2020 (2) TMI 652 - AT - Income Tax

Assessment u/s 153A - exemption u/s 54F - HELD THAT - There is no dispute with regard to fact that along with computation of income for the claim of exemption u/s 54F, the assessee has not appended any note exhibiting the fact that she owned other flats. Copy of the return has been placed on page no.15 to 21 of the paper book submitted on 16.1.209. Non-disclosure of the above facts in the computation of income if looked into in the light of the reply given to question no.9 would indicate that prima facie claim of the assessee was not admissible, because, she failed to disclose details of that property. Hence, during the course of search, it was unearthed that the assessee s claim under section 54Fwas doubtful claim. In the above situation, the AO is justified to initiate action under section 153A of the Act. We do not find any merit in this ground of appeal. It is dismissed. Disallowance of exemption u/s 54F - investment in new residential house out of long term capital gain - HELD THAT - There is no dispute with regard to fulfillment of other conditions by the assessee as contemplated in section 54F. She has sold long term asset and which gave rise to long term capital gain. She has purchased a new residential house in India. Only objection raised by the AO is that she was having more than one residential house other than the new asset on the date of transfer of original asset. In other words, in the opinion of the AO, her case falls within the ambit of sub-clause (a)(i) of proviso of section 54F. In the sale deed flat at Bafna Tower, Indore has been termed as residential house, but ceased to be a residential property because commercial activities are going on in this property. All flat owners have let out their properties; that being so, no one can use it for residential purpose. This fact ought to have been examined by the AO before disbelieving. If this property is excluded from residential house, then the assessee would be having only 90% in a flat no.281, Kalpataru Heights, Mumbai. Apart from this, the assessee was not having any residential house in this accounting year, and therefore her case would fall within the ambit of clause (a)(i) of the proviso appended to section 54F. It is also pertinent to observe that object of Section 54F is go give incentive to the assessee for making investment in purchase of residential house. Such object ought not to be defeated on sum flimsy reasons. Therefore, in view of above discussion, we are of the view that the assessee is entitled for exemption under section 54F of the income Tax Act. We direct the AO to grant exemption of ₹ 50 lakhs on account of investment in new residential house out of long term capital gain. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against order of ld.CIT(A)-1 for assessment year 2009-10.
2. Dispute over interest charged under section 234B.
3. Challenge to action taken by AO under section 153A.
4. Disallowance of exemption under section 54F.
5. Interpretation of section 54F in relation to ownership of multiple residential houses.

Analysis:

1. The assessee appealed against the order of ld.CIT(A)-1 for the assessment year 2009-10. The Tribunal rejected a general ground of appeal that did not require any finding to be recorded.

2. Regarding the interest charged under section 234B, the Tribunal noted that it is consequential in nature. The matter was remitted to the AO for readjudication after the Tribunal's order on the appeal.

3. The dispute arose over the action taken by the AO under section 153A of the Income Tax Act. The assessee argued that since no seized material was found during the search, no action under section 153A should have been taken. However, the Tribunal upheld the AO's jurisdiction based on the non-disclosure of property details by the assessee.

4. The disallowance of exemption under section 54F was challenged by the assessee. The Tribunal analyzed the relevant provisions of section 54F and the ownership of multiple properties by the assessee. After considering the details of the properties owned by the assessee, the Tribunal concluded that the assessee was entitled to the exemption under section 54F, directing the AO to grant the exemption of ?50 lakhs.

5. The interpretation of section 54F in relation to ownership of multiple residential houses was crucial. The Tribunal examined the properties owned by the assessee and determined that only one property qualified as a residential house at the time of the transfer of the original asset. The Tribunal emphasized the objective of section 54F to provide incentives for investment in residential houses and granted the assessee the exemption under the section.

In conclusion, the Tribunal partially allowed the appeal of the assessee, directing the AO to grant the exemption under section 54F.