2018 (1) TMI 1420 - AT - Income Tax

Revision u/s 263 - Claim of deduction u/s 54F denied - date of investment towards new residential property was on 18.11.2009 which was not one year prior to the date of transfer i.e., 09.05.2011 and hence not eligible for deduction - Held that - We find that on identical issue the Co-ordinate Bench of the Tribunal in the case of ITO Vs. Narshivha Amrutrao (2015 (3) TMI 1014 - ITAT PUNE) after relying on the decision of Beena K. Jain (1993 (11) TMI 7 - BOMBAY HIGH COURT) has decided the issue in favour of assessee stating the date to be considered is the date on which the assessee had occupied the said property and not the date on which it had entered into an agreement to purchase the property. - decided in favour of assessee.

Summary

Issues:
Appeal against order of Principal Commissioner of Income Tax (PCIT) under section 263 for assessment year 2012-13.

Analysis:
1. The appeal was filed by the assessee against the order of PCIT passed under section 263 of the Income Tax Act for the assessment year 2012-13. The PCIT had held that the order passed by the Assessing Officer (AO) under section 143(3) was erroneous and prejudicial to the interest of revenue. The dispute arose from the claim of deduction under section 54F by the assessee related to the sale of a flat and investment in a new residential property.

2. The PCIT observed that the assessee's claim for deduction under section 54F was not in order as the investment in the new residential property was made before the sale of the original asset, which did not meet the statutory requirements. The PCIT directed the AO to reassess the case. The assessee challenged the PCIT's order on various grounds, primarily disputing the invocation of revisionary powers under section 263.

3. During the appeal, the assessee argued that the investment in the new property was made within the statutory timelines as required by section 54F. The assessee relied on legal precedents and the timeline of events to support their claim for deduction. The assessee contended that the AO had correctly allowed the deduction, and there was no error in the assessment conducted under section 143(3).

4. The Tribunal analyzed the issue and referred to a previous decision in a similar case where the claim for deduction under section 54F was allowed based on the date of occupancy of the new property, not the date of the agreement. The Tribunal found that the PCIT's decision to invoke revisionary powers was not justified as the AO's assessment was in line with legal principles and previous judgments.

5. Ultimately, the Tribunal allowed the appeal of the assessee, setting aside the PCIT's order under section 263. The Tribunal concluded that the assessee was eligible for the deduction under section 54F as the investment in the new property met the statutory requirements. The Tribunal emphasized that the PCIT had not demonstrated any legal error or incorrect application of law by the AO, warranting the exercise of revisionary powers.

6. The Tribunal's decision highlighted the importance of adhering to statutory provisions and legal precedents in determining eligibility for deductions under the Income Tax Act. The judgment provided clarity on the interpretation of timelines for investments in new properties concerning capital gains, ensuring consistency and adherence to legal principles in tax assessments.