The Income Tax Appellate Tribunal (ITAT), Kolkata Bench while dismissing the appeal of the assessee ruled that the assessee is eligible to claim exemption on Long Term Capital Gains (LTCG) only if investment in eligible bonds is made within 6 months from transfer of asset.
The assessee, Pradip Kumar Basu is an individual, who filed his return of income for the year under consideration declaring total income of Rs.5,96,040/-. In the said return, long-term capital gain arising for sale of residential property amounting to Rs.6,14,674/- was declared by the assessee and the same was adjusted against the loss of Rs.8,64,542/- arising from the commodity share transaction.
Since the loss from commodity share transaction was not eligible for adjustment against the long-term capital gain arising from the sale of residential property, the Assessing Officer disallowed the claim of the assessee for such adjustment and made an addition of Rs.6,14,674/- to the total income of the assessee on account of long-term capital gain in the assessment completed under section 143(3) vide an order.
Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the CIT(Appeals). During the course of appellate proceedings before the CIT(Appeals), a new claim was made by the assessee seeking exemption of long-term capital gain on account of investment made in long-term capital gain bond by virtue of section 54EC of the Act.
The CIT(Appeals), however, found that the said investment was made by the assessee after a period of six months stipulated in the relevant provision and the assessee, therefore, was not entitled for exemption under section 54EC of the Act on account of long-term capital gain. He, therefore, disallowed the claim of the assessee and confirmed the addition made by the Assessing Officer on account of long-term capital gain.
The assessee has submitted that the assessee wanted to invest the long-term capital gain in purchase of another residential property and unable to find the suitable property, he finally invested the amount in long-term capital gain bonds on January 21, 2020.
The coram headed by the Vice President, P.M. Jagtap noted that the long-term capital gain of Rs.6,14,674/- had arisen to the assessee as a result of residential property sold on June 12, 2013 and in order to claim exemption on account of long-term capital gain under section 54EC of the Act, the assessee was required to make investment in the eligible bonds within six months from the date of transfer of the long-term capital asset i.e. December 12, 2013.
The ITAT while upholding the order passed by CIT(A) ruled that the investment in eligible bonds is required to be made by the assessee within a period of six months from the date of transfer of the long-term capital asset in order to claim the exemption on account of long-term capital gain.
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