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2018 (5) TMI 1645 - AT - Income TaxEligibility to deduction u/s 54F - assessee was owning only one asset and the income of which was chargeable under the head income from house property - Held that - AO has erred in denying the deduction in the section 54F of the Act. The restriction imposed by section 54F as mentioned above disentitling the claim of deduction u/s 54F not only requires that the assessee owns more than one residential house but it also requires that income from such residential house is chargeable to tax under the head income from house property. In the assessee s case since the second condition of income of such residential house being chargeable to tax is not being met, the Assessing Officer was not justified in denying the assessee deduction u/s 54F of the I. T. Act, 1961. We have also perused the decision of the ITAT, Delhi E Bench dated 04.08.2017 in the case of ACIT vs. Mohinder Kumar Jain reported (2017 (8) TMI 480 - ITAT DELHI) wherein similar and identical issue was dealt by the Tribunal in assessee s favour.
Issues Involved:
1. Disallowance of deduction u/s 54F of the Income Tax Act, 1961. 2. Jurisdiction of assessment made under section 143(3). Issue 1: Disallowance of deduction u/s 54F of the Income Tax Act, 1961: The case involved an appeal by the Revenue against the Ld. Commissioner of Income Tax (Appeals-XXVII) order regarding the addition of ?1,16,88,825 made by the Assessing Officer. The Assessee's Cross Objection supported the impugned order. The dispute centered around the disallowance of deduction u/s 54F for capital gain arising from the sale of shares. The Assessing Officer contended that the Assessee was not entitled to the deduction due to owning more than two immovable properties on the date of sale. However, the Tribunal found that the Assessee only owned one property chargeable under "income from house property," while the other properties were not yet possessed or generating income. The Tribunal referred to the provisions of section 54F, emphasizing that both conditions must be met to disentitle the Assessee from the deduction. The Tribunal concluded that the Assessing Officer erred in denying the deduction under section 54F, as the second condition regarding income from residential houses was not fulfilled. Issue 2: Jurisdiction of assessment made under section 143(3): The assessment under section 143(3) was challenged by the Assessee as being without jurisdiction. The case background revealed a search and seizure operation conducted under section 132, leading to the assessment completed by the Assessing Officer. The Assessee's return of income declared ?2,71,44,880, with the assessment resulting in a total income of ?3,89,41,516 after disallowing the deduction u/s 54F. The Ld. CIT(A) partly allowed the Assessee's appeal. The Tribunal upheld the Ld. CIT(A)'s decision to delete the addition made by the Assessing Officer, thereby dismissing the appeal filed by the Revenue. Consequently, the Assessee's Cross Objection, supporting the impugned order, was dismissed as infructuous. In conclusion, the Tribunal ruled in favor of the Assessee regarding the disallowance of the deduction u/s 54F, emphasizing the conditions specified in the Income Tax Act. The Tribunal also upheld the Ld. CIT(A)'s decision, dismissing the appeal filed by the Revenue and consequently dismissing the Assessee's Cross Objection.
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