2018 (10) TMI 1643 - AT - Income Tax

Benefit of exemption u/s 54 - property was transferred by a General Power of Attorney - Held that - Circular directing Registrars not to register conveyance of immoveable property by a General Power of Attorney was contrary to the observation of the Hon ble Apex Court and was liable to be set aside. In the assessee s case the only objection of the various authorities to allowing the benefit of claim made u/s 54 of the Act is that the property was transferred by a General Power of Attorney. The payment had been made from the husband to the wife for purchase of property is undisputed and is evidenced by the bank statement of the assessee s wife. Further possession letter is also on record. Therefore in view of the binding judgment in the case of Pace Developers & Promoters (P) Ltd. vs Government of NCT (2013 (5) TMI 421 - DELHI HIGH COURT) we are unable to concur with the findings of the lower authorities and we set aside the order of the Ld. CIT(A) and direct the Assessing Officer to allow benefit of exemption u/s 54 of the Act to the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Assessment order passed u/s 263 of the Income Tax Act, 1961
2. Consequential assessment order passed u/s 143(3) subsequent to proceedings u/s 263
3. Delay in filing appeal against the order passed u/s 263
4. Disallowance of claim of exemption u/s 54 of the Act

Analysis:
1. The case involved two appeals by the assessee against orders u/s 263 and u/s 143(3) for assessment year 2009-10. The original assessment order was set aside by the Ld. CIT u/s 263 due to the assessee's claim of deduction u/s 54, which was deemed ineligible as the property was acquired through a General Power of Attorney, not a sale deed. The Ld. CIT directed a re-examination by the Assessing Officer, leading to a subsequent assessment u/s 143(3) disallowing the claim. The issue was whether the assessee was entitled to the deduction u/s 54.

2. The delay in filing the appeal against the order passed u/s 263 was contested by the assessee, claiming lack of guidance from the appointed representative. However, the tribunal found that the delay of 478 days was not justified, emphasizing that negligence or inaction cannot be a sufficient cause for condonation of delay. The appeal against the order passed u/s 263 was dismissed due to the un-condoned delay.

3. The second appeal challenged the disallowance of the claim of exemption u/s 54. The assessee provided evidence of payment for the property through various documents, including a registered General Power of Attorney. The tribunal referred to a judgment by the Delhi High Court, establishing that transfer through a General Power of Attorney constitutes a transfer of capital asset. Relying on this precedent, the tribunal set aside the lower authorities' decision and directed the Assessing Officer to allow the benefit of exemption u/s 54 to the assessee.

4. Consequently, the tribunal dismissed the appeal against the order passed u/s 263 and allowed the appeal challenging the disallowance of the claim of exemption u/s 54. The judgment was pronounced on 11th October 2018 by the ITAT Delhi.