ARUNAVA BHATTACHARJEE,KOLKATA vs. ACIT, CIR. 9(2), KOLKATA

The ld. PCIT observed from the assessment records that the assessee had sold a Guest House, located at Ganganagar on 20.02.2016 at Rs.4,50,00,000/- which was acquired on 01.12.2007. The assessee computed Long Term capital gain of Rs.2,00,26,945/- from the sale of the aforementioned property and out of the said capital gain, the assessee had claimed a deduction of Rs.1,17,03,326/- u/s.54EC in ITR. But in its revised computation the assessee had Assessment Year: 2016-17 Arunava Bhattacharjee claimed deduction of Rs.1,18,22,046/- u/s.54/54F of the Act. However, in the assessment order the AO allowed deduction to the tune of Rs.1,17,03,326/- u/s. 54/54F against the assessee's claim of Rs. 1,18,22,046/-. The ld. PCIT further observed from the details of immovable asset as submitted by the assessee in Balance Sheet as on 31.03.2016 that the assessee was in possession of three residential unit viz. (1) 50% shareholding of property at 190/1 Biddhan Nagar Road, Kolkata-67, (2) Flat No.2601 Height Tower 8, Uniworld City, Rajarhal, Newtown, Kol-156 and (3) Flat No. 2201, Height Tower 8. Uniworld City, Rajarhat, New town, Kol-156 during the F.Y. 2015-16. But as per sub- section 1(b) of Section 54F, deduction u/s. 54F is not allowable if the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset. He therefore observed that the assessee owned more than one residential house, other than the new asset on the date of transfer (20.02.2016) of the original asset, hence, the assessee was not eligible to claim deduction u/s 54/54F of the Act and allowing the same in the assessment order was irregular and required to be disallowed. He show-caused the assessee in this respect. In response, the assessee submitted that during the assessment proceeding the assessee had claimed deduction of Rs.1,67,03,026/- u/s 54EC of the Act, whereas, the maximum deduction permissible under the said section was Rs.50,00,000/-. That thereafter the revised computation was furnished and the deduction u/s 54EC was claimed at Rs.50,00,000/- and further deduction of Rs.1,17,03,326/- was claimed u/s 54 of the Act.

Before the ld. PCIT, It was explained that section 54 was applicable in the case of the assessee not the section 54F. However, the