2021 (7) TMI 58 - AT - Income Tax

Deduction u/s 54F - AO did not allow the claim of developmental expenses in the absence of reliable evidences and disallowed the deduction u/s 54F as the construction of house was already shown to be completed in the individual hands of the assessee - assessee has opted VSVS scheme - HELD THAT - AO observed that in the income tax returns filed by the assessee in individual capacity for the AY 2009-10 and 2010-11 the said house was shown as self-occupied and interest on house loan was claimed as deduction from house property u/s 24 of the IT Act which shows that the assessee is the sole owner of the said house in individual capacity and the construction of the house was completed during the FY relevant to AY 2009-10 and interest on housing loan was claimed from the AY 2009-10 onwards in his individual income tax returns. In the written submissions filed by the assessee, it has been mentioned that the same addition in respect of same property had been assessed in AY 2008-09 u/s 143(3)/147 of the Act, vide order dated 07/03/2016, against which, the assessee filed appeal before the CIT(A), who had dismissed the appeal of the assessee. As before the Tribunal, the assessee has opted VSVS scheme for the said appeal and Form No. 3 has been issued. The said appeal was disposed off by the coordinate bench of this Tribunal vide order dated 24/02/2021. Considering the submissions of the assessee, we remit this matter to the file of AO for a limited purpose for verification of the same as to whether the same capital gains arising on sale of the same property has been assessed in AY 2008-09 If it is found that the capital gains has been assessed twice on the same property in AY 2008-9 and 2010-11, the proceedings for AY 2010-11 shall be dropped and, if it is found otherwise, the AO can revive the appeal as it is. Accordingly, the grounds raised by the assessee are treated as allowed for statistical purposes

Summary

Issues:
1. Confirmation of capital gain determination for HUF.
2. Rejection of claim under section 54F of the Income Tax Act.
3. Disallowance of development expenditure and interior expenses.
4. Assessment for AY 2008-09 and AY 2010-11 regarding capital gain on a development agreement.

Analysis:

1. The case involved an appeal by the assessee against the CIT(A)'s order for AY 2010-11 concerning the determination of capital gains for a Hindu Undivided Family (HUF). The AO observed that the assessee had transferred a plot and claimed capital gains based on the value of three apartments received in exchange. However, the claim for development expenses and deduction under section 54F was disallowed due to lack of reliable evidence. The AO also noted short term capital gains on the sale of flats. The ITAT remitted the matter to the AO for verification of potential double assessment of capital gains on the same property for AY 2008-09 and 2010-11.

2. The rejection of the claim under section 54F of the Income Tax Act was a key issue in the appeal. The AO had denied the deduction as the construction of the house was deemed completed in the individual's hands, not the HUF's. The assessee argued that the reinvestment was made in a jointly owned residential house. The ITAT directed the AO to verify if the capital gains on the same property had been assessed twice for AY 2008-09 and 2010-11. If confirmed, the proceedings for AY 2010-11 were to be dropped.

3. The disallowance of development expenditure and interior expenses was another significant aspect of the case. The AO had rejected these claims due to insufficient evidence. The ITAT considered the submissions of the assessee and remitted the matter to the AO for verification regarding potential double assessment of capital gains for AY 2008-09 and 2010-11. The grounds raised by the assessee were treated as allowed for statistical purposes.

4. Regarding the assessment for AY 2008-09 and AY 2010-11 concerning the capital gain on a development agreement, the appellant accepted the levy of capital gain for AY 2008-09 and filed under the Vivad Se Vishwas Scheme. The ITAT directed the AO to verify if the capital gains on the same property had been assessed twice for AY 2008-09 and 2010-11. The appeal for AY 2010-11 would be dropped if double assessment was confirmed, as per the ITAT's decision.