2022 (9) TMI 35 - AT - Income Tax

Deduction u/s 54F - Deduction not claimed in the return of income filed - HELD THAT - Hon ble Supreme Court s judgment in the case of Goetz India Ltd 2006 (3) TMI 75 - SUPREME COURT that dealt with a fresh claim made in the income tax return, and this claim was made by way of filing a letter, rather than by revising the income tax return. Taking note of this position, Their Lordships had observed that The return was filed on 30-11-1995 by the appellant for the assessment year in question. On 12-1-1998, the appellant sought to claim a deduction by way of a letter before the Assessing Officer (emphasis, by underlining, supplied by us). It was in this context that Their Lordships held that such a course of action was impermissible. That is not the case, as learned CIT(A) has rightly appreciated, before us. Here is a case in which a claim for exemption was rightly made, but only a wrong section was quoted while making a claim, which is qualitatively different from was no fresh claim was such. In our considered view, therefore, the Assessing Officer was indeed in error in adopting such a hyper-pedantic approach and in holding that there was a fresh claim for exemption under section 54F. The grievance raised by the Assessing Officer, in this appeal, is, therefore, devoid of any legally sustainable merits. It proceeds on the fallacious assumption that a change of section, on account of an inadvertent and bonafide error, under which the claim is made, by itself, amounts to a fresh claim. We reject the same. We approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. Appeal dismissed.

Summary

Issues:
1. Correctness of allowing deduction under section 54F not claimed in the return of income.
2. Compliance with the decision of the Hon'ble Supreme Court in Goetz India Ltd Vs CIT.

Issue 1: Correctness of Allowing Deduction under Section 54F:
The appeal questions the order by the Commissioner (Appeals) regarding the assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2017-18. The appellant, an Assessing Officer, challenges the decision of the Commissioner (Appeals) in allowing the claim of the assessee for deduction under section 54F of the Income Tax Act, which was not initially claimed in the income tax return. The assessee, a non-resident lady, had tenancy rights in a residential apartment in South Mumbai and later invested the proceeds in a new residential flat. The dispute arose due to the incorrect mention of section 54 instead of 54F in the income tax return, leading to the rejection of the claim by the Assessing Officer. The Commissioner (Appeals) upheld the claim, stating that the mistake was bonafide and could be corrected during the assessment itself. The Tribunal affirmed the Commissioner's decision, emphasizing that the error in quoting the section did not constitute a fresh claim for exemption under section 54F. The Tribunal dismissed the appeal, ruling in favor of the assessee.

Issue 2: Compliance with Goetz India Ltd Vs CIT Decision:
The Assessing Officer relied on the Goetz India Ltd Vs CIT case to argue that the claim under section 54F was inadmissible as it was considered a fresh claim during scrutiny assessment proceedings. However, the Commissioner (Appeals) differentiated the present case from the Goetz India Ltd case, highlighting that the mistake in quoting the section was not akin to making a fresh claim. The Tribunal concurred with the Commissioner's interpretation, rejecting the Assessing Officer's hyper-pedantic approach. The Tribunal clarified that a mere error in mentioning the section did not transform the claim into a new one. The Tribunal dismissed the appeal, upholding the Commissioner's decision to allow the deduction under section 54F for the assessee.

In conclusion, the Tribunal dismissed the appeal filed by the Assessing Officer, affirming the decision of the Commissioner (Appeals) to allow the deduction under section 54F for the assessee. The Tribunal emphasized that the error in quoting the section in the income tax return did not constitute a fresh claim for exemption, thereby rejecting the Assessing Officer's argument based on the Goetz India Ltd case.