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2018 (11) TMI 640 - AT - Income TaxRevision u/s 263 - erroneous claim of deduction u/s 54 - date for reckoning the deduction u/s 54 - Held that - In the submissions made before the AO, the assessee has convinced the AO that the date for reckoning the deduction u/s 54 for trasferring the property was 29.06.2008. Since the AO has taken a conscious decision after verification of the complete information the and the same is one of the possible views as per law, the assessment order passed u/s 143(3) r. w. s. 147 not be held to be erroneous. Though prima facie, there appears to be some confusion with regard to the reckoning the date of transfer of the property, whether it is to be reckoned from the date of agreement or from the date of sale deed, on the set of facts both the views are possible thus it amounts to difference of opinion between the AO and the Pr. CIT, but not render the order erroneous. Since there is no error in the order passed by the AO, we hold that the Pr. CIT has incorrectly taken up the case for revision u/s 263 and the same is unsustainable. The assessee has acquired the land prior to the sale of property d completed the construction within the time limit allowed u/s 54 of the Act. The intention of the legislature for giving the benefit is to encourage housing in the country. Since the assessee has acquired the property d completed the construction within the period of limitation prescribed by the Act, we hold that the assessee s case is squarely covered by the decision of this tribunal in the case of Dy. CIT,Circle-2(1) Vs. Dr CHALASANI MALLIKARJUNA 2016 (10) TMI 1032 - ITAT VISAKHAPATNAM . Accordingly, we hold that the assessment passed by the AO u/s 147 r. w. s. 143(3) dated 27. 03. 2015 is neither erroneous nor prejudicial to the interest of the revenue - Decided in favour of assessee
Issues Involved:
1. Validity of invoking jurisdiction under Section 263 by the Principal Commissioner of Income Tax (Pr. CIT). 2. Entitlement of the assessee to claim deduction under Section 54 of the Income Tax Act, 1961. 3. Determination of the date of transfer for the purpose of Section 54. 4. Compliance with the conditions laid down under Section 54 regarding the construction of a new residential property. Issue-wise Detailed Analysis: 1. Validity of invoking jurisdiction under Section 263 by the Pr. CIT: The Pr. CIT invoked Section 263 to revise the assessment order passed under Section 143(3) read with Section 147, contending that the order was erroneous and prejudicial to the interests of the revenue. The Pr. CIT argued that the assessee was not entitled to the deduction under Section 54 as the new property was acquired before the sale of the impugned property. However, the Tribunal found that the Assessing Officer (AO) had conducted a detailed inquiry, verified all the details, and made a conscious decision to allow the deduction under Section 54. The Tribunal held that the AO's order was neither erroneous nor prejudicial to the interests of the revenue, thus invalidating the Pr. CIT's invocation of Section 263. 2. Entitlement of the assessee to claim deduction under Section 54 of the Income Tax Act, 1961: The assessee claimed a deduction under Section 54 for the cost of the new property, including the cost of land and construction, amounting to ?1,01,49,000/-. The Pr. CIT contested this, arguing that the property was acquired before the sale of the original property. However, the Tribunal upheld the assessee's claim, referencing precedents where the cost of land purchased before the sale of the original property was allowed as part of the deduction under Section 54. The Tribunal cited the decision of the Hon'ble Madras High Court in C. Aryama Sundaram Vs. CIT, which supported the inclusion of land cost in the deduction under Section 54. 3. Determination of the date of transfer for the purpose of Section 54: The Pr. CIT argued that the Memorandum of Understanding (MoU) dated 29.06.2008 was unregistered and backdated, thus not valid for determining the date of transfer. The Tribunal, however, noted that the AO had accepted the MoU and the subsequent sale deed dated 15.01.2010, which indicated the completion of the transaction. The Tribunal found that the AO had taken a possible view by considering the date of the MoU for the purpose of Section 54, thus making the assessment order valid. 4. Compliance with the conditions laid down under Section 54 regarding the construction of a new residential property: The Tribunal examined whether the assessee complied with the conditions under Section 54, which requires the construction of a new residential house within three years from the date of transfer. The assessee had completed the construction within the stipulated time. The Tribunal referenced the decision in Dy. CIT, Circle-2(1), Vijayawada Vs. Dr. Chalasani Mallikarjuna Rao, which held that the date of commencement of construction is irrelevant as long as the construction is completed within three years. The Tribunal concluded that the assessee met the conditions under Section 54, allowing the deduction. Conclusion: The Tribunal allowed the appeal of the assessee, canceling the order passed by the Pr. CIT under Section 263. The Tribunal held that the AO's assessment order was neither erroneous nor prejudicial to the interests of the revenue and that the assessee was entitled to the deduction under Section 54. The Tribunal also affirmed that the assessee complied with the conditions for the deduction, including the timely construction of the new residential property.
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