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TMI Blog2021 (11) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital gain is considered for the purpose of making the investment in another residential property whereas under the provisions of section 54F of the Act the amount of net consideration is considered for the purpose of making the investment in another residential property. On perusal of the direction of the learned principal CIT we find that it was directed to the AO to make a fresh assessment in accordance with the provisions of law in terms of section 54F of the Act. Thus, it was clear that the AO was authorized to make a fresh assessment as per the provisions of law after the necessary verification in terms of section 54F of the Act. Without prejudice to the above, we also note that, assuming the assessee has claimed deduction under section 54F of the Act, then it was the duty of the revenue to provide the rightful claim of the assessee which is available under the provisions of law but the same was not claimed by the assessee under the wrong believe. As such, the Revenue cannot take the benefit of the ignorance of the assessee rather it was duty-bound to extend the benefit available to the assessee under the provisions of law. Exemption u/s 54F of the Act on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing grounds of appeal: 1.1 The order passed u/s. 250 on 26.06.2018 for A.Y. 2012-13 by CIT(A)-3, Abad upholding the disallowance of exemption aggregating to ₹ 1,39,08,029/- u/s. 54 and 54F made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned disallowance. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming the disallowance of exemption of ₹ 1,23,10,660/- u/s. 54F though it was not subject matter of revision or direction by Pr. CIT in his order dated 29.03.2017 and the conditions required for availing the exemption were fulfilled. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the disallowance of exemption of ₹ 1,23,10,660/- u/s. 54F though it was not subject matter of revision or direction by Pr. CIT in his order dated 29.03.2017 and the conditions required for availing the exemption were fulfilled. 3.1 The Ld. CIT(A) has grievously e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by issuing show cause notice dated 4th October 2017 seeking clarification from the assessee for disallowing the exemption claimed by him under the provisions of section 54F of the Act. 4.3. The assessee in response to such show cause notice vide letter dated 15th December 2017 submitted that he has sold two properties being bungalow and the land in the year under consideration. He has claimed exemption under section 54 of the Act with respect to the sale of bungalow. Likewise, the exemption under section 54F of the Act was claimed with respect to the sale of land. The necessary details for the exemption claimed under the respective section stand as under: FACTS OF THE CASE RELATING TO EXEMPTION OF LONG TERM CAPTIAL GAIN U/S 54 AS WELL AS 54F ASSTT. YEAR 2012-2013 Date of Purchase Sale Date Amount of Sate Cost Indexed Amount Long Term Capita! Gam Cost of New Property Purchase 1 Paras Bunglow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. However the assessee has not declared any income from house property in any of the Assessment Years starting from A.Y. 2008-09 to 2012-13. Thus he did not fulfill all the ingredient to claim exemption under section 54 of the Act. Thus, the AO, in view of the above observation denied the exemption of ₹ 1,39,08,029/- and added to the total income of the assessee. 5. Aggrieved assessee carried the matter to the learned CIT (A). 6. The assessee before learned CIT(A) reiterated his submission that he claimed exemption under section 54 of the Act against gain of ₹ 1,23,10,660/- on sale of Bungalow and exemption under section 54F for ₹ 15,97,369/- against gain on sale of land. The assessee further submitted that the learned PCIT has revised the assessment order under section 263 for exemption under section 54F of the Act only. Consequential notice dated 11th December 2017 issued by the AO was also with respect to exemption under section 54F only. Accordingly the assessee contended that the AO has exceeded his jurisdiction in disallowing the exemption under section 54 of ₹ 1,23,10,600/- claimed on account of sale of Bungalow. The assessee further co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 12,96,135/- {claimed as asset in balance sheet and used for residence of the staff members of my business). * 2 Residential Flat 31.03.2012 ₹ 15,21,492/- Used as Residence * This is a case of individual and not firm or company having established business so as to provide residential accommodation to the so-ca led staff and the undersigned concludes it to be a avarice claim attempting to reduce the tax liability. The findings in para-3 of order u/s. 263 dated 29.03.2017 are that the appellant was having two residential flats and one residential building as on 31.03.2011. Therefore; LTCG arising on sale of Paras Bunglow dated 20.10.2011 is not eligible for any deduction u/s. 54 (CIT order u/s. 263 at para [6 (it)] mentions, when, due to notice u/s. 263, he became aware that he can't get benefit of section 54F on sale of residential house, he is now claiming it u/s. 54). Therefore, there is no gainsaying in emphasizing section 54 or 54F or may be the appellant does not have a case on facts, therefore, trying to scuttle the issue by overem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed exemption under section 54F of the Act on account of sale of the bungalow as well as the land. 10.1. First, we proceed to see whether the assessee has claimed exemption under section 54F of the Act with respect to the sale of bungalow. For this purpose, we referred the income tax statement filed by the assessee placed on pages 91 to 95 of the paper book which is reproduced as under: INCOME FROM LONG TERM CAPITAL GAIN Rs. Rs. Rs. Sale of Items As per List Enclosed 23332000 Less: (Cost of Acquisition etc.) (-)9423971 Indexed Cost of Acquisition Less: (Exemptions u/s.54B/54D/54G etc.) 17000000 (-)13908020 NIL Investment in Property U/s.54-A 10.2. On perusal of the above statement of income of the assessee, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire capital gain of ₹ 1,23,10,660/-. Thus the assessee considered the amount of capital gain for investment which was claimed as exempted under section 54 of the Act. In other words, had the assessee claimed exemption under section 54F of the Act and the same should have been Limited to proportion of amount invested viz a viz net consideration i.e. ₹ 97,34,010/- (1.7 crore/2.15 crore x 1,23,10,660) only. 10.7. Admittedly, the assessee has claimed exemption of ₹ 1,23,10,660/- which is an amount eligible for exemption under section 54 of the Act. Thus, it can be inferred that the deduction was claimed with respect to the sale of bungalow under the provisions of section 54 of the Act. 10.8. In this background, we proceed to adjudicate the question which raised before us that the AO has exceeded his jurisdiction under set aside proceeding or not? 10.9. We find it important to bring on record that the AO in the set-aside proceedings is bound by the direction of the higher authority. The proceedings in the present case were initiated by the AO in consequence to the direction of the learned principal CIT under section 263 of the Act which are reproduced as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the ITAT, Delhi Bench, after discussing several decisions of the Court including that of Anchor Pressings (P.) Ltd. (supra) held that the jurisdiction u/s. 154 can be assumed if there is a mistake apparent from record. If on the basis of material on record, the assessee is entitled to a relief which has remained to be allowed, then it would constitute a mistake apparent from record and consequently, such relief cannot be denied merely because the assessee omitted to claim the same by mistake. 10.12. Now coming to the exemption claimed under section 54F of the Act on the sale of land by the assessee. There is no dispute to the fact that the assessee has claimed the exemption under section 54F of the Act on the sale of land. As such the assessee can claim the deduction under section 54F of the Act on the sale of long-term capital asset being land in the present case. Furthermore, this fact was also admitted by the assessee before the authorities below. However, the authorities below have denied the exemption claimed by the assessee under section 54F of the Act on the sale of land on the reasoning that the assessee on the date of transfer of land was the owner of more than ..... 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