Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DELHI
Before: SHRI G.S. PANNU & SHRI SAKTIJIT DEY, VICE-
Date of hearing : 24.07.2023 Date of pronouncement: 24.07.2023 ORDER
Assessee has filed the present appeal challenging the final assessment order dated 30.08.2022 passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 for the assessment year 2017-18, in pursuance to the directions of learned Dispute Resolution Panel (DRP).
The Registry has notified delay of two days in filing the appeal.
The assessee has filed a petition seeking condonation of delay stating that during the pendency of assessment proceedings, the assessee expired and his wife after being substituted as legal heir, represented before the Assessing Officer. It is submitted, since, the legal heir is permanently based in USA and exchange of signed documents for filing of the appeal consumed time, the delay occurred.
Considering the submissions of the assessee, we are satisfied that the delay in filing of appeal was due to reasonable cause.
Accordingly, we condone the delay and admit the appeal for adjudication on merits.
Though, the assessee has raised multiple grounds, however, at the time of hearing, learned counsel appearing for the assessee, on instructions, submitted that the assessee has no dispute with Revenue on any other issues except the issue relating to disallowance of deduction claimed under section 54 of the Act, as raised in ground No.5. In view of the aforesaid submission of learned counsel, we will restrict our decision only with reference to the dispute relating to claim of deduction under section 54 of the Act.
Briefly, the facts relating to the issue are, the deceased assessee along with other co-owners was the owner of a parcel of land at Vasant Vihar, New Delhi. The said plot of land was given for development to a developer. In lieu of cost of land, the assessee received an amount of Rs.1,03,00,000/-, one flat and two car parking in the developed structure. In the return of income filed for the assessment year under dispute, the assessee claimed long term capital loss. Further, in course of assessment proceedings, the assessee furnished a revised computation claiming deduction under section 54 of the Act in respect of cost of land to be paid to the assessee subsumed in the flat given to the assessee after development of the project. While completing the assessment, the Assessing Officer, in addition to the amount of Rs.1,03,00,000/- received by the assessee, also added the fair market value of cost of construction of the flat and adopted the sale consideration received at Rs.1,67,44,554/-. After allowing benefit towards cost inflation index, he determined the net long-term capital gain at Rs.43,27,032/-. As regards assessee’s claim of deduction under section 54 of the Act, the Assessing Officer rejected such claim on the ground that the claim was not made either in the original return of income or in revised return of income. In this context, he relied upon decision of Hon’ble Supreme Court in case of Goetze (India) Ltd. v. CIT (2006)
284 ITR 323(SC). The assessee contested the aforesaid decision of the Assessing Officer before learned DRP. However, adopting the reasoning of the Assessing Officer, learned DRP rejected the claim of the assessee.
We have considered rival submissions and perused materials on record. Undisputedly, in lieu of cost of land, the assessee received a flat and some parking space in the developed property. The Assessing Officer has brought to tax capital gain arising out of the cost of land received by the assessee from the builder/developer for handing over the land for development. Undoubtedly, against the cost of land, the assessee has received a new flat/residential dwelling.
Therefore, the consideration received from transfer of original asset has to be considered towards investment in purchase of new property in terms of section 54 of the Act. Therefore, the assessee should be entitled to claim deduction under section 54 of the Act in respect of the sale consideration/capital gain from transfer of land, being invested in the new flat received from the developer.
As we find, in course of assessment proceedings, the assessee through revised computation had claimed deduction under section 54 of the Act. The only reason, based on which, the Assessing Officer has rejected assessee’s claim of deduction under section 54 of the Act is that such claim cannot be entertained as it was not made either in the original return of income or through revised return of income.
Even, learned DRP has endorsed the aforesaid view of the Assessing Officer. A careful reading of the decision of Hon’ble Supreme Court in case of Goetze (India) Ltd. (supra) makes it clear that the restriction imposed on the Assessing Officer in accepting new claim made by the assessee otherwise than through the return of income or revised return of income is not applicable to higher appellate authorities.
Therefore, even assuming that the Assessing Officer may not be empowered to accept assessee’s claim of deduction under section 54 of the Act in absence of the claim having been made in the original return of income or revised return of income, learned DRP, being in the status of a higher appellate authority, was empowered to entertain assessee’s claim. Unfortunately, learned DRP has failed to exercise its power correctly. In view of the aforesaid, though, we hold that the assessee is entitled to claim deduction under section 54 of the Act, however, the Assessing Officer is directed to allow such claim after factually verifying the computational aspect as per revised computation furnished by the assessee. Ground No. 5 is allowed.
Whereas rest of the grounds are dismissed as not pressed.
In the result, appeal is partly allowed.
Order pronounced in the open court on 24/07/2023.