2021 (7) TMI 76 - AT - Income Tax

LTCG - Estimation of cost of construction - assessee had disputed with the Ld. AO towards adopting the cost of the land sold as on 1/4/1981 and cost of construction for the purpose of computing his Long Term Capital Gain - HELD THAT - Since the assessee is unable to produce any evidence with respect to his cost of land as on 1/4/1981 and cost of construction, we do not have any other option but to confirm the order of the Ld. Revenue Authorities who had relied on the SRO valuation and fairly estimated the cost of construction. Therefore, the grounds raised by the assessee on these regards are devoid of merit. Deduction u/s. 54F - assessee has utilised only ₹ 10 lakhs for the construction of his new residential house within the due date of filing of the return of income i.e. on 31/7/2009 and had failed to remit the balance amount in the capital gain account scheme in a National Bank as provided under the Act - HELD THAT - As decided in JUSTICE T.S. ARUNACHALAM 2018 (1) TMI 1572 - ITAT CHENNAI that if the sale proceeds are deposited in Nationalised Bank it would suffice to claim the benefit of deduction U/s. 54F of the Act. Now, Since the assessee has claimed before me that the entire amount was deposited in Nationalised Bank and thereafter fully utilised the same for the purpose of acquiring the New asset within the period specified under the Act, in the interest of justice, I hereby remit back the matter to the file of the ld. AO in order to verify the claim of the assessee and decide the matter in accordance with law and merit and in the light of the Tribunal decision cited herein above. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues:
1. Delay in filing appeal before the Tribunal.
2. Computation of capital gains and deductions under IT Act.
3. Disallowance of deduction U/s. 54 of the IT Act.
4. Verification of claim for deduction U/s. 54F of the IT Act.

Analysis:
1. Delay in filing appeal: The appellant filed an appeal against the order of the Ld. CIT (A)-3, Hyderabad, citing a delay of 136 days due to the lockdown caused by the pandemic. The Tribunal, considering the Apex Court's guidelines, condoned the delay in the interest of justice, allowing the appeal to proceed on merits.

2. Computation of capital gains: The assessee's return of income was scrutinized, leading to the assessment of capital gains at ?13,79,397/-. Disputes arose regarding the cost of land sold and construction costs. The Ld. AO adopted SRO rates due to the lack of evidence from the assessee, resulting in the computation of taxable LTCG at ?13,79,379/-. The Ld. CIT (A) upheld this decision as the assessee failed to substantiate their claims.

3. Disallowance of deduction U/s. 54: The assessee claimed a deduction of ?30 lakhs under U/s. 54 of the IT Act, but the Ld. AO allowed only ?10 lakhs due to non-compliance with deposit requirements. The Ld. CIT (A) affirmed this decision, leading to the computation of taxable LTCG at ?13,79,379/-.

4. Verification of claim for deduction U/s. 54F: The appellant argued for the deduction U/s. 54F, citing precedents where depositing sale proceeds in a nationalized bank was deemed sufficient. The Tribunal remitted the matter back to the Ld. AO to verify the claim, considering the appellant's compliance with the deposit and utilization requirements, following the decision in the case of ACIT vs. Justice T.S. Arunachalam.

In conclusion, the appeal was partly allowed for statistical purposes, with the Tribunal directing a re-verification of the deduction claim U/s. 54F. The judgment considered legal precedents, lockdown-related delays, and compliance with statutory provisions to ensure a just decision.