2018 (11) TMI 327 - AT - Income Tax

Rectification of mistake - disallowance of deduction under section 54F in respect of the alleged expenditure on construction of house, registration charges and payment to deed writer - Held that - So far as the registration charges are concerned, this is a matter of record and, therefore, there cannot be any dispute about the said expenditure. However, the other two claims of expenditure need a proper verification and examination. Accordingly we modify the impugned order and direct the AO to verify these claims of expenditures incurred in respect of construction of house, registration charges and payment to deed writer for the purpose of allowing the deduction under section 54F in respect of the residential house no. 79, Vivek Vihar, Jagatpura, Jaipur. Accordingly, the AO has to adjudicate the issue after allowing an opportunity of hearing to the assessee. Resultantly, ground of the assessee s appeal stands allowed for statistical purposes.

Summary

Issues:
1. Rectification of mistake in the order regarding non-adjudication of ground no. 2.1 related to disallowance of deduction under section 54F.
2. Eligibility of deduction under section 54F for investments made in more than one house.
3. Adjudication of the claimed expenditure on construction of the house, registration charges, and payment to deed writer for the purpose of allowing the deduction under section 54F.

Issue 1: The assessee sought rectification of a mistake in the Tribunal's order concerning the non-adjudication of ground no. 2.1 related to the disallowance of a deduction under section 54F. The Tribunal had not addressed this issue in the initial order.

Issue 2: The Tribunal analyzed the eligibility of deduction under section 54F for investments made in more than one house. The Tribunal observed that the assessee had invested in three properties, but only one was a constructed house, while the others were plots of land in different locations. Referring to relevant case law, the Tribunal concluded that the properties could not be considered a single residential house due to their disparate locations, thereby upholding the decision in favor of the revenue.

Issue 3: The Tribunal addressed the claimed expenditure on construction of the house, registration charges, and payment to deed writer for the purpose of allowing the deduction under section 54F. The assessee argued that the actual cost of acquisition and improvement/construction was higher than the deduction allowed by the Assessing Officer. The Tribunal directed the AO to verify the claimed expenditures, including construction costs, registration charges, and payment to the deed writer, for the residential house in question. The Tribunal allowed ground no. 2.1 of the assessee's appeal for statistical purposes, emphasizing the need for proper verification and examination of the claimed expenditures.

In conclusion, the Tribunal's judgment involved rectification of a mistake in the order, the eligibility of deduction under section 54F for multiple property investments, and the verification of claimed expenditures for allowing the deduction under section 54F. The decision upheld the revenue's stance on the eligibility of deductions for multiple properties while directing the AO to verify and examine the claimed expenditures for the residential property in question.