Sheth Shree Karshandas Halu Dharamshala Jamnagar VS CIT (Exemption) & Anr. (Gujarat High Court)
Summary: The Gujarat High Court has allowed the writ petition filed by Sheth Shree Karshandas Halu Dharamshala Jamnagar and quashed the order dated 19.11.2020 passed under Section 264 of the Income-tax Act, 1961, rejecting the Trust’s claim for exemption under Section 11(1A) in respect of capital gains reinvested in a fixed deposit.
The petitioner, a public charitable trust registered under the Gujarat Public Trust Act, 1950 and under Section 12A of the Income-tax Act with effect from 01.04.2007, had sold its immovable property for Rs.4,87,50,000/- under a registered sale deed dated 11.07.2011. The entire sale proceeds were thereafter invested in a two-year Fixed Deposit Receipt with Canara Bank, Jamnagar, in accordance with the conditions imposed by the Joint Charity Commissioner.
For A.Y. 2012-13, the Trust inadvertently failed to claim the exemption under Section 11(1A) for the reinvestment of the capital gains, although the capital gains were fully disclosed and tax was paid. The return was processed under Section 143(1), resulting in a demand of Rs.19,44,180/-. The Trust subsequently invoked Section 264.
The High Court relied upon the principles laid down in C. Parikh & Co., Ramdev Exports and S.R. Koshti, holding that revisional jurisdiction under Section 264 is sufficiently wide to grant relief where an assessee has been over-assessed because of a mistake or omission. The fact that the assessee itself had disclosed the income in the original return did not prevent the Commissioner from considering the lawful exemption.
