2022 (2) TMI 73 - AT - Income Tax

Deduction u/s 54F denied - CIT-A deleted the addition - maintainability of appeal - AO was of the view that the assessee did not fulfill the condition as laid down for allowance of exemption under section 54F of the Act. As per the AO, the assessee had received full consideration from NDTV ltd. on 21.10.2011 and till date the assessee had not constructed or taken possession of the new property which is beyond 3 years - HELD THAT - We find that tax effect involved is lower than ₹ 50 Lacs as prescribed by CBDT Circular No.17/2019 dated 08.08.2019.. Therefore, the appeal deserves to be dismissed being not maintainable.

Summary

Issues:
1. Addition of capital gain for non-explanation of possession of house.
2. Maintainability of the appeal based on tax effect.

Analysis:
1. The appeal by the Revenue challenged the deletion of an addition of ?2,40,39,613 as capital gain due to non-explanation of possession of a house. The Revenue contended that the CIT(A) erred in law by not appreciating the facts, including the lack of evidence of construction/possession within the required timeframe and the nature of the alleged investment in a group company. The Assessing Officer noted that the assessee earned a capital gain on the sale of shares, invested in a villa, and claimed deduction under section 54F of the Income Tax Act. However, the AO found that the assessee had not fulfilled the conditions for the deduction, as the new property was not constructed or possessed within the stipulated period. Consequently, the AO disallowed the deduction and added the amount to the assessee's income, resulting in a revised income computation.

2. The Tribunal addressed the issue of maintainability of the appeal based on the tax effect, as pointed out by the CBDT Circular. The Tribunal noted that the tax effect in this case was below the prescribed limit of ?50 lakhs as per the Circular. The Tribunal, after hearing the submissions and reviewing the orders, concluded that the appeal was not maintainable due to the low tax effect involved. Therefore, the Tribunal dismissed the appeal of the Revenue on this ground.

This judgment highlights the importance of complying with statutory provisions for claiming deductions and the significance of tax effect in determining the maintainability of appeals before the Tribunal.