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2022 (9) TMI 1089 - AT - Income TaxDeduction u/s. 54 - Non deposit of the sale consideration in capital gain scheme account prior to due date of filing of return under section 139(1) - investment prior due date of filing of return of income under section 139(4) - investment in new property which was not made within the due date of furnishing return of income under section 139(1) of the Act, but was made within the timelines provided under section 139(4) - scope of due date of filing return under section 139(1) - HELD THAT - It is a fit case for allowing deduction under section 54F of the Act in the instant set of facts. Various Courts and Tribunals have on numerous occasions held that 54F is a beneficial provision and the same date should be construed liberally. Further, from the plain language of section 54F of the Act, it is seen that only section 139 is mentioned in the context of the unutilised portion of the capital gain on sale of property and therefore investment in new property under section 139 cannot be confined only to provisions of section 139(1) of the Act, but includes all the subsections of section 139 of the Act. In the case of CIT v Rajesh Kumar Jalan 2006 (8) TMI 126 - GAUHATI HIGH COURT on similar facts held that assessee is eligible for claiming deduction under section 54F of the Act in case of HV investment property section 139(4) of the Act. The Delhi Tribunal in the case of Smt. Harinder Kaur 2021 (2) TMI 580 - ITAT DELHI held that where assessee paid amount of sale consideration received from sale of a residential house for purchase of another residential property prior to due date of filing of return of income under section 139(4), his claim for exemption under section 54 was to be allowed - Appeal of assessee allowed. Allowability of deduction of renovation and brokerage expenses claimed as deduction by way of cost of improvement from sale of consideration - HELD THAT - As on the basis of supporting evidences furnished before us, we are of the view that the assessee has been able to substantiate that he had expenses in connection with renovation/brokerage expenses. Accordingly, we are hereby allowing the assessee s ground of appeal in relation to allowability of renovation and commission expenses by way of deduction as cost of improvement from sale consideration, while computing capital gains tax on sale of property. Assessee appeal allowed.
Issues Involved:
1. Eligibility for claiming deduction under section 54F of the Income Tax Act. 2. Allowability of deduction for renovation and brokerage expenses. Detailed Analysis: 1. Eligibility for Claiming Deduction Under Section 54F: The primary issue was whether the assessee could claim deduction under section 54F for investment in a new property made after the due date for filing the return under section 139(1) but within the extended period under section 139(4). The assessee sold property on 27-03-2006 and purchased a new property on 16-10-2006, filing the return on 28-12-2007. The assessee argued that the investment was within the timeline provided under section 139(4), thus qualifying for the deduction. The CIT(A) dismissed the appeal, emphasizing that the investment was not made by the due date under section 139(1) nor was the unutilized amount deposited in the Capital Gains Account Scheme. The CIT(A) cited the Mumbai High Court ruling in Humayun Suleman Merchant vs. CCIT, which held that the unutilized capital gains must be deposited in a specified account before the due date under section 139(1) to qualify for the deduction. However, the Tribunal found in favor of the assessee, referencing various judicial precedents that interpreted section 54F liberally, allowing investments made within the extended period under section 139(4). The Tribunal cited cases such as Dipal Sureshbhai Patel v ITO, CIT v Rajesh Kumar Jalan, Uddhav Krishna Bankar v. ITO, and others, which supported the view that section 139 includes all subsections, not just 139(1). Consequently, the Tribunal allowed the deduction under section 54F. 2. Allowability of Deduction for Renovation and Brokerage Expenses: The second issue was whether the assessee could deduct renovation and brokerage expenses amounting to Rs. 2,86,500/- from the sale consideration. The AO and CIT(A) had denied this deduction due to lack of evidence. The assessee, however, provided bills/vouchers and a bank certificate indicating a loan for renovation. Upon review, the Tribunal found the evidence sufficient to substantiate the expenses. Therefore, it allowed the deduction for renovation and brokerage expenses as part of the cost of improvement from the sale consideration, thereby reducing the capital gains tax liability. Conclusion: The Tribunal allowed the appeal, granting the deduction under section 54F for the investment made within the extended period under section 139(4) and permitting the deduction for renovation and brokerage expenses based on the evidence provided. The judgment emphasized a liberal interpretation of beneficial provisions and the importance of substantiating claims with adequate evidence.
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