ACEME ENGINEERS PRIVATE LIMITED,HYDERABAD vs. INCOME TAX OFFICER, WARD 1(1), HYDERABAD

आआआआ आआआआआआ आआआआआआ, आआआआआआआआ आआआ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘B’ Bench, Hyderabad

BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER
आ.आआआ.आआ /ITA No.679/Hyd/2024
(आआआआआआआआ आआआआ/Assessment Year:2017-18)

M/s. ACEME Engineers Pvt.
Ltd., Hyderabad.
PAN:AABCA7332H

Vs.
Income Tax Officer,
Ward-1(1), Hyderabad.
(Appellant)

(Respondent)

आआआआआआआआआआ
आआआआआआ/Assessee by:
Shri M.V. Anil Kumar,Advocate
आआआआआआ
आआआआआआ/Revenue by::
Shri SPG Mudaliar, SR-DR

आआआआआआ आआ आआआआआ/Date of hearing:
26/12/2024
आआआआआ आआ
आआआआआ/Pronouncement:
02/01/2025

आआआआ/ORDER
PER MADHUSUDAN SAWDIA, A.M:

This appeal is filed by M/s. ACEME Engineers Pvt. Ltd.,
Hyderabad (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National
Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated
16.05.2024 for the A.Y. 2017-18. 2. The assessee has raised the following grounds :

ITA No.679/Hyd/2024 2

“ 1. Your appellant submits that the CIT(A) erred in confirming the disallowance of deduction under section 54G ignoring the facts of the case.
2. Your Appellant submits that the CIT(A) ought to have given an opportunity for submitting the details regarding reinvestment and cost incurred in transferring the undertaking to the non- urban area.
3. Your appellant submits that the CIT(A) and the assessing officer erred in calculating the capital gains as well as the deduction under section 54G. The addition may be deleted.
4. For these and such other grounds that may be urged at the time of hearing your appellant prays that the deduction under section 54G may be allowed.”
3. The brief facts of the case are that, the assessee is a private limited company, filed its Return of Income (“ROI”) on 31.03.2018 declaring a total income of Rs.23,30,050/- claiming exemption u/s.54G of the Income Tax Act, 1961 (“the Act”) for Rs.1,72,01,612/-. The case of the assessee was selected for scrutiny and notice u/s.143(2) was issued to the assessee. The assessee has shown sales consideration from sale of land and building at Rs.2,00,50,000/- and claimed index cost of acquisition of Rs.28,48,388/- against the sales consideration and shown a capital gain of Rs.1,72,01,612/-. Against the capital gain of Rs.1,72,01,612/-, the assessee claimed deduction u/s.54G of the Act on account of opening WDV of plant and ITA No.679/Hyd/2024 3

machinery of Rs.1,38,63,877/-, addition on account of plant and machinery at Rs.17,05,741/- and purchase of land at Rs.80,43,000/-. Accordingly, the assessee had shown a total investment of Rs.2,36,12,618/- and claimed total deduction of Rs.1,72,01,612/- u/s. 54G of the Act. During the assessment proceedings, the Ld. AO took the sales consideration at Rs.2,03,39,533/- and allowed deduction u/s.54G only on account of purchase of land for Rs.80,43,000/-. Accordingly, the Ld. AO completed the assessment u/s.143(3) of the Act on 26.11.2019 by rejecting the claim of the assessee towards opening WDV of plant and machinery of Rs.1,38,63,877/- and addition on account of plant and machinery of Rs.17,05,741/- and made addition of Rs.1,22,96,533/- on account of capital gain.
4. Aggrieved by the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the claim of the assessee on account of opening WDV of plant and machinery of Rs.1,38,63,877/- contending that the same is not eligible for deduction u/s.54G of the Act. However, on account of claim towards addition of plant and machinery of Rs.17,05,741/- the ITA No.679/Hyd/2024 4

Ld. CIT(A) deleted the addition subject to verification of the same by Ld. AO.
5. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us. The Ld. AR submitted that, at the time of filing of the ROI, the amount of capital gain was Rs.1,72,01,612/- only, therefore, they had claimed deduction on account of total investment of Rs.2,36,12,618/- towards opening WDV of plant and machinery, addition of plant and machinery and purchase of land and accordingly, claimed the whole amount of capital gain as deduction u/s.54G. As their investment on account of opening WDV of plant and machinery, addition of plant and machinery and purchase of land were enough to claim the whole amount of capital gain, they did not claim the deduction on account of investment in construction of building. As both the revenue authorities have disallowed the claim of the assessee on account of opening
WDV of plant and machinery of Rs.1,38,63,877/-, the assessee now wants to claim the deduction u/s.54G of the Act on account of investment of Rs.85,84,987/- towards construction of building also. For this, the Ld. AR produced before us the evidence in the form of bills and vouchers with respect to the amount of investment in the construction of ITA No.679/Hyd/2024 5

building as additional evidence with a request to accept the additional evidence. Therefore, the Ld. AR prayed before the bench to allow the deduction u/s.54G of the Act on account of investment made in construction of building.
6. Per contra, the Ld. DR relying on the order of revenue authorities submitted that, the assessee has not claimed the deduction u/s.54G of the Act on account of investment made in construction of building neither before the Ld. AO nor before the Ld. CIT(A). Therefore, he submitted that, the assessee is not eligible to claim any deduction for the first time before the ITAT.
Therefore, the Ld. DR prayed before the bench to dismiss the claim of the assessee.
7. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side.
During the course of appellate proceedings, the Ld. AR submitted that, at the time of filing of ROI, the amount of capital gain was Rs.1,72,01,612/- only, therefore, they had claimed deduction u/s.54G of the Act on account of total investment of Rs.2,36,12,618/- towards opening WDV of plant and machinery, addition on account of plant and machinery and purchase of land. As, the eligible investment on account of opening WDV of ITA No.679/Hyd/2024 6

plant and machinery, addition on account of plant and machinery and purchase of land were enough to claim the whole amount of capital gain u/s.54G of the Act, they did not claim the deduction on account of investment in construction of building.
As their deduction u/s.54G of the Act on account of opening
WDV of plant and machinery of Rs.1,38,63,877/- has been rejected by both the revenue authorities, they want to make an additional claim of Rs.85,84,987/- u/s.54G of the Act, on account of their investment in construction of building.
Considering the principle of natural justice, in our considered opinion, the assessee's tax liability should be determined in accordance with the law and the assessee should not be denied any eligible deduction available to them. Therefore, we accept the new claim of the assessee towards deduction u/s. 54G of the Act on account of investment in construction of building. The assessee has filed additional evidence in support of their new claim before us in the form of bills and vouchers on account of construction of building. In our considered view, the additional evidence filed by the assessee under Rule 46A of Income Tax
Rules, 1962 are material and relevant for deciding the issue on hand. Further, we find that, there was sufficient cause for the ITA No.679/Hyd/2024 7

assessee for not producing the additional evidence before the Ld.
AO during the assessment proceedings. In view of the principle of natural justice, we admit the additional evidence submitted by the assessee. We also note that the Ld. AO did not have an opportunity to examine these additional evidences, therefore, in the interest of justice, we deem it appropriate to set aside the issue to the file of Ld. AO, with a direction to consider the additional evidence furnished by the assessee in support of their claim for deduction u/s.54G of the Act on account of investment in construction of building and decide the amount of deduction available to the assessee u/s.54G of the Act as per law after providing a reasonable opportunity of being heard to the assessee.
8. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 2nd Jan., 2025. (K. NARASIMHA CHARY)
ACCOUNTANT MEMBER
Hyderabad. Dated: 02.01.2025. * Reddy gp

Copy of the Order forwarded to :

ITA No.679/Hyd/2024 8

BY ORDER,