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2015 (4) TMI 403 - AT - Income TaxEntitlement to exemption u/s 54F - computation of capital gain - It is submitted that the assessee purchased one plot which was divided in two plots having different numbers, those plots were sold to two different persons through separate sale deeds but the exemption u/s 54F has been allowed by the Department in respect of one plot only. - Held that - The time of purchasing the new residential house for a sum of ₹ 21,10,500/-. The assessee was having only one residential house which was earlier purchased on 10.05.2008. Therefore, the assessee was entitled for exemption u/s 54F of the Act in respect of this house also as per the provisions contained in proviso (a)(i) to sub- section (1) of section 54F of the Act. The sale consideration of ₹ 47,42,255/- relating to Plot No. 11A was utilized by the assessee for purchasing the new house for a sum of ₹ 21,10,500/-, therefore, the exemption u/s 54F was allowable for a sum of ₹ 20,79,938/- (21,10,500 46,73,582 47,42,255) and taxable Long Term Capital Gains worked out to ₹ 26,62,317/- (Rs. 47,42,255/- - ₹ 20,79,938/-). We, therefore, considering the totality of the facts as discussed here in above are of the view that the ld. CIT(A) was not justified in directing the AO to sustain the addition on account of Long Term Capital Gains for a sum of ₹ 46,63,324/-. Accordingly, we delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee Entitlement to deduction u/s 80C - in the absence of complete documentary evidences AO allowed the deduction in part - Held that - Considering the submissions of both the parties and the material on record, we deem it appropriate to remand this issue back to the file of the AO for verification and if it is found that the assessee invested ₹ 88,341/- in LIC and the tuition fees of the children then the claim may be allowed in accordance with law.- Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Exemption under Section 54F of the Income Tax Act, 1961. 2. Deduction under Section 80C of the Income Tax Act, 1961. 3. Charging of interest under Sections 234A and 234B of the Income Tax Act, 1961. Detailed Analysis: Issue 1: Exemption under Section 54F of the Income Tax Act, 1961 The primary issue in both the assessee's and the department's appeals concerns the exemption under Section 54F of the Income Tax Act, 1961. The assessee claimed exemption of Rs. 46,00,630/- on account of investment of Rs. 46,68,400/- against the sale of his immovable property. The Assessing Officer (AO) noticed that the assessee sold one plot divisible into two units for a total sale consideration of Rs. 94,73,002/- and claimed the resultant long-term capital gains as exempt under Section 54F by investing in two residential houses. The AO denied the exemption, stating that the assessee did not fulfill the eligibility conditions prescribed by Section 54F, as the sale proceeds were reinvested in two house properties, which violates the conditions of Section 54F. The CIT(A) observed that the exemption under Section 54F is available for the purchase of one residential house only, and since the assessee invested in two residential houses, the exemption could not be allowed. However, the CIT(A) allowed a proportionate exemption of Rs. 20,79,900/- for the investment in one of the houses. Upon appeal, the Tribunal found that the assessee purchased one plot, divided it into two plots, and sold them separately. The Tribunal held that the assessee was entitled to exemption under Section 54F for both investments since he did not own more than one house at the time of each purchase. The Tribunal deleted the addition confirmed by the CIT(A). Issue 2: Deduction under Section 80C of the Income Tax Act, 1961 The assessee claimed a deduction of Rs. 88,341/- under Section 80C, but the AO allowed only Rs. 59,576/- due to the absence of complete documentary evidence. The CIT(A) confirmed the AO's action. The Tribunal remanded this issue back to the AO for verification, instructing that if the assessee provides proof of the claimed investments, the deduction should be allowed in accordance with the law. Issue 3: Charging of Interest under Sections 234A and 234B of the Income Tax Act, 1961 The issue of charging interest under Sections 234A and 234B is consequential. The Tribunal ordered accordingly, implying that the interest would be recalculated based on the final assessment of the taxable income. Conclusion: The Tribunal partly allowed the assessee's appeal for statistical purposes and dismissed the department's appeal. The Tribunal directed the AO to verify the deduction under Section 80C and allowed the exemption under Section 54F for both residential house investments made by the assessee.
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