ABDULLA ZACKERIA,OOTY vs. INCOME TAX OFFICER WARD-2,OOTY, OOTY

There is a delay of 49 days in filing the appeal. The assessee has filed an application for condonation of delay with supporting affidavit stating therein the reasons for the delay. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of this appeal. Hence, we condone the delay and proceed to dispose off the appeal on merits.

Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2015-16, the return of income was filed on 21.04.2018. In the said return of income, assessee declared capital gains arising from the sale of only two properties. However, upon verification of records, the AO found that assessee had actually sold three properties during the relevant year. Consequently, the assessment was reopened and a notice u/s.148 of the Act was issued on 13.04.2018. The re-assessment was completed u/s.143(3) r.w.s. 147 of the Act vide order dated 28.12.2019. During the assessment proceedings, the AO invoked section 50C of the Act and determined the full value of consideration of the properties at Rs. 1,33,57,200/-. The AO also rejected the assessee’s claim of Rs.41,69,670/- towards investment in interior decorations and fittings. According to the

Aggrieved, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, assessee claimed a revised figure of Rs.43,43,298/- being expenditure incurred for interior decorations and fittings. However, the claim of the assessee was rejected by the FAA by observing as under:- “5.4. Before the AO, appellant had claimed Rs.41,69,670/- for interior decoration and fittings but now during the appellate proceedings the appellant has claimed a revised figure of Rs. 43,43,298/-. Same is not explained or reconciled by the appellant. Nevertheless, the items mentioned in the list are perused. They appear to be the payments made for civil modification and furniture & fittings related expenditure. If appellant has made agreement for the purchase for a certain amount why he is paying over and above that amount. Appellant has not submitted purchase agreement to show that these payments were made as a part- payment of purchase agreement value. Therefore, I find no reason to

Aggrieved, assessee has filed the present appeal before the Tribunal. The Ld.AR’s made a limited prayer that the expenditure incurred on interior decoration and fittings up to 16.04.2017, i.e., within three years from the date of transfer of the original asset, should be allowed for the purpose of exemption under Section 54F of the Act. In support of this contention, the Ld.AR furnished a revised computation of income for the assessment year 2015–16 along with a detailed worksheet for recalculating the exemption u/s. 54F of the Act. The Ld.AR submitted that out of the total claim of Rs.43,43,298 towards interior decorations and fittings, a sum of Rs.36,71,128 was actually incurred before the expiry of the prescribed three-year period from the date of sale of the original asset. Therefore, the assessee is entitled to claim proportionate exemption u/s.54F of the Act with respect to the said amount of Rs.36,71,128. In support of his contention, the Ld.AR relied on the judgment of Hon’ble Karnataka High Court in the case of CIT vs. Sambandam Udaykumar reported in 345 ITR 389 (Karnataka) and order of Bangalore Bench of the Tribunal in the case of DCIT

The Ld.DR supported the orders of the AO and the FAA.

We have heard rival submissions and perused the material on record. The limited issue raised by the assessee before us is with regard to allowing deduction u/s.54F of the Act in respect of expenditure incurred on interior decoration and fittings up to 16.04.2017, i.e., within three years from the date of transfer of the original asset. In this regard, the Ld.AR has furnished a detailed computation sheet for recalculating the exemption claimed u/s.54F of the Act. The revised computation of exemption u/s.54F of the Act, as submitted by the assessee, is as follows::- 54F Exemption Calculation Purchase of New Residential House No.3, 3rd Cross, K.K. Halli, Blore 49,50,000 Add: Stamp Duty and Regn Charges 3,50,330 Documentation Charges 30,000 Total Cost 53,30,330 Add: Interior Charges Total Amount as per letter dated 26-11-2019 43,43,298 Less: Reduction of amounts paid after 20-3-17 6,72,170 Total Claimable Interior Charges 36,71,128 Total Amount Reinvested 90,01,458

On perusal of the above computation, it is the claim of the assessee that a sum of Rs.36,71,128 has been incurred towards interior decoration and fittings prior to 16.04.2017, i.e., within three years from the date of transfer of the original asset. If the said claim of the assessee is found to be correct, then the expenditure incurred up to 16.04.2017 would be eligible for proportionate deduction u/s.54F of the Act. In arriving at this conclusion, reliance is placed on the judgment of the Hon’ble Karnataka High Court in the case of Sambandam Udaykumar, supra and the order of the Bangalore Bench of the Tribunal in the case of Bagalur Krishnaiah Shetty Vijay Shanker, supra. However, since these factual aspects require verification, we deem it appropriate to restore the matter to the files of the AO. The AO is directed to examine the claim of the assessee with regard to the expenditure incurred within the prescribed period of three years from the date of transfer of the original asset. The assessee is directed to produce necessary documentary evidence to

In the result, the appeal filed by the assessee is allowed for statistical purposes.