2014 (5) TMI 390 - AT - Income Tax

Claim of deduction u/s 54F of the Act Held that - Following Shri Mohd. Imamuddin, Narsingi Village and Others 2014 (5) TMI 264 - ITAT HYDERABAD - provisions of section 54F are that if the assessee being a individual or HUF, the capital gain arises from transfer of any long term capital asset not being a residential house and the assessee has, within a period of one year before or two years after the date on which the transfer takes place, purchases or, has within a period of three years after that date constructed a residential house, the capital gain will not be charged to the extent of cost of new asset if the entire net consideration is invested or proportionate to the extent of new asset bears to the net consideration if the conditions laid down u/s. 54F are fulfilled the assessee is entitled for deduction u/s. 54F - the onus is on the assessees to prove that the claim made by them u/s. 54F is in accordance with law - the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
Appeals against denial of deduction under S.54F of the Income-tax Act for assessment year 2008-09.

Analysis:
The appeals were filed by the assessees against the denial of deduction under S.54F of the Income-tax Act for the assessment year 2008-09. The assessees, owners of lands adjoining each other, had sold their properties to DLF group of companies and claimed deductions under S.54F. The Assessing Officer rejected the deductions, stating lack of evidence supporting the construction of houses, except for cash withdrawals as proof of fund utilization. The CIT(A) upheld the Assessing Officer's decision, leading the assessees to appeal before the ITAT Hyderabad.

During the hearing, the assessees' counsel argued that a previous Tribunal bench had remanded a similar issue back to the Assessing Officer for reconsideration and evidence submission. The Departmental Representative supported the lower authorities' decisions. The ITAT Hyderabad, after hearing both parties and reviewing the case records, referred to the previous Tribunal's decision regarding the onus on the assessees to prove compliance with S.54F. The Tribunal emphasized the need for proper evidence to support the claim and directed the Assessing Officer to conduct a fresh examination, ensuring the assessees cooperate by providing necessary proof of construction completion within the specified time frame.

Given the identical nature of the current cases to the previous Tribunal's decision, the ITAT Hyderabad set aside the CIT(A)'s orders and remitted the matters back to the Assessing Officer for reevaluation. The Tribunal stressed affording the assessees a fair hearing and compliance with the law and directions provided in the previous order. Ultimately, the assessees' appeals were allowed for statistical purposes, with the order pronounced at the conclusion of the hearing on 29.4.2014.