2017 (7) TMI 568 - AT - Income Tax

Disallowance of benefit to the assessee under section 54F - Held that - The date of agreement to sell as the date of sale of asset we consider it fit to restore the issue back to the file of the Ld. CIT (Appeals) to examine the documents now produced by the assessee and adjudicate the issue in the light of the decisions cited by the assessee and in accordance with law. We may add that the assessee be granted due opportunity of hearing. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
- Disallowance of benefit under section 54F of the Income Tax Act, 1961.

Detailed Analysis:

1. Issue: Disallowance of benefit under section 54F of the Income Tax Act
- The appellant filed an appeal against the order of the Commissioner of Income Tax (Appeals) for disallowance of benefit under section 54F.
- The appellant claimed deduction under section 54F for long term capital gain but was found to own two residential properties on the date of asset transfer.
- The Assessing Officer requested proof of sale agreement and documents, but the appellant failed to provide them, resulting in disallowance.
- The appellant submitted additional evidence during the appeal, including an agreement to sell, but it was not admitted by the Commissioner of Income Tax (Appeals).
- The Commissioner held that even if the evidence was genuine, the appellant failed to meet the conditions of section 54F.

2. Admission of Additional Evidence:
- The appellant filed an application for admission of additional evidence before the Appellate Tribunal, including agreements to sell, Power of Attorney, and a Will.
- The Tribunal admitted the additional evidence, considering it essential to prove the appellant's claim under section 54F.
- Precedents were cited to support the admission of additional evidence, emphasizing the Tribunal's discretion in admitting evidence for a just decision.

3. Arguments and Counter-arguments:
- The appellant argued that the possession of the property was transferred before the sale agreement date, justifying the claim under section 54F.
- The appellant cited precedents where the date of the agreement to sell was considered the date of transfer.
- The Department argued that as per the Transfer of Property Act, property transfer occurs only upon registration of a sale deed.

4. Tribunal Decision:
- The Tribunal, after considering the additional evidence and relevant case laws, decided to remand the issue back to the Commissioner of Income Tax (Appeals).
- The Commissioner was instructed to re-examine the documents provided by the appellant and decide the case in light of the cited judgments and legal provisions.
- The appellant was granted a fair hearing opportunity in the process.

5. Outcome:
- The appeal of the appellant was allowed for statistical purposes, indicating a favorable decision regarding the admission of additional evidence and the reconsideration of the disallowance under section 54F.
- The Tribunal pronounced the order in the open court, concluding the legal proceedings.