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Case Law Details

Case Name : ITO Vs Smt. Uma Dnyanoba Bhintade (ITAT Pune)
Appeal Number : ITA No.1485/PUN/2017
Date of Judgement/Order : 09/07/2019
Related Assessment Year : 2011-12
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ITO Vs Smt. Uma Dnyanoba Bhintade (ITAT Pune)

The limited issue which arises in the present appeal filed by Revenue is against directions of CIT(A) in allowing the benefit claimed under section 54B of the Act by Assessing Officer, in case the assessee has fulfilled all the conditions laid down in the said section. Admittedly, the assessee had not offered any income from Long Term Capital Gains or Short Term Capital Gains on sale of agricultural land in its hands, in the return of income. However, it had shown exempt agricultural income on account of sale of agricultural land which was duly reflected in the return of income. The Assessing Officer sought information from the Municipal authority and since the land sold by assessee was within 8 Kilometers from the Municipal limits, the Assessing Officer held that gain arising from the sale of agricultural land was taxable in the hands of assessee and computes the income from Long Term Capital Gains and Short Term Capital Gains. However, the claim of assessee during assessment proceedings in allowing the benefit of deduction under section 54B of the Act i.e. on account of investment in new agricultural land was denied to the assessee on the ground that no such claim was made in the return of income and hence, not allowable as per the ratio laid down by the Hon’ble Supreme Court in M/s. Goetze India Pvt. Ltd. Vs. CIT (supra). The CIT(A) on the other hand, allowed the claim of assessee in turn, relying on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (supra). In this regard, we find no merit in the appeal filed by Revenue, wherein the matter has been decided by the CIT(A) observing that the assessee would be entitled to the aforesaid deduction under section 54B of the Act, in view of the dictate of the Hon’ble Bombay High Court in CIT Vs. Pruthvi Brokers & Shareholders (supra). We find no error in the order of CIT(A) in this regard. The decision of jurisdictional High Court is squarely binding and in view of the said ratio laid down, the CIT(A) was duty bound to allow the claim of assessee though not made in the return of income. It may be pointed herein itself that even the income from sale of agricultural land as either Long Term Capital Gains or Short Term Capital Gains, was never offered by assessee in its return of income. In such circumstances, when the Assessing Officer computing income from capital gains in the hands of any assessee, then it is his duty not only to compute income under the respective heads but also to allow exemptions which are duly allowable to the assessee. The CIT(A) had in all fairness directed the Assessing Officer to verify whether the assessee has fulfilled the conditions laid down in section 54B of the Act and had further observed that in case they are not so fulfilled, then no deduction under section 54B of the Act is to be allowed to the assessee. We find no error in the order of CIT(A) in this regard. So, we dismiss the grounds of appeal raised by Revenue.

Whether when an assessee mistakenly fails to claim deduction in its return, the same can be allowed as additional claim by the CIT(A) and the Tribunal in exercise of discretion – YES: ITAT
FULL TEXT OF THE ITAT JUDGEMENT

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