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2023 (3) TMI 152 - AT - Income TaxRevision u/s 263 - deduction u/s 54 - assessee had failed to deposit the unutilized capital gain proceeds in the capital gain account scheme, 1988, on or before the date of furnishing his return of income u/s 139(1) - assessee made investment in the name of his wife and mandatory condition to deposit the capital gains in prescribed manner was not fulfilled by the assessee - HELD THAT - From the assessee s submissions as made before CIT(A), it could be seen that the assessee has fairly demonstrated start of construction activities during the year. Substantial payment of Rs. 7 Lacs was made during the year towards construction activities and therefore, there would be no requirement to deposit the same in capital gains account scheme. Another undisputed fact is that the amount of capital gains earned by the assessee has been utilized towards construction of house property though the new house property has been acquired in the name of the assessee s wife. In our considered opinion, would not jeopardise the claim of the assessee considering the fact that the utilisation of sale proceeds towards construction of house property has not been disputed by AO. We do not find any reason to interfere in the impugned order. Appeal stand dismissed.
Issues:
1. Allowance of deduction u/s 54 by Ld. CIT(A) 2. Delay condonation in appeal admission 3. Investment in the name of wife and non-fulfillment of mandatory conditions 4. Approval for construction obtained by wife beyond the relevant assessment year 5. Claim of deduction u/s 54 by the assessee Analysis: Issue 1 - Allowance of deduction u/s 54 by Ld. CIT(A): The appeal by the Revenue for Assessment Year 2005-06 challenged the order of the Commissioner of Income Tax (Appeals) allowing the deduction u/s 54 of the Income Tax Act. The Revenue contended that the deduction was not justified due to various reasons related to the utilization of capital gains and approval for construction. The Tribunal noted the delay in the appeal but condoned it for adjudication on merits. After hearing both parties, it was concluded that the deduction u/s 54 was correctly allowed by Ld. CIT(A) based on the construction timeline and utilization of funds towards the new house property. The appeal was dismissed. Issue 2 - Delay Condonation in Appeal Admission: The Registry noted a delay in the appeal which was condoned by the Tribunal, allowing the appeal to be admitted for further review on its merits despite the delay. Issue 3 - Investment in the Name of Wife and Non-Fulfillment of Mandatory Conditions: The Senior DR raised concerns regarding the investment made in the name of the assessee's wife and the failure to fulfill mandatory conditions for depositing capital gains in the prescribed manner. The Ld. AR supported the impugned order, leading to the disposal of the appeal based on the merits presented by both sides. Issue 4 - Approval for Construction Obtained by Wife Beyond the Relevant Assessment Year: The Revenue contested the approval for construction obtained by the assessee's wife, arguing that it was beyond the relevant assessment year, which could impact the admissibility of the deduction u/s 54. However, the Tribunal found that the construction was completed within the stipulated time limit, justifying the allowance of the deduction. Issue 5 - Claim of Deduction u/s 54 by the Assessee: The assessee had claimed deduction u/s 54 for investing the proceeds in constructing a new house property. The Tribunal observed that the construction activities had commenced during the year, with substantial payments made towards construction. The Tribunal upheld the claim, emphasizing the utilization of sale proceeds for the intended purpose, even though the property was acquired in the name of the assessee's wife. The decision was based on the substantiated evidence provided by the assessee, leading to the dismissal of the appeal by the Revenue. In conclusion, the Tribunal upheld the decision of Ld. CIT(A) to allow the deduction u/s 54, considering the construction timeline and utilization of funds towards the new house property, thereby dismissing the appeal by the Revenue.
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