2022 (12) TMI 1343 - AT - Income Tax

Deduction u/s 54 - deemed investment in the proposed flat - HELD THAT - Upon perusal of above assessment orders, it could thus be seen that Ld. AO has accepted the declared sale consideration in case of Smt. Mini Pillai whereas it has rejected the sale consideration in the case of Smt. Sharda Menon. Both the assessment, prima-facie, has attained finality. Therefore, considering the same, the adoption of value of Rs.182.76 Lacs in the case of assessee before us stand confirmed. The corresponding grounds thus raised stand dismissed. Having said so, the present assessee would logically be eligible to claim deduction u/s 54 for deemed investment in the proposed flat to the extent of Rs.107.76 Lacs as similar deduction has been granted to both the other co-owners also. Regarding the revenue s plea that deduction u/s 54 was not to be granted for more than one property, we find that the ratio of decision of CIT V/s Gumanmal Jain 2017 (3) TMI 394 - MADRAS HIGH COURT would apply. This decision considers catena of judicial decisions as well as amendment made by Finance Act, 2014 and finally held that the assessee would be eligible to claim deduction for more than one property. Following the same, Ld. AO is directed to adopt sale consideration and grant additional deduction u/s 54- We order so. The corresponding ground stand allowed.

Summary

Issues:
1. Condonation of delay in filing appeal
2. Taxability of long-term capital gains
3. Deduction u/s 54 for deemed investment in proposed flat

Condonation of Delay in Filing Appeal:
The appeal by the assessee for Assessment Year 2013-14 was delayed by 576 days, seeking condonation. The delay was due to pursuing alternative remedies after rejection of rectification application. The delay was condoned as the assessee was already pursuing alternative remedies and would not gain by filing the appeal late. The appeal was admitted for adjudication on merits.

Taxability of Long-Term Capital Gains:
The assessee, a non-resident, earned long-term capital gains from a property under a Joint Development Agreement. The assessing officer held that the sale consideration would include the value of proposed flats in the hands of the assessee. The AO computed the total sale consideration at Rs. 548.30 Lacs, with the assessee's share at Rs. 182.76 Lacs. The AO allowed indexation from the year the assessee's father held the asset. Deductions u/s 54 and 54EC were claimed and allowed, resulting in taxable long-term capital gains of Rs. 58.83 Lacs. The CIT(A) confirmed the AO's computations, leading to the further appeal.

Deduction u/s 54 for Deemed Investment in Proposed Flat:
The joint owners agreed to convey 50% of the property against built-up area and cash consideration. The assessee agreed to receive 1/3rd of the cash component. The AO accepted the declared sale consideration in one co-owner's case but rejected it in another. The adoption of the value in the present case was confirmed. The assessee was eligible for deduction u/s 54 for deemed investment in the proposed flat, in line with similar deductions granted to other co-owners. The jurisdictional High Court's decision allowed deductions for more than one property, directing the AO to grant additional deduction u/s 54. The appeal was partly allowed based on this order.

This detailed analysis covers the issues of condonation of delay in filing the appeal, the taxability of long-term capital gains, and the deduction u/s 54 for deemed investment in the proposed flat, as per the judgment by the Appellate Tribunal ITAT Chennai.