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2017 (1) TMI 1240 - AT - Income TaxRevision u/s 263 - there is a lack of enquiry on the part of the A.O. in examining the issue of exemption u/s 54F - Held that - In the present case on hand, though the assessee did not prove with necessary evidences that the remaining amount of ₹ 20,80,000/- has been spent within the due date u/s 139(1) of the Act, but undoubtedly the assessee has proved that he had spent the amount within the due date specified u/s 139(4) of the Act. Therefore, we are of the view that the assessee is eligible for exemption u/s 54F of the Act, even though the property was purchased in the name of his close family members. In this case, the assessee has purchased the property in the name of his son by entering into sale agreement-cum-GPA. As claimed by the assessee, there is no intention to purchase property in the name of his son, which is evident from the fact that finally the property has been transferred in the name of the assessee. Therefore, the assessee is eligible for exemption u/s 54F of the Act and the A.O. has rightly allowed exemption and hence, we are of the view that there is no prejudice is caused to the revenue. Accordingly, the CIT was incorrect in assuming jurisdiction to revise the assessment order u/s 263 of the Act. - Decided in favour of assessee Computation of capital gain towards transfer of asset between the assessee and his father - transfer - Held that - In the present case on hand, on perusal of the facts available on record, we find that there is no consideration passed on between the assessee and his father. The consideration has been paid for purchase of property to the seller of the property as per the original sale agreement dated 7.6.2007 has been directly paid by the assessee s father to the seller. Therefore, we are of the view that there is no transfer within the meaning of section 2(47)(v) of the Act, towards transfer of property between the assessee and his father. Accordingly, we direct the A.O. to delete addition made towards computation of long term capital gain. - Decided in favour of assessee Addition towards cost of construction u/s 69 - Held that - As we hold that the transaction between the assessee and his father towards transfer of property is a transaction belonging to his father. Since, we hold that the assessee s father has purchased site in assessee s name and also the assessee s father has invested towards construction of property, the A.O. was incorrect in making addition towards cost of construction in the hands of the assessee. The CIT(A) without appreciating the facts, simply confirmed additions made by the A.O. Therefore, we reverse the order of CIT(A) and direct the A.O. to delete additions made towards cost of construction u/s 69 of the Act.- Decided in favour of assessee
Issues Involved:
1. Validity of the revision of assessment order under Section 263 of the Income Tax Act, 1961. 2. Eligibility for exemption under Section 54F of the Income Tax Act, 1961. 3. Computation of capital gains and applicability of Section 50C of the Income Tax Act, 1961. 4. Addition towards cost of construction under Section 69 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Validity of the Revision of Assessment Order under Section 263 of the Income Tax Act, 1961: The CIT, Vijayawada issued a show cause notice to revise the assessment order passed by the A.O. under Section 143(3) of the Act, stating that the A.O. failed to examine the allowability of exemption under Section 54F towards re-investment in the purchase of residential property. The CIT held that the assessment order was erroneous and prejudicial to the interest of the revenue because the new property was purchased in the name of the assessee’s son, not the assessee. The Tribunal, however, found that the A.O. conducted a detailed inquiry and examined the issue of exemption under Section 54F during the assessment. The Tribunal concluded that the CIT was incorrect in holding that the A.O. did not examine the issue and thus quashed the order passed by the CIT under Section 263, restoring the assessment order passed by the A.O. 2. Eligibility for Exemption under Section 54F of the Income Tax Act, 1961: The CIT argued that the exemption under Section 54F was not allowable as the new property was purchased in the name of the assessee’s son. The Tribunal, however, found that the assessee had re-invested the sale consideration in the purchase/construction of another residential house property, which was later transferred to the assessee’s name. The Tribunal held that the provisions of Section 54F are beneficial and intended to encourage investment in residential properties. The Tribunal cited judicial precedents, including the Delhi High Court ruling in CIT Vs. Kamal Wahal, which held that the new residential house need not be purchased exclusively in the assessee's name. Therefore, the Tribunal concluded that the assessee was eligible for exemption under Section 54F. 3. Computation of Capital Gains and Applicability of Section 50C of the Income Tax Act, 1961: The A.O. computed capital gains by taking the sale consideration as per the guidance value for stamp duty purposes under Section 50C, which was higher than the actual consideration received. The Tribunal found that the property was purchased by the assessee’s father and that the assessee was merely a GPA holder. The Tribunal noted that there was no consideration passed between the assessee and his father, and the transaction did not constitute a transfer within the meaning of Section 2(47)(v). Consequently, the Tribunal directed the A.O. to delete the addition made towards computation of long-term capital gain. 4. Addition towards Cost of Construction under Section 69 of the Income Tax Act, 1961: The A.O. made an addition towards the cost of construction under Section 69, stating that the assessee failed to explain the sources of investment. The Tribunal found that the investment in the construction of the property was made by the assessee’s father, who had disclosed the transaction in his income tax returns. The Tribunal held that since the property and the investment belonged to the assessee’s father, the addition under Section 69 in the hands of the assessee was not justified. The Tribunal reversed the order of the CIT(A) and directed the A.O. to delete the addition. Conclusion: The Tribunal allowed both appeals filed by the assessees, quashing the order passed by the CIT under Section 263 and directing the deletion of additions made towards capital gains and cost of construction. The Tribunal upheld the eligibility for exemption under Section 54F, emphasizing the beneficial nature of the provision and the importance of substantive compliance over technicalities.
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