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2023 (5) TMI 739 - AT - Income TaxDeduction u/s. 54F - new claim before the appellant authority - Assessee neither claimed the deduction in original return nor by filing a revised return - as assessee for the first time made the claim of deduction before the ld.CIT(A) as per revenue assessee cannot claim the exemption - CIT(A) allowed the exemption by admitting additional evidence - HELD THAT - Assessee can make a new claim u/s. 54F before the appellant authority which was not claimed in the original return or in the revised return. For allowing the claim of deduction u/s.54F certain conditions are prescribed. Although in the instant case the assessee has stated that he did not possess any residential house in his name, however the same was not verified by the ld.CIT(A) by calling for a remand report from the AO and he has simply accepted the submission of the assessee. We deem it proper to restore the issue to the file of the AO with a direction to give an opportunity to the assessee to substantiate with evidence to his satisfaction that the assessee did not possess any residential house in his name. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee.Grounds raised by the revenue on this issue are accordingly allowed for statistical purposes. Determination of cost of construction - cost of construction at Rs. 1370 per sq.ft by the ld.CIT(A) as against Rs. 2286/- per sq.ft adopted by the AO - HELD THAT - Since the AO in the instant case has computed the cost of construction on the basis of the figures obtained from the Telangana Registration Department website, therefore, in our opinion everything should be based on the rate as per the office of the Sub Registrar - restore this issue also to the file of the AO - Ground allowed for statistical purposes. Addition u/s. 68 - assessee could not produce the proper confirmation letters by giving communication address, date of borrowal amount, mode of transaction, permanent account number, bank account statement etc. - HELD THAT - Since the confirmation letter filed before the AO shows that the same amount is the opening balance as on 01.04.2010, therefore, addition of the same for the impugned assessment year for non-submission of date of borrowal and purpose of utilization of the same cannot be a ground for making the addition during the year. CIT(A) also given a finding that the above amount was received from the partnership firm M/s. V.Praveen Kumar Reddy Co. Since the amount was outstanding at the beginning of 01.04.2010 and the confirmation letter to this effect was also filed before the AO, therefore, this amount relates to the AY 2010-11 and addition if any, could have been made in AY 2010-11 and not in the AY 2012-13 being an old outstanding creditor. The ground raised by the revenue on this issue is accordingly dismissed. Disallow 30% of the agricultural income by CIT(A) - HELD THAT - We are of the considered opinion that disallowance of 50% of the agricultural income in absence of any details for sale of the produce and towards expenses for earning agricultural income will meet the ends of justice. We therefore direct the AO to restrict the disallowance to 50% of the agirucltural income as against 30% restricted by the ld.CIT(A). The ground raised by the revenue on this issue is partly allowed.
Issues Involved:
1. Condonation of delay in filing the cross objection by the assessee. 2. Taxability of capital gains arising from a development agreement. 3. Claim of deduction under Section 54F of the Income Tax Act. 4. Determination of the cost of construction per square foot. 5. Addition of sundry creditors under Section 68 of the Income Tax Act. 6. Disallowance of agricultural income declared by the assessee. Summary: 1. Condonation of Delay: The assessee filed a condonation application explaining the delay of 88 days in filing the cross objection. After considering the reasons and hearing both sides, the delay was condoned, and the cross objection was admitted for adjudication. 2. Taxability of Capital Gains: The Assessing Officer (AO) reopened the assessment under Section 147 based on information that the assessee entered into a development agreement, which led to capital gains. The AO computed the value of the superstructure and determined the taxable short-term capital gain. The AO also made additions for sundry creditors and disallowed a deduction under Chapter VIA due to lack of proof. 3. Deduction under Section 54F: The assessee claimed deduction under Section 54F before the Commissioner of Income Tax (Appeals) [CIT(A)], which was allowed. However, the Tribunal noted that the assessee did not claim this deduction in the original or revised return. The Tribunal restored the issue to the AO to verify if the assessee did not possess any other residential house, directing the AO to decide the issue as per facts and law. 4. Cost of Construction: The AO adopted the cost of construction at Rs. 2286 per sq.ft, while the CIT(A) reduced it to Rs. 1370 per sq.ft. The Tribunal found that the AO's computation based on the Telangana Registration Department website should be considered. The issue was restored to the AO for re-evaluation based on the rate as per the office of the Sub Registrar. 5. Addition of Sundry Creditors: The AO made an addition under Section 68 for sundry creditors, which the CIT(A) deleted, noting that the amount was an opening balance from an earlier year. The Tribunal upheld the CIT(A)'s decision, stating that the addition should have been made in the year the amount was borrowed, not in the assessment year under consideration. 6. Disallowance of Agricultural Income: The AO disallowed a portion of the agricultural income declared by the assessee, while the CIT(A) restricted the disallowance to 30%. The Tribunal found both the AO's and CIT(A)'s methods arbitrary and directed the AO to restrict the disallowance to 50% of the agricultural income for lack of detailed evidence. Conclusion: The Tribunal partly allowed the appeals filed by the revenue for statistical purposes and restored specific issues to the AO for re-evaluation. The cross objections filed by the assessee were also allowed for statistical purposes. The order was pronounced in the Open Court on 16th May, 2023.
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