2017 (5) TMI 1778 - AT - Income Tax

Disallowance of exemption u/s. 54F - disallowance of exemption claimed by the assessee u/s. 54F - assessee did not claim any deduction subsequently, the assessee filed a revised return u/s. 153A wherein the assessee claimed deduction u/s. 54F of the Act in respect of a new flat purchased by her - HELD THAT - There is merit in the contention of the assessee, as the claim of the assessee is supported by the decision rendered by Hon'ble Bombay High Court in the case of B.G. Shirke Construction Technology P. Ltd. 2017 (3) TMI 879 - BOMBAY HIGH COURT There is no dispute with regard to the fact that the present assessment falls in the category of abated assessment and hence the entire assessment is open before the AO. The claim of the assessee for deduction u/s 54F of the Act can be entertained in the facts and circumstances of the present case. The assessee has also demonstrated before CIT(A) that she is holding only one residential house on the date of sale of commercial property. It has been submitted that the house, where she resides, does not belong to her. If that be the case, the assessee shall be entitled for deduction u/s. 54F - assessee has chosen not to disclose the ownership details of the house where she is residing, i.e., whether it belongs to some other family members or it was rented flat. Accordingly we set aside the order passed by Ld CIT(A) and restore the same to the file of the Assessing Officer with the direction to allow the claim of the assessee u/s. 54F - Decided in favour of assessee.

Summary

Issues:
Disallowance of exemption claimed under section 54F of the Income Tax Act for the assessment year 2010-11.

Analysis:
The appellant, in this case, challenged the decision of the CIT(A) confirming the disallowance of exemption claimed under section 54F of the Income Tax Act. The appellant initially did not claim any deduction under section 54F in the returns filed for the year under consideration. However, in a revised return filed under section 153A, the appellant claimed the deduction concerning a new flat purchased by her.

The Assessing Officer rejected the claim based on the appellant owning a property at Avasekar Heights, which was let out, and staying in another residential property, implying ownership of another undisclosed property. The CIT(A) upheld this decision, citing precedents like Charchit Agarwal Vs. CIT and Genmal Kothari Vs. DCIT, which restricted fresh claims in section 153A returns.

During the appeal, the appellant argued that the property where she resides does not belong to her, challenging the Assessing Officer's presumption. The appellant's representative highlighted the distinction between section 147 and section 153A proceedings, emphasizing the scope for fresh claims in abated assessments, as per the decision in CIT Vs. B.G. Shirke Construction Technology.

The Tribunal, after considering the arguments, found merit in the appellant's contention. Citing the decision of the Bombay High Court in B.G. Shirke Construction Technology, the Tribunal noted that in abated assessments, the entire assessment is open before the Assessing Officer. The Tribunal emphasized that the return filed under section 153A is akin to a return under section 139, allowing for fresh claims and application of relevant provisions.

The Tribunal also referred to the decision in CIT vs. Pruthvi Brokers & Shareholders (P) Ltd., affirming the right of an assessee to raise fresh claims before appellate authorities. Consequently, the Tribunal allowed the appellant's appeal, directing the Assessing Officer to verify the claim under section 54F and grant the deduction if satisfied with the appellant's eligibility, considering the ownership status of the residential property where the appellant resides.

In conclusion, the Tribunal allowed the appeal, setting aside the CIT(A)'s order and instructing the Assessing Officer to grant the deduction under section 54F after due verification.