9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (6) TMI 720 - AT - Income TaxEntitlement to benefit of deduction u/s. 54F - long term capital gain on sale of shares invested towards purchase of a flat - allegation of the AO that it is only a lease and not a purchase - Assessing Officer denied the deduction on the ground that the assessee has made the claim under wrong provision and the correct provision is Section 54F - CIT(A) allowed claim of deduction u/s. 54F issue as raised in additional ground - Held that - Hon ble Bombay High Court in the case of Pruthvi Brokers and Shareholders P. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT ) has held that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words could not have been raised must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. In the instant case the assessee has already made a claim although under the wrong head. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) allowing the claim of deduction u/s. 54F. Assessee is not the absolute owner of the property since he is a lessee and the lease is for a period of 999 years, we find this issue also stands decided in favour of the assessee by the decision of the Mumbai Bench of the Tribunal in the case of Mrs. Prema P. Shah (2005 (11) TMI 182 - ITAT BOMBAY-J) wherein held that the lease is valid for a period of 150 years, which is in perpetuity and as such, the assessee is as good as absolute owner of the property. In the instant case the lease is for a period of 999 years subject to renewal for further period of 999 years. Further, as per clause 26 of the lease agreement, the assessee enjoys all the rights, i.e. transfer, mortgage, sub-lease etc. Therefore, it cannot be said that the assessee is not the owner of the property. Amount of deduction to be allowed u/s.54F - we find it is an admitted fact that the assessee has not deposited the sale proceeds in the specified bank account till 31-03-2009. The assessee only made payment of ₹ 55,40,625/- till 31-03-2009 towards purchase of flat. Since, in the instant case admittedly the assessee has made payment of ₹ 55,40,625/- till 31-03-2009 which is the due date of filing of return u/s. 139(4), therefore, following the decision Commissioner of Income-tax-II, Chandigarh Versus Ms. Jagriti Aggarwal (2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT) we hold that the assessee is entitled to claim deduction u/s.54F only to the extent of ₹ 55,40,625/- as against ₹ 100,03,125/- allowed by the Ld. CIT(A). As in the instant case the assessee has utilized a part of capital gain towards purchase of flat which is not in dispute. Therefore, we are of the considered opinion that the assessee is entitled to deduction u/s. 54F to the extent of ₹ 55,40,625/- only. - Decided partly in favour of Revenue.
Issues Involved:
1. Eligibility of deduction under Section 54 vs. Section 54F. 2. Ownership status of the assessee (lessee vs. owner). 3. Compliance with the stipulated period for purchase or construction of property. 4. Validity of claims made under incorrect sections in the tax return. 5. Compliance with the requirement to deposit sale proceeds in a specified bank account. Issue-wise Detailed Analysis: 1. Eligibility of Deduction under Section 54 vs. Section 54F: The Assessing Officer (AO) observed that the assessee claimed a deduction of Rs. 30,78,228 under Section 54 for investment in a house. However, the AO contended that the correct section should be Section 54F, which applies to long-term capital gains from assets other than residential houses. The CIT(A) and the Tribunal agreed that the assessee should not be denied the deduction merely because it was claimed under the wrong section. The Tribunal upheld the CIT(A)'s decision to allow the deduction under Section 54F to the extent of Rs. 1,00,03,125, which was paid within three years from the date of transfer of the original asset. 2. Ownership Status of the Assessee (Lessee vs. Owner): The AO argued that the assessee, being a lessee for 999 years, was not the owner of the property and thus not eligible for the deduction under Section 54F. The CIT(A) rejected this view, noting that the lease for 999 years is effectively as good as ownership. The Tribunal concurred, citing that the long lease period and the rights enjoyed by the lessee (transfer, mortgage, sub-lease) are sufficient to consider the assessee as the owner for the purposes of Section 54F. 3. Compliance with the Stipulated Period for Purchase or Construction of Property: The AO contended that the assessee did not complete the purchase within the stipulated period, as possession was not taken until after the due date. The CIT(A) and the Tribunal found that the assessee had made substantial payments (approximately 80%) within the three-year period, thereby acquiring dominion over the property. The Tribunal held that the law does not require the construction to be completed within the stipulated time, only that substantial steps towards ownership or construction must be taken. 4. Validity of Claims Made Under Incorrect Sections in the Tax Return: The AO disallowed the claim because it was made under the wrong section. The CIT(A) and the Tribunal held that an assessee is entitled to correct such mistakes during assessment proceedings. The Tribunal cited the Bombay High Court's decision in CIT Vs. Pruthvi Brokers and Shareholders P. Ltd., which allows for claims to be corrected even if initially made under the wrong section. 5. Compliance with the Requirement to Deposit Sale Proceeds in a Specified Bank Account: The AO noted that the assessee did not deposit the sale proceeds in a specified bank account as required by Section 54F(4). The Tribunal, however, found that the assessee had utilized Rs. 55,40,625 of the sale proceeds towards the purchase of the flat before the due date for filing the return under Section 139(4). Citing the Punjab and Haryana High Court's decision in CIT Vs. MS. Jagrity Aggarwal, the Tribunal held that the extended period under Section 139(4) applies, and thus the assessee is entitled to the deduction for the amount utilized. Conclusion: The Tribunal partly allowed the Revenue's appeal, holding that the assessee is entitled to a deduction under Section 54F to the extent of Rs. 55,40,625, which was utilized within the stipulated period. The Tribunal upheld the CIT(A)'s decision to allow the claim under Section 54F despite the initial claim being made under Section 54, and recognized the lessee's rights as equivalent to ownership for the purposes of the deduction.
|
