Mumbai : A tax benefit claimed by a tax payer in his revised
income-tax return cannot be denied outright by an income-tax (I-T)
officer merely because the revised return has been filed after issue
of notice, income-tax appellate tribunal ( ITAT ) has said.
However, the revised return needs to be filed within the time
limits set out in the I-T Act. This order of the Mumbai bench of the
ITAT, passed on June 20, will provide relief to several taxpayers.
When a mistake is made in the original I-T return, such as not
disclosing an income correctly or not claiming a tax deduction,
section 139(5) the I-T Act permits a revised return to be filed to
correct the errors. Currently, the time limit for filing a revised
return is before the expiry of twelve months from the last day of the
financial year, or before the completion of I-T assessment, whichever
is earlier.
In this case before the ITAT, Mahesh Hinduja had declared a total
income of Rs. 4.91 lakh in his original return for the financial year
2010-11. He later filed a revised return declaring a total income of
Rs.6.24 lakh. In this revised return he also disclosed long-term
capital gains (LTCG) of nearly Rs.50 lakh. However, as he had invested
Rs.1.15 crore in a new residential house, he claimed a deduction under
Section 54 of the I-T Act. Thus, capital gains were not offered for
tax.
Under the Act, if an investment is made in another house in India,
within he stipulated period of time, then the ' cost of the new house
' is deducted and only the balance component of the LTCG is taxable.
Thus, if the amount of capital gains is equal to or less than the cost
of the new house, the entire sum of LTCG is not taxable. To ensure
that the taxpayer has not under reported his income or paid less tax,
the I-T Act empowers I-T officials to issue a notice asking for
further evidence. As the revised return was filed by Hinduja after he
had received a notice under section 143(2), the I-T official rejected
his claim for deduction. The litigation finally reached the level of
the ITAT.
( The Times of India, Chennai, Friday, June 22, 2018 )
Courtesy : MPS
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