2021 (7) TMI 373 - AT - Income Tax

Deduction u/s 54 - investment in an under construction flat - Admission of additional evidence - HELD THAT - Additional evidences as submitted by the assessee are in the shape of allotment letter dated 28/03/2014 and agreement dated 30/03/2016. These documents shall have material bearing to ascertain the assessee s claim of deduction u/s 54. Therefore, these evidences ought to have been admitted. Keeping in view the arguments made before us, we direct Ld. CIT(A) to admit the additional evidences and re-adjudicate the issue of deduction u/s 54 in the light of these evidences as well as factual matrix on record. Assessee appeal allowed for statistical purposes.

Summary

Issues: Denial of exemption u/s 54, Admission of additional evidences, Interpretation of Sec.54 conditions

Denial of exemption u/s 54: The assessee appealed against the denial of exemption under Sec. 54 for ?27.20 Lacs. The assessee claimed deduction based on investment in an under-construction flat after selling a flat in Mumbai. The assessing officer denied the deduction as the builder confirmed the booking was canceled, and the amount was transferred to another project. The CIT(A) upheld the denial stating the allotment letter lacked enforceability. The ITAT directed the CIT(A) to admit additional evidences, including an allotment letter and agreement, to re-examine the deduction claim.

Admission of additional evidences: The assessee sought admission of additional evidences, including an allotment letter and agreement, to support the claim of deduction u/s 54. The ITAT found these documents crucial to determining the claim's validity and directed the CIT(A) to admit them for re-adjudication. The ITAT emphasized the importance of substantiating the claim and instructed the CIT(A) to dispose of the appeal promptly due to the assessee's non-resident status.

Interpretation of Sec.54 conditions: The case revolved around the interpretation of Sec.54 conditions regarding the eligibility for deduction. The assessee argued that the investment made in the new property fulfilled the requirements of Sec.54, emphasizing the beneficial nature of the provision to encourage investments in the housing sector. The ITAT highlighted the assessee's responsibility to demonstrate compliance with Sec.54 conditions and directed the CIT(A) to reconsider the deduction claim in light of the additional evidences provided.