true that no fresh ECB loans have been granted during the year under consideration, but services indeed have been rendered by the assessee to its overseas entities.
Entire nature of work comes squarely within the realm of ‘carrying out any work in pursuance of a contract’ as stipulated in section 194C. ‘Carrying out any work’ has a very wide import, which includes within its ambit not only simply works contract but also all kind of work, which a person carries out in pursuance of a contract.
In the present case, the provisions of sec.74(1) as amended w.e.f. 1.4.2003 have been relied upon by the revenue authorities to disallow the assessee’s claim for set off of long-term capital loss relating to AY 2001-02 against short-term capital gain of the year under consideration and as already noted by us, the plain grammatical construction of the language of sec.74(1) as amended w.e.f. 1.4.2003 makes it clear that the same are applicable and deal with carry forward and set off of loss under the head “capital gain” incurred in AY 2003-04 and subsequent years. The right accrued to the assessee by virtue of sec.74(1) as it stood prior to the amendment made w.e.f.1.4.2003 thus has not been taken away either expressly by the provisions of sec. 74(1) as amended w.e.f. 1.4.2003 or even by implication.
Hon’ble Jurisdictional High Court has held that income in this case is chargeable u/s. 44D read with section 115A of the Act. However, I also note that tribunal in earlier round remitted the issue to the file of the Assessing Officer to give the finding as to whether the assessee is entitled to exemption under DTAA between the India and UAE.
Accrual of income is a well-known concept of taxation jurisprudence. It is a fact that assessee is following the Mercantile system of accounting and as per the established principles of that system, whatever accrues to an assessee in a particular AY has to be offered for taxation for that particular year. In our opinion the concept of real income or no real income can never be a concept which can work if it is at variance with the statutory provisions.
