Exemption u/s 54

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niki (Querist)
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27 January 2013 Dear All,

Can exemption u/s 54 be denied on the grounds that assessee had not filed return of income?

An assessee had sold her residential flat in F. Y. 2009 – 10 and purchased a new flat by investing the entire sale consideration of the old flat. The entire purchase consideration of new flat was also paid in the same year itself i.e. F. Y. 2009 – 10. Since, she did not have any other taxable income; no return of income was filed for the A. Y. 2010- 11.

The Assessing Officer has reopened the assessment for A. Y. 2010-11 so as to tax the LTCG from sale of old residential flat, by denying exemption u/s 54 on the grounds that no return of income was filed u/s 139. Is the stand of the AO correct?

Is it mandatory to file a return of income in order to claim exemption u/s 54 of the Act?

Are there any case laws on this matter?

Thanks & Regards
Niki

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 January 2013 I am not having any case law right now but I do not confirm that the AO is correct looking towards the liberal and beneficial provisions of Section 54.
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You may appeal against the order of the AO and in appeal you may get the required relaxation.
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