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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: SH. ANIL CHATURVEDI
The present appeal filed by the assessee is directed against the order dated 13.11.2019 of the Commissioner of Income Tax (Appeals)-Karnal relating to Assessment Year 2015-16.
The relevant facts as culled from the material on records are as under :
Assessee is an individual who electronically filed return of income for A.Y. 2015-16 on 30.07.2015 declaring income of Rs.5,53,900/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 20.12.2017 and the total income was determined at Rs.48,11,970/- . Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 13.11.2019 in Appeal No.IT/74/E/KNL/2018-19 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds of appeal : 1. “That on the facts and circumstances of the case, the Ld AO has erred in judiciously applying the provisions of section 54F of the Act thereby restricting the deduction u/s 54F to Rs.84,86,228/-, ignoring the vital fact that since the assessee had utilized a sum of Rs.168,10,020/- in purchase of a new residential house property within two years from the date of sale of the original asset he was entitled to a higher deduction u/s 54F of the Act and the Ld CIT(A) has further erred in confirming the action of the AO in a causal, unreasoned and illogical manner.
2. That on the facts and circumstances of the case, the Ld AO has miserably failed in appreciating the true intent and spirit of the provisions of section 54F of the Act which otherwise stands legally settled by various courts that the benefit of the substantive provision of section 54F (1) of the Act cannot be denied to the assessee by the procedural and enabling provision of section 54F(4) of the Act and the Ld CIT(A) has further erred in denying relief to the assessee in a very casual, unreasoned and illogical manner.
3. That the Appellant craves to add, amend or delete any ground(s) of appeal before or during the hearing of the appeal.”
4. Before us, at the outset, Learned AR submitted that though the assessee has raised 2 grounds but the sole controversy is with respect to not allowing full deduction u/s 54F of the Act.
During the course of assessment proceedings, AO noticed that assessee had sold a Plot No. 50, Block E, Sector 52, Noida, Distt.
Gautam Budh Nagar, U.P. measuring 200 Sq. Mtrs. for a total consideration of Rs.1,82,00,000/- on 20.01.2015 and had deposited in Saving Bank Capital Gain scheme Rs.1,21,19,100/- before 31st March 2015. Assessee was asked to furnish the complete details of the cost of acquisition of the plot and claim of deduction to which assessee filed the details and made the submissions. AO noted that assessee had not produced any evidence regarding payment which are listed at page 2 of the order. He therefore, after excluding the indexed cost of those entries, held that sum of Rs.9,45,310/- was not allowable and thereafter worked out the capital gain at Rs. 1,27,44,292/-. He noted that since assessee has deposited Rs.1,21,19,100/- and had made investment in purchase of another residential house at Chandigarh for which the total cost incurred was Rs.1,68,10,020/-, he worked out the total deduction u/s 54F at Rs.84,86,228/- and held Rs.42,58,064/- to be taxable Long Term Capital Gain.
Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now in appeal. Before me, Learned AR submitted that assessee had made an investment of Rs.168,10,020/- in purchase of new residential house property in Jan 2017 i.e. within 2 years from the date of sale of the original assets and purchase was made by withdrawing Rs.120 lakh from the Capital Gain Scheme account. It was submitted that the provisions of Section 54F(1) of the Act were complied with but AO had proceeded by ignoring the entire investment and worked out the deduction on the basis of Rs. 1,20,00,000/- deposited in Capital Gain A/c. Scheme. He submitted that AO had ignored the substantive provisions in Section 54F(1) of the Act. He further placed reliance on the decision of Hon’ble Karnataka High Court in the case of CIT vs. K. Ramachandra Rao reported in (2015) 56 taxmann.com 163/230 Taxman 334 wherein it has been held that when the assessee invests the entire sale consideration in construction of a residential house within 3 years on the date of transfer and he cannot be denied exemption u/s 54F of the Act on the ground that he did not deposit entire amount of Capital Gain Scheme. He submitted that the authorities have not considered the submissions made by assessee with respect to the claim of deduction u/s 54F of the Act. He therefore fairly submitted that matter may be restored to the file of AO to examine the claim and thereafter allow the claim of deduction.
Learned DR on the other hand supported the order of lower authorities but however did not object to the submissions made by Learned AR to remit the matter back to lower authorities for examination of the claim of deduction u/s 54F of the Act.
I have heard the rival submissions and perused the material available on record. Before me, Learned AR has submitted that assessee had sold residential plot on 20.01.2015 for Rs.1,82,00,000/- and had also made an investment in the purchase of new residential property in Jan 2017 by making investment of Rs.168,10,020/-. The investment has been made within the period of two years from the date of sale of original assets. The aforesaid contention of the Learned AR has not been controverted by Revenue. I find that while deciding the issue there is no finding of CIT(A) on the issue of availability of deduction to the assessee u/s 54F of the Act. I find that Hon’ble Karnataka High Court in the case of CIT vs. K. Ramachandra Rao (supra) has held that when the assessee has invested the entire sale consideration in construction of a residential house within 3 years from the date of transfer then he cannot be denied exemption u/s 54F of the Act on the ground that he did not deposit the said amount in capital gains account scheme before the due date prescribed u/s 139(1) of the Act. Considering the totality of the aforesaid facts, I am of the view that issue needs to be reexamined by the AO. I therefore restore the issue back to the file of the AO and direct him to decide the issue about the availability of deduction u/s 54F of the Act after considering the submissions of the assessee and in accordance with law. Needless to state that AO shall grant sufficient opportunity of hearing to the assessee. Thus the ground of assessee is allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 16.06.2022