ACIT, CHENNAI vs. SHRI D. RAVIKUMAR, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

The appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-V, Chennai dated 02.09.2013 in ITA No.123/09-10(A)-V, for the assessment year 2007-2008 passed

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under sections 143(3) and 250 of the Income Tax Act (in short ‘’the

Act’’).

The Revenue has raised the following grounds:- 2.

‘’2.1 The learned CIT(A) erred in directing the Assessing Officer to allow exemption to the assessee under Sec.54F of the I.T. Act, 1961.

2.2 The learned Commissioner of Income Tax (Appeals) failed to appreciate that the assessee was the owner of more than one residential property on the date of transfer of the original asset. 2.3 Having regard to proviso (a) (i) to Sec 54F(1), the learned Commissioner of Income Tax (Appeals) ought to upheld the action of the Assessing Officer in negativing the claim of the assessee under Sec.54F of the I.T. Act 1961.

The brief facts of the case are that the assessee is an 3.

individual having income from business of partnership, rental income

from four properties and interest on fixed deposits filed return of

income on 31.03.2007 disclosing total income of �5,49,500/-. The

case was selected for scrutiny under CASS and accordingly notice

u/s.143(2) and 142(1) were served on the assessee. In response to

the notices, the ld. Authorised Representative has appeared in the

assessment proceedings and filed evidences to support the

computation of income and also capital gain working statement

alongwith deeds and power of attorney in sale of properties. The

assessee during the financial year 2006-2007 has sold the property for

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�40,00,000 under General Power of Attorney and accordingly long

term capital gain after considering the index cost of acquisition worked

out to �26,28,898/-. It was further submitted that the assessee has

utilized above sale consideration for the purchase of land and building

and paid advance of �27,50,000/- and alleged that there is no capital

gains as he reinvested the sale proceeds in purchase of residential

property. At the time of hearing the assessee could not produce any

evidence in respect of investment which disqualified him from claiming

exemption u/s.54 of the Act and accordingly the Assessing Officer

assessed long term capital gains to tax with assessed income of

�31,86,711/- and raised demand.

Aggrieved by the order of the Assessing Officer u/s.143(3) of 4.

the Act dated 29.12.2009, the assessee filed an appeal before the

Commissioner of Income Tax (Appeals)-V, Chennai. The ld. Authorised

Representative in the appellate proceedings submitted that the

assessee is in receipt of remuneration as partner, interest on capital

from firm and house property income including income from

commercial properties. The assessee has purchased land and building

within the same financial year vide document No.776/2007, dated

28.03.2007 for �30,00,000/- and claimed exemption u/s.54 and

produced copy of sale deeds and details of rental income from new

property offered in the assessment year 2008-09 and prayed for

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deletion of addition made by the Assessing Officer. The ld.

Commissioner of Income Tax (Appeals) after hearing the submissions

and also verified the sale deed copies and called for remand report

from the Assessing Officer and the same was furnished vide letter

No.acitbc4/remand/07-08/2013-14, dated 23.07.2013 were the ld.

Assessing Officer mentioned that the assessee has not produced

copies of documents in the assessment proceedings though the sale is

finalized in the same financial year and assessee is not eligible to claim

exemption of Long term Capital Gain. As per the provisions of section

54F(1) of the Act the assessee is having more than one residential

house on the date of transfer of original asset and offered rental

income for taxation under the head income from house property. The

ld.CIT(A) was satisfied that assessee has utilized the sale proceeds in

purchasing the new property belongs to his brother by registered sale

deed. Considering the above facts and documentary evidence directed

the Assessing Officer to grant exemption and allowed the appeal in

favour of the assessee.

Aggrieved by the order of Commissioner of Income Tax 5.

(Appeals), the Revenue filed an appeal before the Tribunal. The ld.

Departmental Representative submitted that the Commissioner of

Income Tax (Appeals) erred in allowing the deduction u/s.54F without

considering the provisions of Sec 54F (1)(a) (i) of the Act wherein on

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the date of sale of property not more than one residential property

should be owned by the assessee and there is no clarity whether the

assessee is having residential property or commercial property where

income is offered under the head income from house property and

prayed for allowing the Revenue appeal.

assessee relied on the order of the Commissioner of Income Tax

(Appeals) and vehemently argued that the claim of the assessee is as

per law and Commissioner of Income Tax (Appeals) has rightly

considered the exemption.

lower authorities and also material perused on record. The assessee

before Assessing Officer has claimed deduction u/s.54 of the Act and

was negativated by the Assessing Officer as no material evidence was

produced for purchase of property and ld. Assessing Officer has also

recorded that assessee has house property income from four

properties. Before the Commissioner of Income Tax (Appeals) the

assessee claimed exemption u/s.54F of the Act, the ld. CIT(A) based

on documentary evidence granted deduction u/s54F inspite of the

objections of the ld.AO that assessee is not eligible to claim exemption

of long term capital gain as per the provisions of Sec. 54(F)(1) of the

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Act, if the assessee is having more than one residential house chargeable under the head income from house property on the date of transfer. Since there is no clarity in the order of the Commissioner of Income Tax (Appeals) to this effect, we hereby set aside the order of the Commissioner of Income Tax (Appeals) and remit the issue in dispute to the file of the Assessing Officer to verify the issue afresh and pass the order on merits after providing adequate opportunity of being heard by the assessee.

In the result, the appeal of the Revenue in ITA 8.

No.140/Mds/2014 is allowed for statistical purposes .

Order pronounced on Friday, the 6th day of November, 2015, at Chennai.

Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (G. PAVAN KUMAR) (CHANDRA POOJARI) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated:06.11.2015 KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF