Correction In Form 35A Is No Basis To Treat Such Form As Filed Beyond Time Limit: Mumbai ITAT Allows Expenses Incurred In Earning Capital Gain
Since the AO did not consider that assessee has incurred expenses as per the terms & conditions of the agreement, the Mumbai ITAT directed the AO to allow the claim of the assessee to treat Form No. 35A as filed after verification of the copy of agreement and copy of bank statement filed by the assessee. The Bench of Amit Shukla (Judicial Member) and Amarjit Singh (Accountant...
Since the AO did not consider that assessee has incurred expenses as per the terms & conditions of the agreement, the Mumbai ITAT directed the AO to allow the claim of the assessee to treat Form No. 35A as filed after verification of the copy of agreement and copy of bank statement filed by the assessee.
The Bench of Amit Shukla (Judicial Member) and Amarjit Singh (Accountant Member) observed that “it is evident that assessee has made correction in the form 35A which cannot be treated as filed beyond time limit, therefore, we don't find any justification in the finding of the DRP for treating the form 35A as not filed.” (Para 5)
As per the brief facts of the case, the assessee's case was selected for scrutiny, wherein the AO found that under consideration the assessee was having income from capital gains and income from other sources. As per the computation submitted by the assessee, the assessee has shown long term capital gain of Rs.104,07,700/- on sale of immovable for Rs.2,93,00,000/-. Out of the capital gain of Rs.104,07,700/- the assessee has invested Rs.50,00,000/- in the capital gain bond scheme as per Sec. 54EC and offered tax on remaining capital gains of Rs.54,07,700/-. On verification of the detail filed the AO noticed that assessee has claimed deduction of Rs.17,58,000/- and Rs.30,000/- pertaining to stamp duty and registration charges of Rs.2,20,000/- in respect of society transfer fees paid by the assessee out of the aforesaid capital gain amount. The AO has disallowed the claim of aforesaid expenses on the ground that assessee has not furnished the supporting document regarding making payment of aforesaid expenditure claimed by the assessee.
The assessee filed objection before the DRP. The DRP has dismissed the objection filed by the assessee on the ground that original form no. 35A was non signed by the authorized representative and the fresh form no. 35A filed by the assessee cannot be considered because it was filed beyond time.
The Bench noted that the assessee had paid stamp duty, registration charges, society transfer fee and also provided a copy of sale agreement and bank statement in support of his claim of making payment of these expenses.
The Bech observed that the AO had disallowed the claim of such expenses merely on the ground that the Dispute Resolution Panel has treated the original Form 35A as not filed.
The Bench further observed that assessee has already filed original form 35A within the time limit, however, same was corrected as pointed out by the DRP on the ground that authorized representative was not the right person to sign form 35A.
Therefore, on finding that the AO has completely relied on the ground raised by DRP for rejection and failed to verify the documents, ITAT allowed the assessee's appeal.
Counsel for Appellant/ Assessee: Rahul Sarda
Counsel for Respondent/ Revenue: Anil Sant
Case Title: Kishore Bhagwandas Ramnani verses ITO
Case Number: ITA No.3460/Mum/2023