2021 (6) TMI 982 - AT - Income Tax

Capital gain computation - LTCG or STCG - sale consideration received in respect of transfer of land and transfer of super structure - HELD THAT - There is no doubt that the assessee has entered into development agreement for construction of the flats and sold 4 flats as per the details given in this order and received the sale consideration. There is no dispute with regard to sale of flats and rates adopted by the AO. AR did not bring any evidence to controvert the findings of the AO during the appeal hearing - we uphold the action of the AO as well as the CIT(A) in treating the sale consideration received in respect of transfer of land as long term capital gain and transfer of super structure as short term capital gain. Thus, computing the income under long term capital gains and short term capital gains is confirmed. Deduction u/s 54F - As seen from the assessment proceedings as well as the CIT(A) proceedings that the assessee has made the investment for purchase of new flat or new house within two years from the end of the relevant financial year as specified u/s 54F of the act. Though the assessee has not made the deposit in specified account, it is observed form the order of the AO that the assessee has made the deposit in the bank account and used the said amount only for the purpose of acquiring the new asset. Hon ble courts in similar circumstances held that, the assessee would be given the benefit of deduction u/s 54F of the Act, since, the deduction u/s 54F is beneficial provision and introduced with an intention to encourage the housing / accommodation across the country. assessee is eligible for deduction u/s 54F from the long term capital gains. Though assesses did not make the claim, appellate authorities are not barred from entertaining the fresh claim. This view is supported by in the case of Goetze (India) Ltd 2006 (3) TMI 75 - SUPREME COURT . Hence, we set aside the order of the lower authorities and direct the AO to verify the facts regarding acquiring the new asset and allow deduction u/s 54F in respect of long term capital gains. Accordingly, the order of Ld.CIT(A) in respect of long term capital gains is set aside and the order of the Ld.CIT(A) in respect of short term capital gains is confirmed.

Summary

Issues Involved:
1. Confirmation of additions made on account of Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG).
2. Eligibility for exemption under Section 54F of the Income Tax Act.
3. Validity of the appellate order passed in the name of the deceased assessee's husband.

Issue-wise Detailed Analysis:

1. Confirmation of Additions on Account of LTCG and STCG:
The appellant challenged the confirmation of additions made by the Assessing Officer (AO) and sustained by the Commissioner of Income Tax (Appeals) [CIT(A)] on account of LTCG and STCG amounting to ?4,91,800/- and ?27,30,000/- respectively. The AO determined these amounts based on the sale of four flats received by the assessee through a development agreement with M/s Samyuktha Constructions, Hyderabad. The AO calculated the sale consideration of land at ?6,72,000/- and the cost of acquisition at ?1,80,200/-, resulting in LTCG of ?4,91,800/-. Similarly, the AO arrived at the sale consideration of the built-up area at ?27,30,000/- for the four flats, which was treated as STCG. The Tribunal upheld the AO's and CIT(A)'s findings, confirming the computation of income under LTCG and STCG.

2. Eligibility for Exemption Under Section 54F:
The appellant claimed exemption under Section 54F of the Income Tax Act for the investment made in a new flat. The AO rejected the claim as the appellant neither purchased the flat before the end of the financial year nor deposited the amount in the specified account. However, the Tribunal observed that the assessee had made the investment within the stipulated time and used the amount for acquiring the new asset. Citing the decision of the ITAT Bangalore in Ramaiah Dorairaj v. ITO and the judgment of the Hon'ble Karnataka High Court in K. Ramachandra Rao, the Tribunal held that the assessee is eligible for deduction under Section 54F, even if the amount was not deposited in the specified account, as the intention was to invest in the new property. The Tribunal directed the AO to verify the facts and allow the deduction under Section 54F for LTCG.

3. Validity of the Appellate Order Passed in the Name of the Deceased Assessee's Husband:
The appellant contended that the CIT(A) erred in passing the order in the name of the deceased assessee's husband, who passed away on 12 June 2013. However, this ground was withdrawn by the appellant during the appeal hearing and was dismissed as withdrawn by the Tribunal.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes. It confirmed the additions made on account of STCG and directed the AO to verify the facts regarding the investment in the new asset and allow the deduction under Section 54F for LTCG. The order of the CIT(A) in respect of LTCG was set aside, and the order in respect of STCG was confirmed. The appeal was pronounced in the open court on 25th June 2021.