2020 (4) TMI 814 - AT - Income Tax

Rectification u/s 254 - apparent mistake in the impugned Tribunal order - Deduction u/s 54F - if the assessee is owning more than one residential house other than the new asset on the date of the transfer of the original asset, it has to be seen as to whether income from such residential houses is chargeable under the head Income from house property and since this aspect was not examined and decided, there is an apparent mistake in the impugned Tribunal order which should be rectified or this Tribunal order should be recalled - HELD THAT - Assessee purchased two house properties on 25.04.2014 and 28.04.2014. One of these two properties is new asset for which deduction is claimed u/s 54F. Proviso will be applicable if the condition prescribed in Proviso (b) that income is taxable under the head Income from House Property for the second house is satisfied. In para No.11 of the impugned Tribunal order as reproduced above, there is no discussion or finding on this aspect as to whether income from property purchased on these two dates is chargeable to tax under the head income from house property or not. There may be various reasons due to which income from house property may not be chargeable to tax under the head income from house property and since this aspect was not examined and decided by the Tribunal in the impugned Tribunal order, we find force in the submission of the learned AR of the assessee that there is apparent mistake in the impugned Tribunal order to this extent. We feel it proper to recall this ex-parte Tribunal order for a fresh decision on this limited aspect as to whether the income from these two house properties purchased by the assessee on 25.04.2014 and 28.04.2014 are chargeable to tax under the head income from house property or not and thereafter decide about the applicability of the proviso to section 54F(1) - Miscellaneous petition filed by the assessee stands allowed.

Summary

Issues: Interpretation of provisos under section 54F(1) regarding eligibility for deduction under Income Tax Act.

Analysis:

1. Issue 1 - Interpretation of Proviso (a) and (b) of Section 54F(1):
The key contention in this case was the interpretation of provisos under section 54F(1) of the Income Tax Act. The assessee argued that the Tribunal had erred in not considering proviso (b) along with proviso (a)(ii) while deciding against the assessee. The Tribunal order focused on proviso (a)(ii) but did not address proviso (b) which states that the assessee is not eligible for deduction if the income from additional residential houses purchased is chargeable under the head "Income from house property." The Tribunal order did not analyze this aspect, leading to a potential mistake in the decision. The Tribunal was urged to reconsider the order in light of proviso (b) to section 54F(1) to ensure a comprehensive examination of the eligibility criteria for deduction.

2. Issue 2 - Examination of Income from Additional Residential Houses:
The Tribunal's order highlighted that the assessee had purchased two house properties on specific dates, with one being claimed as the new asset for deduction under section 54F. However, there was no discussion or finding regarding whether the income from these additional properties was chargeable to tax under the head "Income from house property." The Tribunal's failure to address this crucial aspect raised concerns about the completeness of the decision. The Tribunal was directed to recall the order for a fresh decision specifically on whether the income from the two house properties purchased by the assessee was taxable under the head "Income from house property" or not. This reevaluation was deemed necessary to determine the applicability of the provisos under section 54F(1) accurately.

3. Conclusion:
In conclusion, the Appellate Tribunal, after considering the submissions and provisions under section 54F(1) of the Income Tax Act, allowed the miscellaneous petition filed by the assessee. The Tribunal acknowledged the need for a fresh decision on the issue of whether the income from the additional house properties purchased by the assessee was chargeable under the head "Income from house property." This decision aimed to ensure a comprehensive assessment of the eligibility criteria for deduction under section 54F(1) and rectify any potential mistakes in the initial order. The case was directed for a fresh hearing to address the specific aspect of income tax liability related to the additional house properties, emphasizing the importance of a thorough analysis in tax matters.