2019 (11) TMI 909 - AT - Income Tax

Deduction u/s 54F - AO denied the claim on the date of transfer, the assessee is having more than one house, therefore he is not eligible for claim of section 54F - HELD THAT - As observed by the AO, himself in the Return of Income filed by him. Therefore, there is no merit in the contention that the Income from these properties is being taken by the mother of the assessee, and that she is not willing to fore go this advantage, which is available to her as per the will. Further, it is seen that the Municipal tax receipt is in the name of the assessee, Shri T.Peddiraju, which shows that the two houses are in the name of the assessee in the records of Municipal Corporation. All these facts are sufficient to show that for all practical purposes, the assessee is the owner of the said houses, and therefore, is not entitled to claim exemption u/s.54F. It is therefore held that the exemption u/s.54F has been rightly denied by the AO. The addition made is therefore confirmed and all grounds related to this issue are dismissed. Appeal filed by the assessee is dismissed.

Issues:
Assessment under section 143(3) - Claim of exemption under section 54F - Ownership of residential houses - Denial of exemption - Confirmation of Assessing Officer's order by CIT(A) - Lack of evidence to support claim under section 54F.

Assessment under section 143(3):
The assessment under section 143(3) was initiated for the Assessment Year 2013-14 after the assessee's return of income was selected for scrutiny. The Assessing Officer noted discrepancies in the income statement regarding the sale of properties and claimed long-term capital gains at NIL after exemption under section 54F. The assessee was asked to provide evidence for the exemption claimed but failed to do so on multiple occasions, leading to the conclusion that conditions for claiming the exemption were not met.

Claim of exemption under section 54F:
The Assessing Officer found that the assessee owned more than one residential house apart from the new asset on the date of transfer, making him ineligible for exemption under section 54F. The assessee's explanation regarding ownership and possession of the properties was not substantiated with evidence. The CIT(A) confirmed the Assessing Officer's decision, emphasizing that the conditions for claiming the exemption were not fulfilled, and the entire capital gains amount was added to the total income.

Ownership of residential houses:
The dispute revolved around the ownership of residential properties and the eligibility for exemption under section 54F. The assessee's claim that the properties were in the name of his mother and that he had only one house was not supported by evidence. The Municipal tax receipts showed the properties in the name of the assessee, contradicting the claim made by the assessee during the assessment proceedings. The CIT(A) upheld the denial of exemption based on the ownership status of the properties.

Denial of exemption and confirmation by CIT(A):
The CIT(A) carefully considered the Assessing Officer's order and the submissions made by the assessee's Authorized Representative (AR). The AR's contentions regarding the ownership and income from the properties were refuted based on the evidence available. The CIT(A) concluded that the Assessing Officer's decision to deny the exemption under section 54F was justified, as the assessee failed to prove ownership of only one residential house on the date of transfer. All grounds related to this issue were dismissed, and the denial of exemption was confirmed.

Lack of evidence to support claim under section 54F:
Throughout the proceedings, the assessee failed to provide substantial evidence to support the claim under section 54F. The absence of documentation or proof regarding the ownership and possession of the residential properties weakened the case for claiming the exemption. The failure to substantiate the claim ultimately led to the dismissal of the appeal by the ITAT, upholding the decisions of the Assessing Officer and the CIT(A).

This detailed analysis of the legal judgment highlights the key issues, arguments, and decisions made regarding the assessment under section 143(3), the claim of exemption under section 54F, ownership of residential houses, denial of exemption, confirmation by CIT(A), and the lack of evidence to support the claim under section 54F.

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