Jyotsna Kunwar Vs ITO (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal and directed the Assessing Officer to grant deduction of INR.1,48,16,241/- under Section 54GB of the Income-tax Act, 1961 for Assessment Year 2022-2023. The assessee had filed her return declaring total income of INR.23,80,340/- after transferring residential property for Rs.4,40,00,000/- on 02.09.2021 and claiming proportionate deduction of INR.1,48,16,241/- against total capital gains of INR.1,76,67,062/-. She had invested INR.3.69 crore in equity shares of Autonymi Pvt. Limited (APL). The Assessing Officer proposed and ultimately made the disallowance on several grounds, including that the net consideration had not been fully invested, that the transfer took place after 31.03.2017, that the investment exceeded an alleged Rs.50 lakh limit and that complete evidence regarding purchase of plant and machinery had not been furnished. The assessee explained that the deduction was claimed proportionately, that the benefit of Section 54GB had been extended for eligible start-ups up to 31.03.2022 by Finance Act, 2021, that the provision did not prescribe a Rs.50 lakh cap and that APL had confirmed utilisation of the investment towards capital goods. The CIT(A), however, upheld the disallowance while recording several findings concerning the investee company’s alleged lack of manufacturing activity, non-utilisation of subscription money, failure to satisfy the shareholding threshold and absence of genuine commercial activity. The Tribunal examined the statutory scheme and found that the Assessing Officer’s objection that the benefit was unavailable for transfers after 31.03.2017 was based on an incorrect understanding of the law. The Tribunal noted the proviso to Section 54GB(5), whose sunset date for eligible start-ups had been successively extended, including by Finance Act, 2019 and subsequently by Finance Act, 2021. It also held that Section 54GB contained no INR.50 lakh investment cap. The Tribunal further noted that APL had confirmed receipt of INR.3.69 crore, issue of equity shares and utilisation of the invested amount towards capital goods. The confirmation dated 24.07.2023 stated that INR.1.1468 crore had been utilised towards advances for purchase of capital goods and that APL had acquired new assets aggregating INR.4.2539 crore against the assessee’s INR.3.69 crore investment. APL had also furnished its financial statements. The Tribunal found that the Assessing Officer had not issued any follow-up query or notice to APL seeking further details before making the disallowance. Significantly, the Tribunal found that several alleged “AO’s Findings” reproduced and relied upon by the CIT(A) did not form part of the assessment order. It therefore held that the findings returned by the Assessing Officer and CIT(A) were perverse, being contrary to the material on record. The Tribunal ultimately held that the assessee was entitled to the deduction of INR.1,48,16,241/- under Section 54GB and overturned the CIT(A)’s order. The Tribunal also reproduced the statutory text of Section 54GB applicable to AY 2022-2023 and discussed the principles concerning strict construction of exemption provisions referred to in Commissioner of Customs (Import) Vs Dilip Kumar And Company & Ors. and Novopan India Ltd. v. CCE. :contentReference[oaicite:0]{index=0}
