ITAT Directs AO to Examine Section 54 Exemption Eligibility in year in which capital gain is taxable

Manesh Bansilal Shah Vs ITO (ITAT Ahmedabad)

Introduction:

The Income Tax Appellate Tribunal (ITAT) Ahmedabad addressed an appeal by Manesh Bansilal Shah against the order of the Commissioner of Income Tax regarding the deduction under Section 54 of the Income Tax Act, 1961 for the Assessment Year 2013-14. The matter pertains to the capital gain resulting from the sale of property, and the dispute over the Assessment Year to which the capital gain pertains, as well as the eligibility for the exemption.

Analysis:

1. Background: The assessee reported capital gain from the sale of residential property and claimed an exemption under section 54 and 54EC of the Act, resulting in nil capital gain. However, the AO found that the capital gain pertained to the preceding year, thus denying the claim for the impugned year.

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