2014 (3) TMI 26 - AT - Income Tax

Appellate Tribunal affirms deduction under section 54F for new property investment

The Appellate Tribunal upheld the CIT(A)'s decision, allowing the Assessee's deduction under section 54F for investment in a new residential property. The ... Allowability of deduction u/s 54F of the Act – Held that:- The CIT(A) while allowing this deduction has given a finding that Assessee had executed sale deed for sale of land at Jayendra Park Housing Society on 26.03.2007 for Rs. 60 lacs and the transfer as per definition u/s. 2(47) and Section 45 of the Act was 26.03.2007 - the payments aggregating Rs. 17.50 lacs made during the period 27.03.2006 to 13.10.2006 is also eligible for deduction u/s 54F as the condition of one year before and two years after the sale is duly complied with - the investment during the period 26.03.2006 to 26.03.2009 is eligible for deduction u/s. 54F - Relying upon CIT vs. J.R. Subramanya Bhat [1986 (6) TMI 7 - KARNATAKA High Court] - it was immaterial that the construction of the new building was started before the sale of the old building - Revenue could not bring any contrary material on record to controvert the findings of CIT(A) – thus, there is no reason to interfere with the order of CIT(A) – Decided against Revenue. Issues Involved:Allowability of deduction u/s.54F for investment in new residential property.Analysis:The appeal was filed by the Revenue against the order of CIT(A) for the assessment year 2007-08. The Assessee, an individual with income from capital gains, claimed a deduction under section 54F for an amount invested in the construction of a new residential property after selling a plot of land. The Assessing Officer disallowed a portion of the claimed deduction, stating that the investment made before the date of sale of the original asset was not eligible for deduction under section 54F. The CIT(A), however, allowed the deduction after considering the legislative intent and legal principles. The CIT(A) emphasized that the conditions mentioned in Section 54F do not specify that the investment in new residential property cannot be made before the date of transfer, and the date of commencement of construction is irrelevant. The CIT(A) concluded that the Assessee met the conditions specified in the section, making them eligible for the deduction.The Revenue, aggrieved by the CIT(A)'s order, appealed before the Appellate Tribunal. The Tribunal noted that the CIT(A) had correctly interpreted the law and found no reason to interfere with the CIT(A)'s order. The Tribunal agreed with the CIT(A)'s findings that the Assessee had fulfilled the conditions for claiming the deduction under section 54F. The Tribunal observed that the payments made by the Assessee before the sale of the original asset were also eligible for deduction under section 54F. The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the deduction.In conclusion, the Tribunal upheld the CIT(A)'s order, emphasizing that the Assessee was entitled to the deduction under section 54F for the investment made in the new residential property. The Tribunal found no grounds to interfere with the CIT(A)'s decision and dismissed the Revenue's appeal, affirming the allowance of the deduction for the Assessee.This detailed analysis of the judgment highlights the key legal arguments, interpretations of relevant sections, and the final decision of the Appellate Tribunal regarding the deduction under section 54F.