2023 (3) TMI 1157 - AT - Income Tax

Deduction u/s 54F - payment for purchase of property and registration after the due date of filing of return - AO denied the claim on the ground that the assessee has not fulfilled the procedural requirement laid down by the law of depositing sale proceeds into the capital gain account scheme with a nationalized bank before the due date of furnishing of return, which was confirmed by the ld. CIT(A) - HELD THAT - Even though the assessee has not invested the sale proceeds in Capital Gain Account Scheme, but complied with the conditions under section 54F(1) by purchasing an independent house for a consideration of ₹.2 crores by executing sale agreement on 09.01.2016 by paying advance of ₹.50 lakhs and the remaining amount of ₹.1.50 crores was paid on the date of registration of sale deed on 04.10.2017, which are not in dispute. The provisions of section 54F of the Act are beneficial provisions and are to be considered liberally in the aspect of limitation period. The investment in residential property is must which the assessee has proved with evidence and complied before the lower authorities. As following case of CIT v. Smt. Umayal Annamalai 2020 (7) TMI 630 - MADRAS HIGH COURT we set aside the order of the ld. CIT(A) and direct the AO to allow the deduction section 54F of the Act to the assessee. Appeal filed by the assessee is allowed.

Summary

Issues involved: Delay in filing appeal, denial of deduction under section 54F of the Income Tax Act.

Issue 1: Delay in filing appeal

The appeal was delayed by 91 days, and the assessee filed a petition for condonation of the delay, which was accepted as the assessee was prevented by sufficient cause. The delay was condoned, and the appeal was admitted for adjudication.

Issue 2: Denial of deduction under section 54F

The assessee claimed deduction under section 54F for a property purchased for Rs. 2,00,00,000. However, the Assessing Officer denied the claim citing non-fulfillment of the procedural requirement of depositing sale proceeds into the capital gain account scheme before the due date of furnishing the return. The CIT(A) confirmed the disallowance.

Judgment:

The Tribunal considered the case and observed a similar issue in a previous judgment where the assessee had complied with the conditions for availing the benefit of exemption under section 54F. In the present case, the assessee had purchased an independent house for Rs. 2 crores, paying an advance and the remaining amount on the date of registration, fulfilling the conditions under section 54F. The Tribunal, following the decision of the High Court, set aside the CIT(A)'s order and directed the Assessing Officer to allow the deduction under section 54F to the assessee.

Conclusion:

The appeal filed by the assessee was allowed, and the order was pronounced on 24th March 2023 at Chennai.