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2017 (11) TMI 1734 - AT - Income TaxDenial of exemption u/s 54 - non completion of the construction the flat by the builder within the stipulated period - Held that - In view of the decision of Sambandam Udaykumar 2012 (3) TMI 80 - KARNATAKA HIGH COURT the assessee cannot be denied exemption u/s 54 to the extent of investment in the new property, even though the construction of the new asset is not completed within the eligible period of 3 years for the date of sale/transfer of the original asset. With respect to the amount invested in construction of the new property before the date of transfer of the original asset, it is well settled law that the amount invested within one year before the date of transfer of the original asset is to be allowed exemption u/s 54 of the Act. From the details of investments for purchase of the new asset as submitted by the assessee, it is stated that the assessee has only invested an amount of ₹ 2,26,82,097/- towards construction of the property. The AO is therefore directed to restrict the exemption allowable to the assessee to the actual amount spent on construction after due verification. Short Credit of TDS - assessee contends that the ld CIT(A) has not disposed off the ground raised for directing the AO to grant the assessee full credit for TDS - Held that - As submitted that the assessee had claimed TDS credit of ₹ 25,67,776/- in the return of income and the assessee s grievance is that it has been allowed TDS credit of only ₹ 25,09,137/- by the AO. We, therefore, restore this issue to the file of the AO with direction for examination and verification of the assessee s claim and to grant the assessee the TDS credit entitled to as per law
Issues Involved:
1. Long Term Capital Gain (LTCG) on sale of property and exemption under Section 54. 2. Accumulated Provident Fund (PF) balance and interest thereon. 3. Annuity from LIC. 4. Short credit of TDS. Detailed Analysis: 1. Long Term Capital Gain (LTCG) on Sale of Property and Exemption under Section 54: The assessee sold a property in Pune and declared LTCG of ?2,91,94,197, claiming exemption under Section 54 for investing in a new property. The Assessing Officer (AO) denied this exemption, stating that the construction of the new property was not completed within three years from the sale and that the investment began more than a year before the sale. The CIT(A) allowed the exemption, emphasizing that the exemption sections should be construed liberally, and the assessee had done everything legally required. The Tribunal upheld the CIT(A)'s decision, noting that the non-completion of the new property was due to factors beyond the assessee's control, such as the withdrawal of NOC by HAL and subsequent legal proceedings. The Tribunal directed the AO to verify the actual amount spent on construction and allow the exemption accordingly. 2. Accumulated Provident Fund (PF) Balance and Interest Thereon: The assessee withdrew ?82,00,783 from the PF account, which included ?37,93,588 as the balance on the date of retirement and ?44,07,195 as interest accrued post-retirement. The AO added the entire amount to the income, stating that the exemption under Section 10(12) was not claimed in the return. The CIT(A) deleted the addition, but the Tribunal partially upheld the AO's decision. The Tribunal allowed the exemption for the accumulated balance as of the retirement date but taxed the interest accrued post-retirement. The Tribunal directed the AO to tax the interest in the respective years of accrual. 3. Annuity from LIC: This issue was not specifically detailed in the judgment. However, it was part of the additions made by the AO and contested by the assessee. 4. Short Credit of TDS: The assessee claimed TDS credit of ?25,67,776 but was granted only ?25,09,137. The Tribunal restored this issue to the AO for verification and directed to grant the credit as per law. Conclusion: The Tribunal partly allowed both the Revenue's appeal and the assessee's cross-objection. The Tribunal upheld the CIT(A)'s decision on the LTCG exemption under Section 54, allowed the exemption for the PF balance as of the retirement date, and directed the AO to tax the interest accrued post-retirement in the respective years. The issue of short credit of TDS was restored to the AO for verification. The judgment emphasizes the importance of interpreting exemption provisions liberally and ensuring that the correct tax liability is assessed in accordance with the law.
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