VARADHAN SURESHBABU,CHENNAI vs. ACIT, NON CORPORATE CIRCLE-7(1), CHENNAI
Facts
The assessee, an individual, filed a return for AY 2017-18 declaring total income and offered capital gains after claiming deduction u/s. 54 on sale of a property. The AO denied the deduction, and the CIT(A) upheld this decision, also denying deduction u/s. 54F as it was a new claim.
Held
The Tribunal noted that the assessee had claimed deduction u/s. 54 in the return and that the AO admitted certain construction expenditure. The denial of deduction u/s. 54F on the ground of it being a fresh claim was considered incorrect. The issue requires fresh examination.
Key Issues
Whether the assessee is eligible for deduction under section 54F of the Income Tax Act, 1961, when a claim for deduction under section 54 was made in the original return and the CIT(A) denied the claim on the basis of it being a fresh claim.
Sections Cited
250, 54, 54F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & MS. PADMAVATHY.S
आदेश / O R D E R
PER PADMAVATHY.S, A.M: This appeal by the assessee are against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 27.10.2025 for Assessment Year (AY) 2017-18.
The assessee is an individual and filed the return of income for AY 2017-18 on 08.05.2017 declaring total income of Rs.23,58,080/-. The case was selected for limited scrutiny and the statutory notices were duly served on the assessee. The assessee during the year under consideration has sold along
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with his spouse property for a consideration of Rs.7,00,00,000/-. The assessee in the return of income has offered capital gains at Rs.23,58,080 after claiming deduction u/s. 54. The Assessing Officer (AO) called on the assessee as to why the deduction u/s. 54 of the Act cannot be denied since the property sold is a commercial property. The assessee submitted that he is trying to file revised the return claiming deduction under section 54F instead of 54 and that is unable to do it. The AO did not accept the submissions of the assessee and proceeded to recompute the long-term capital gain to make an addition of Rs.1,29,10,753/-. Aggrieved, the assessee filed the appeal before the CIT(A). The CIT(A) upheld the decision of the AO and also denied the deduction under section 54F to the assessee stating that new claims cannot be accepted by placing reliance on the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd vs CIT [(2006) 284 ITR 323 (SC)]. Aggrieved, the assessee is in appeal before the tribunal.
We heard the Ld. DR and perused the material on record. We notice that the deduction u/s. 54F of the Act has been denied by the assessee on the ground that it is a fresh claim. However from the order of the AO it is clear that the assessee in the return of income has claimed deduction under section 54 of the Act instead of section 54F of the Act. Further from the perusal of the order of the AO, we notice that the AO has admitted the fact that the assessee has spent certain amount on construction. We also noticed that the CIT(A) has denied the deduction on the ground that it is a fresh claim. In our considered view, the said contention to deny the deduction is not correct when the fact that the assessee has expended certain amount is admitted. Considering the overall facts and circumstances peculiar to the assessee's case, we are of the considered view that impugned issue needs fresh examination. Therefore we
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remit the appeal back to the AO with a direction to call for the required details for computing the long-term capital gains and to allow deduction u/s. 54F of the Act in accordance with law. Needless to say that the assessee be given reasonable opportunity of being heard. It is ordered accordingly.
In result the appeal of the assessee is allowed for statistical purposes
Order pronounced on 27th day of February, 2026 at Chennai.
Sd/- Sd/- (एबी टी. वक�) (पदमावती यस) (ABY. T. Varkey) (Padmavathy.S) लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य �याियक �याियक सद�य �याियक �याियक सद�य सद�य / Judicial Member सद�य चे�नई/Chennai, �दनांक/Dated: 27th February, 2026. EDN, Sr. P.S आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF
