2019 (11) TMI 923 - AT - Income Tax

Revision u/s 263 - claim of exemption u/s.54F - as per CIT necessary enquiry were not conducted and whether cost of interior decoration was allowable or not, these were not specifically enquired into by the Assessing Officer while framing assessment - HELD THAT - The issue on which 263 jurisdiction was assumed by the Ld. Pr. Commissioner of Income Tax, to those issues, the Assessing Officer has enquired into and replies were also filed in detail by the assessee in response thereto. In such scenario, the Ld. Pr. Commissioner of Income Tax could not have assumed the jurisdiction u/s.263. That further, regarding contentions of the Ld. DR that section 54F pertains to the cost of acquisition of the new assets and it does not cover the cost of interior decoration, in this regard, as evident from the agreement entered into between the promoter and the assessee therein certain essential items as mentioned herein above in the order were to be carried out by the assessee himself. These expenses are necessary to suitably live in that particular flat. These expenses are necessary for habitation in that particular flat. They do not pertain to any decoration item rather they are all essential to make a flat fit for living. Reverting to the facts of the present case, expenses were incurred on floor, bathrooms fittings and electrifications etc. which are necessary to live in that flat. In view of the aforesaid examination of the facts and legal parameters, we are of the considered view that the revisionary order passed by the Ld. Pr. Commissioner of Income Tax is not correct within the legal framework, rather arbitrary, un-judicious, bad in law and liable to be quashed. - Decided in favour of assessee.

Summary

Issues:
Assumption of revisionary jurisdiction u/s.263 of the Income Tax Act by the Ld. Pr. Commissioner of Income Tax regarding the claim of exemption u/s.54F of the Act by the assessee.

Analysis:
The appeal arose from the order of the Ld. Pr. Commissioner of Income Tax-1, Pune dated 29.03.2017 for the assessment year 2012-13 under section 263 of the Income Tax Act, 1961. The crux of the grievance was the assumption of revisionary jurisdiction u/s.263 by the Ld. Pr. Commissioner of Income Tax concerning the claim of exemption u/s.54F of the Act by the assessee.

A show cause notice was issued by the Ld. Pr. Commissioner of Income Tax regarding the claim of exemption u/s.54F of the Act by the assessee and the observations made therein. The Assessing Officer had enquired about the claim of deduction u/s.54F and the stamp duty of sale deed claimed as expenditure. The assessee provided detailed replies and evidence to support the claim during the assessment proceedings.

The Ld. AR argued that the Assessing Officer conducted a thorough enquiry and the order passed was not erroneous or prejudicial to the revenue. Reference was made to specific questions raised by the Assessing Officer and the responses provided by the assessee, demonstrating the application of mind by the Assessing Officer.

The Ld. DR contended that the exemption u/s.54F pertains only to the cost of acquisition of new assets and does not cover interior decoration costs. However, the Ld. AR presented evidence showing that certain essential expenses for habitation were necessary and should be covered under the exemption u/s.54F.

The Tribunal examined the case records, judicial pronouncements, and the arguments presented. It was observed that the Assessing Officer had conducted necessary enquiries and the replies provided by the assessee were considered. The Tribunal referred to relevant legal precedents that emphasized the importance of liberal interpretation of incentive provisions like section 54F to fulfill the statutory objectives.

Based on the detailed analysis and legal framework, the Tribunal concluded that the revisionary order passed by the Ld. Pr. Commissioner of Income Tax was arbitrary, un-judicious, and not in accordance with the law. Therefore, the appeal of the assessee was allowed, and the revisionary order was quashed.

In conclusion, the Tribunal's decision emphasized the importance of thorough enquiry by the Assessing Officer, the liberal interpretation of incentive provisions, and the need for decisions to align with legal parameters for a fair and just outcome.