Tribunal upholds disallowance of deduction; remits cost evaluation back to Assessing Officer

The Tribunal upheld the disallowance of the deduction claimed under section 54F due to lack of evidence of utilizing sale proceeds for house construction. The issue regarding the non-consideration of an amount of Rs. 4,32,720 as part of the cost of acquisition was remitted back to the Assessing Officer for reevaluation based on additional evidence submitted by the assessee. The appeal was partly allowed for statistical purposes.

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Issues:
1. Disallowance of deduction claimed u/s 54F of the Act
2. Non-consideration of an amount of Rs. 4,32,720 as part of cost of acquisition of immovable property for computing capital gain

Analysis:

Issue 1: Disallowance of deduction claimed u/s 54F of the Act
The appeal by the assessee was against the order of the ld. CIT(A)-IV, Hyderabad for the AY 2008-09. The first issue pertained to the disallowance of the deduction claimed u/s 54F of the Act. The assessee sold an immovable property during the relevant year and claimed a deduction u/s 54F. However, the Assessing Officer (AO) disallowed the deduction as the sale consideration was not deposited in the capital gain account scheme. The ld. CIT(A) upheld the disallowance stating that the assessee did not fulfill the conditions of section 54 and lacked evidence of constructing a house. The Tribunal observed that the agreement with the father did not confer legal ownership rights to the assessee over the property. The Tribunal dismissed the appeal, stating that there was no evidence to prove the utilization of sale proceeds for house construction, thereby denying the deduction u/s 54.

Issue 2: Non-consideration of an amount of Rs. 4,32,720 as part of cost of acquisition
The second issue revolved around the disallowance of Rs. 4,32,720 from being considered as part of the cost of acquisition. The AO recomputed the indexed cost of acquisition as the assessee failed to provide a basis for the cost of acquisition claimed. The assessee submitted details of the cost of acquisition, including construction costs paid to Parsn Foundation. The ld. CIT(A) rejected the claim, stating that the confirmation letter submitted did not prove how the amount was paid. The Tribunal allowed the additional evidence submitted by the assessee and remitted the matter back to the AO for fresh consideration after providing an opportunity for hearing to the assessee. The appeal was partly allowed for statistical purposes.

In conclusion, the Tribunal upheld the disallowance of the deduction claimed u/s 54F due to lack of evidence of utilizing sale proceeds for house construction. The matter regarding the cost of acquisition was remitted back to the AO for reevaluation based on the additional evidence submitted by the assessee.

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