2022 (11) TMI 230 - AT - Income Tax

Deduction u/s 54F - AO had denied the exemption on the ground that the same was not claimed in the return of income - CIT(A) held that the claim for exemption u/s 54 can be entertained at the stage of appeal - appellant had purchased two flats in Pune by two separate purchase deeds - HELD THAT - It is an admitted fact that the appellant had not offered any capital gains on the sale of flat at Mumbai. During the course of assessment proceedings, the assessee had furnished the details of working of capital gains arising on sale of flat at Mumbai and claimed exemption u/s 54. CIT(A) had entertained the additional claim u/s 54 placing reliance on the decision of CIT v. Prithvi Brokers Shareholders (P.) Ltd 2012 (7) TMI 158 - BOMBAY HIGH COURT and proceeded to examine the claim on merits. CIT(A) had extracted the details of investments made in the new two flats and held that two flats cannot be treated as one flat in view of the fact that they cannot be combined into single unit as they are located in different floors placing reliance on case of CIT vs. Devdas Naik 2014 (7) TMI 173 - BOMBAY HIGH COURT CIT(A) placing reliance on the decision of K.C. Kaushik 1990 (4) TMI 38 - BOMBAY HIGH COURT held that the assessee is entitled for exemption u/s 54 only in respect of one flat and directed the Assessing Officer to exempt the cost of investment in one flat made before due date of filing the return of income - The contention of the ld. AR that the appellant is entitled to the exemption u/s 54 in respect of investment made into two flats cannot be accepted in view of the decision of K.C. Kaushik - Hence, the order of the ld. CIT(A) is based on the decision of the Hon ble Jurisdictional High Court referred above supra, does not call for any interference. Accordingly, the grounds of appeal filed by the assessee stand dismissed.

Summary

Issues:
Appeal against rejection of exemption u/s 54F of the IT Act-1961 by the ld. Commissioner of Income Tax (Appeals)- 13, Pune for the assessment year 2014-15.

Analysis:
1. Facts of the Case:
The appellant, engaged in trading gold and silver jewelry, sold a residential property in Mumbai for Rs.2,33,00,000 during the assessment year 2014-15. The appellant claimed exemption u/s 54F of the IT Act-1961, stating the capital gains were reinvested in a residential apartment. The Assessing Officer denied the exemption as it was not claimed in the return of income initially.

2. Decision of the ld. CIT(A):
The ld. CIT(A) allowed the claim for exemption u/s 54, citing the decision of the Hon'ble Bombay High Court in the case of CIT v. Prithvi Brokers & Shareholders (P.) Ltd. The ld. CIT(A) analyzed the investments made in two separate flats in Pune by the appellant and concluded that only one flat was eligible for deduction u/s 54, totaling Rs.92,91,220.

3. Appellant's Appeal:
The appellant contested the rejection of exemption for the second flat, referring to a Co-ordinate Bench's decision in a similar case. The appellant claimed entitlement to exemption u/s 54 for multiple flats prior to an amendment.

4. Final Decision:
The ITAT Pune upheld the ld. CIT(A)'s decision, stating that the appellant could only claim deduction for one flat as per the decision of the Hon'ble Bombay High Court. The Tribunal dismissed the appeal, affirming that the ld. CIT(A)'s order was in line with the relevant legal precedents.

In conclusion, the appeal challenging the rejection of exemption u/s 54F of the IT Act-1961 for the assessment year 2014-15 was dismissed by the ITAT Pune, upholding the decision of the ld. CIT(A) based on legal interpretations and precedents set by the Hon'ble High Court.