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Income Tax Appellate Tribunal, “SMC” BENCH: MUMBAI
Before: Hon’ble Sri Mahavir Singh, JM
This appeal by the assessee is arising out of order of CIT(A) in appeal No. CIT(A)33/IT/13/13-14 dated 01/12/2014. Rectification of assessment was carried out by I.T.O. W-22(2)(4), Mumbai for the assessment year 2008-09 u/s 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 08-01-2013.
The only issue in this appeal of assessee is against the order of the CIT(A) in confirming the action of the AO rectifying the debatable issue u/s. 154 of the Act in disallowing the claim u/s. 54F of the Act.
I have heard the ld. Sr. DR and gone through the facts and circumstances of the case. I find that the assessee has sold commercial shop on 29-02-2008 for a total consideration of Rs.1,15,00,000/-. The assessee was having 50% share in the property and his share of consideration was to the extent of Rs.57,50,000/-. The assessee claimed cost of acquisition of Rs.11,77,350/- and also claimed deduction u/s.54F of the Act on account of investment in residential house property an amount of Rs. 1,00,00,000/-. The AO during the course of original assessment proceedings u/s. 143(3) of the Act allowed the claim of deduction u/s. 54F of the Act by observing as under:-
“3. Assessee is an Individual and derived income from business and interest income. During the year, assessee has claimed long term capital of Rs.45,72,650/-, as exempt u/s. 54 of the I.T Act. During the course of assessment proceedings, the representative of the assessee furnished relevant details and submission vide letter dated 20.12.2010.”
Subsequently, the AO noticed that the assessee has only booked a residential flat for a sum of Rs.1,00,00,000/- out of which an amount of Rs.50,00,000/- was paid in Feb’09. In support of his claim, the assessee submitted the copy of letter of allotment issued by the builder. According to the AO, the builder has not yet started the construction, hence, he wanted to rectify the mistake u/s. 154 of the Act by denying the deduction u/s. 54F of the Act, which was allowed by the AO during the original assessment proceedings u/s. 143(3) of the Act. This action of the AO was confirmed by the CIT(A).
I find from the above facts that the issue of claim of deduction u/s. 54F was examined by the AO during the original assessment proceedings u/s. 143(3) of the Act. Now the AO rectified the mistake u/s. 154 of the Act without any evidence and on the ground that the assessee has not invested the sale proceeds in the new residential house. I find from records that the AO while adjudicating this issue during original assessment has recorded the factum of investment of this long term capital gains in purchase of residential house. The CIT(A) recorded the fact that the assessee has paid an amount of Rs. One crore towards booking of flat on the basis allotment letter dated 19.01.2009 issued by the builder Neumec Developers. Only reason of CIT(A) for confirmation is that the letter dated 19.01.2009 does not indicate that the title of the property is transferred in the name of assessee or not ? In view of this fact, I am of the view that the issue is highly debatable and cannot be brought under the purview of section 154 of the Act under the subject matter. Accordingly, the orders of the lower authorities are reversed and the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 01 -07-2016