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2016 (5) TMI 1100 - AT - Income TaxClaim for deduction u/s.54F - Held that - The assessee has invested ₹ 68,00,000/- before due date of filing belated return i.e. 31.03.2007 and took the possession as per the findings of the Commissioner of Income Tax (Appeals) on 15.12.2007, being within three years from the date of transfer/sale of original asset being 14.02.2005. The assessee has not invested in Capital Gain Account Scheme before 139(1) of the Act but complied with the conditions u/s.54F(1) of the Act by purchasing and construction of residential property within three years from the date of transfer of original asset which is not disputed in the assessment proceedings or in appellate proceedings. The provisions of Sec. 54F are beneficial provisions and are to be considered liberally in the aspect of limitation period. But the investment in residential property is must which the assessee has proved with evidence and complied before the lower authorities. The ld. Commissioner of Income Tax (Appeals) relied on the legal provision and submissions of the assessee exhaustively with judicial decisions. Considering the factual aspects, genuiness of the transactions and beneficial aspects of the provisions, we are of the opinion that the Commissioner of Income Tax (Appeals) has rightly construed the findings and the explanation of the assessee with observation in his order and allowed the deduction u/s.54F of the Act - Decided against revenue
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Validity of the reassessment proceedings. 3. Entitlement to deduction under Section 54F of the Income Tax Act, 1961. Detailed Analysis: 1. Condonation of Delay: The Department filed the appeal with a delay of 47 days. The Departmental Representative submitted an affidavit explaining the reasons for the delay, and the Assessee's Representative did not object. The tribunal, satisfied with the reasons provided, condoned the delay and admitted the appeal. 2. Validity of Reassessment Proceedings: The assessee challenged the reassessment on the grounds that it was based on an audit objection and thus amounted to a change of opinion, which is not permissible. The Commissioner of Income Tax (Appeals) (CIT(A)) found that the Assessing Officer (AO) had sufficient reasons to believe that income had escaped assessment due to the lack of evidence supporting the investments in NABARD bonds and the construction of a residential property. The tribunal upheld the CIT(A)'s decision, confirming that the reassessment proceedings were valid and based on genuine reasons, thus rejecting the assessee's contention. 3. Deduction under Section 54F: The main issue revolved around whether the assessee was entitled to a deduction under Section 54F of the Income Tax Act, 1961, for the investment in a new residential property. The AO denied the exemption, stating that the assessee did not deposit the net consideration in the Capital Gain Account Scheme before the due date of filing the return under Section 139(1) and utilized the funds after the due date. The CIT(A) found that the assessee had invested ?68,00,000 in the new property before the extended due date of filing the return under Section 139(4) and took possession of the property within three years from the date of the transfer of the original asset. Citing judicial precedents, including decisions from the Punjab & Haryana High Court and the Gauhati High Court, the CIT(A) concluded that substantial compliance with Section 54F(1) was sufficient, even if the investment was made before the extended due date under Section 139(4). The tribunal agreed with the CIT(A)'s findings, emphasizing that Section 54F is a beneficial provision and should be interpreted liberally. The assessee's investment in the residential property within the stipulated period was deemed sufficient compliance, and the tribunal upheld the CIT(A)'s decision to allow the deduction under Section 54F. Cross Objection by the Assessee: The assessee's cross objection argued that the reassessment was invalid as it was based solely on an audit objection. The tribunal found that the reassessment was initiated due to the non-availability of evidence on record and upheld the CIT(A)'s decision, rejecting the assessee's cross objection. Conclusion: The tribunal dismissed both the Revenue's appeal and the assessee's cross objection, upholding the CIT(A)'s decisions on the validity of the reassessment proceedings and the entitlement to deduction under Section 54F. The order was pronounced on April 22, 2016, in Chennai.
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