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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI A. K. GARODIA & SHRI PAVAN KUMAR GADALE
O R D E R
Per A.K. Garodia, Accountant Member This appeal is filed by the assessee and the same is directed against the order of learned CIT(A) - 5, Bengaluru, dated 25.04.2018 for the Assessment Year 2015-16.
The assessee has raised many grounds of appeal but the only grievance of the assessee is regarding part disallowance of assessee’s claim under section 54 of the Income Tax Act, 1961.
3. In the course of hearing, it was submitted by learned AR of the assessee that the assessee claimed for deduction under section 54 of the IT Act to the extent of Rs.75 lakhs being the amount invested for purchasing the new house property but the AO held that the deduction is allowable under section 54F of the IT Act,1961 and in that manner, he restricted the deduction to Rs.57,64,990/- in proportion to the amount invested in new residential house of Rs.75 lakhs and the total sale consideration of Rs.159.84 lakhs. He submitted that this issue was decided by learned CIT(A) as per para 5 of his order and he held that the property sold by the assessee was a vacant land and not a house property and therefore, deduction is not allowable under section 54 but allowable under section 54F of the IT Act, 1961. He submitted that the property is not a vacant land but was containing some shops and houses also which were illegally occupied by the tenants and the assessee made payment to various 18 persons to the extent of total amount of Rs.60 lakhs as per the details available on pages 29-42 of the Paper Book and therefore, the AO is not justified in stating that the property sold by the assessee is a vacant land. She submitted that under these facts, the deduction is allowable under section 54 and not under section 54F of the IT Act, 1961. Learned DR of the Revenue supported the order of CIT(A).
4. We have considered the rival submissions. We find that in para 3.2 of the assessment order, the AO has also noted that the assessee has claimed the cost of improvement for the financial years 1984-85 and 1989-90 along with cost of evacuation of the tenants to be Rs.60,64,500/-. Thereafter, on page 5 of the Assessment Order, the AO held that a sum of Rs.45 lakhs is being considered out of the claim of Rs.60,64,500/- as payment made for the evacuation of the occupants and thereafter, the AO computed the capital gain at Rs.2,45,72,700/-, after allowing deduction of Rs.45 lakhs. On page 7 of Assessment Order, the AO has reproduced the working of capital gain submitted by the assessee along with return of income at Rs.35,35,084/- after claiming deduction of Rs.60,64,500/- and as per page 8 of the Assessment Order, the AO has worked out the amount of capital gain at Rs.65,21,358/- by considering deduction allowable to the assessee under section 54F of the IT Act, 1961 at Rs.57,64,990/- as against the deduction claimed by assessee of Rs.75 lakhs u/s 54 and in this computation, deduction is allowed of Rs.45 lakhs as against the assessee’s claim of Rs.60,64,500/- for making payment to the occupants. As per the details available in the Paper Book regarding payment to various 18 persons, an amount of Rs.60 lakhs was paid and confirmation of these persons are available in Paper Book on pages 30-42 and in that, it is stated by those persons that they will vacate the house without any litigation or damage. In fact, on page No.34 of the Paper Book, Mr. Tara Chand states that he has no objection to vacate the house which is in his possession and he further states that he has received an amount of Rs.5,00,000/- by way of cash and he will vacate the house without any litigation or damage. So in the light of these facts, in our considered opinion, this should be accepted that the property sold by the assessee was not a vacant land but it was containing houses also and therefore, deduction is allowable under section 54 and not under section 54F of the IT Act, 1961. Hence, we set aside the matter back to the file of AO for a fresh decision with a direction that deduction should be allowed under section 54 of the IT Act, 1961, as per law.
In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page.