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2022 (1) TMI 982 - AT - Income TaxDeduction u/s 54F - investment in purchase of flat made by assessee on sale of the 12 residential plots - Denial of deduction as assessee did not comply with the requirement of provisions to be eligible to claim deduction u/s 54F - As submitted that the purchase of new site took place after one year after the date of transfer of original asset and no construction commenced till the date - HELD THAT - CIT(A) has not verified the submissions made by assessee in respect of purchase of site. Merely on surmises, the deduction is denied. In our opinion it is a fit case to be remanded to Ld.CIT(A) to carry out necessary verification. Assessee is directed to file all relevant documents in respect of purchase of site in support of its claim. CIT(A) is directed to verify all the relevant documents and to consider the claim in accordance with law - Ground raised by assessee stands allowed for statistical purposes.
Issues:
1. Denial of deduction claimed under section 54F of the Act. 2. Classification of long term capital gain as business income. 3. Exemption claim under section 54F for investment in purchase of flat. Analysis: Issue 1: Denial of deduction claimed under section 54F of the Act The assessee filed an appeal against the order passed by the Ld.CIT(A) denying the exemption claimed under section 54F for the assessment year 2013-14. The Ld.CIT(A) granted the sale proceeds on the sale of 12 plots as long term capital gain but found the assessee ineligible for the section 54F deduction. The Appellate Tribunal noted the submissions made by the assessee regarding the investment in the purchase of a flat and directed a remand to the Ld.CIT(A) for necessary verification. The Tribunal found that the denial of the deduction was based on surmises without proper verification, and hence allowed the ground raised by the assessee for statistical purposes. Issue 2: Classification of long term capital gain as business income The Assessing Officer (AO) observed that the sale of plots by the assessee, which were developed in 1990, amounted to a business activity. The AO treated the sale of plots as business income instead of long term capital gain. This decision was challenged by the assessee in the appeal. The Ld.CIT(A) granted the long term capital gain treatment for the sale proceeds of 12 plots. However, the issue of the classification of long term capital gain as business income was not specifically addressed in the Tribunal's judgment. Issue 3: Exemption claim under section 54F for investment in purchase of flat The primary contention in the appeal was the denial of the exemption claimed under section 54F concerning the investment made in the purchase of a flat. The Ld.AR argued that the assessee had advanced payments for flats that did not materialize, leading to the investment in a site. The cancellation agreement for the flats was entered into, and the new site purchase was made within the stipulated time frame. The Ld.Sr.DR, on the other hand, contended that the assessee failed to comply with section 54F requirements. The Tribunal directed a remand to the Ld.CIT(A) for verification of the purchase of the site and relevant documents to consider the claim in accordance with the law. In conclusion, the Appellate Tribunal allowed the appeal for statistical purposes, emphasizing the need for proper verification and consideration of the assessee's claims under section 54F. The judgment highlighted the importance of adhering to legal provisions and conducting thorough assessments before denying deductions or making classifications in income tax matters.
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