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2024 (3) TMI 36 - AT - Income TaxRevision u/s 263 - admissibility of deduction u/s 54F - As per CIT Assessment assessment order is erroneous on account of noting this fact of the claim u/s. 54F being incorrectly allowed to the assessee since the land was purchased by the assessee beyond the alleged prescribed period of two years from the date of transfer of the original asset - HELD THAT - As gone through the provisions of section 54F we agree that as per section 54F of the Act, a time period of three years is provided to the assessee for construction of a house property for claiming exemption of capital gains under the said section. Even DR was unable to controvert this interpretation of the provision of law before us. In view of the same, it is abundantly clear that in the present case that the CIT has misinterpreted the provision of law to hold that the assessee was ineligible to claim exemption u/s. 54F of the Act on the investment made in the land beyond two years since it was beyond the time limit prescribed in law and, accordingly holding the assessment order to be in error causing prejudice to the Revenue for having allowed the assessee this claim. Thus no reason to confirm the order of the CIT, finding his exercise of revisionary power to be based on an incorrect interpretation of the provisions of law on the issue - Appeal of the assessee is allowed.
Issues involved:
The judgment involves the interpretation of Section 54F of the Income Tax Act, 1961 regarding the eligibility of the assessee to claim exemption of capital gains for the purchase of land beyond the prescribed time limit of two years from the date of transfer of shares. Issue 1: Incorrect application of law by the Ld. Pr.CIT The Ld. Counsel for the assessee argued that the order passed by the Ld. Pr.CIT was unsustainable in law as it incorrectly held the assessment order erroneous due to an incorrect application of law. The Ld. Pr.CIT found the assessment order erroneous for allowing the claim of deduction of Capital Gain under Section 54F of the Act, amounting to Rs. 6,82,74,989, on the purchase of land beyond the prescribed period of two years from the date of transfer of shares. Issue 2: Interpretation of Section 54F of the Act The Ld. Pr.CIT held that the claim of deduction under Section 54F of the Act, on account of the purchase of land, was not in accordance with law as the land was purchased beyond the prescribed period of two years from the date of transfer of the original asset. The Ld. Counsel for the assessee contended that the Pr. CIT misinterpreted the provisions of Section 54F by applying the time limit for the purchase of a new property to the intention of constructing a new property, which was incorrect. The Ld. DR agreed that the assessee is provided a time period of three years for the construction of a house property for claiming exemption of Capital Gain under Section 54F of the Act. Decision: After reviewing Section 54F of the Act, the tribunal agreed that the assessee is provided a time period of three years for the construction of a house property for claiming exemption of capital gains. The tribunal found that the Ld. Pr.CIT misinterpreted the provision of law and incorrectly held the assessment order to be erroneous. Therefore, the tribunal set aside the order of the Ld. Pr.CIT and allowed the appeal of the assessee. Conclusion: The tribunal allowed the appeal of the assessee, stating that the Ld. Pr.CIT's exercise of revisionary power was based on an incorrect interpretation of the provisions of law regarding the eligibility of the assessee to claim exemption of capital gains under Section 54F of the Act.
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