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2020 (10) TMI 1161 - HC - Income TaxDeductions u/s 54 - assessee has not completed the construction before 16.05.2014 - Tribunal held that the withdrawals made from the capital gains accounts of the assessee was not used towards construction of a residential house - submission of the appellant / assessee that the said aspect was also not properly appreciated by the Tribunal - HELD THAT - AO has not given elaborate reasons as to why the assesseee was not entitled for deduction under Section 54 of the Act. It is the submission of the learned counsel that decision of the Division Bench of this Court in Commissioner of Income Tax V. Sardarmal Kothari 2008 (6) TMI 15 - MADRAS HIGH COURT would come to the aid of the assessee. Order passed by the Tribunal this aspect has not been dealt with in a proper perspective, especially when CITA has given elaborate reasons as to why the assessee is entitled for deduction under Section 54 of the Act. We are inclined to interfere with the order passed by the Tribunal, at the same time, we propose to remand the matter to the assessing officer for fresh consideration since other issues have also been remanded to the assessing officer for re-adjudication. Appeal filed by the assessee is allowed and matter is restored to the file of the assessing officer to decide the claim of the assessee for deduction under Section 54.
Issues:
1. Claim of deductions under Section 54 of the Income Tax Act, 1961. 2. Utilization of withdrawals from capital gains accounts for construction of a residential house. Issue 1: Claim of deductions under Section 54 of the Income Tax Act, 1961: The appeal was filed under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal. The main issue revolved around the claim of deduction under Section 54 of the Act. The Commissioner of Income Tax (Appeals) had granted relief to the assessee, but the Tribunal concluded that the assessee failed to provide evidence to support their claim. The appellant argued that the CITA had given a detailed finding supporting the deduction claim, and the Tribunal's decision was not adequately reasoned. The Tribunal remanded other issues to the Assessing Officer, who had denied the deduction based on the completion date of construction. The appellant contended that the Tribunal had not properly considered this aspect. The High Court noted that the Tribunal's order lacked proper consideration of the claim and decided to remand the matter to the assessing officer for fresh consideration, allowing the appeal filed by the assessee. Issue 2: Utilization of withdrawals from capital gains accounts for construction of a residential house: The appellant had invested a significant amount towards the construction of a new house property and the purchase of a plot, claiming deductions under Section 54 of the Act. The CITA had detailed the investments made by the appellant, including amounts deposited in the Capital Gains Scheme Account and payments towards construction. The CITA allowed the deduction under Section 54, emphasizing that the substantial investment for construction was made within the stipulated period, even though the construction was not completed within three years. The High Court noted that the CITA had provided elaborate reasons for allowing the deduction, contrary to the Tribunal's decision. The Court, therefore, set aside the Tribunal's order, restoring the matter to the assessing officer for a fresh decision, while upholding the assessee's entitlement to raise all relevant points before the CITA. The substantial questions of law were left open for consideration, and the appeal was allowed with no costs incurred. This detailed analysis of the judgment from the Madras High Court highlights the issues surrounding the claim of deductions under Section 54 of the Income Tax Act, 1961, and the utilization of withdrawals from capital gains accounts for the construction of a residential house. The Court's decision to remand the matter to the assessing officer for fresh consideration underscores the importance of proper reasoning and evidence in tax-related appeals.
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