Appeal Partially Allowed: Assessee Eligible for Exemption

The ITAT partially allowed the appeal, holding the assessee eligible for exemption under section 54F and overturning the CIT's decision. The ITAT emphasized the absence of restrictions in the statutory provisions, affirming the right of the assessee to claim exemptions under both sections 54B and 54F. The assessment order was set aside for a de novo assessment, directing the Assessing Officer to re-examine the profit estimation and denying the exemption under section 54F.

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Issues:
1. Estimation of profit on subcontracted work.
2. Claim of exemption under section 54F.

Estimation of profit on subcontracted work:
The appeal was against an order passed by the CIT under section 263 of the Act for the assessment year 2009-10. The Assessing Officer had estimated profit at 2% on work subcontracted to third parties without offering any commission/royalty, resulting in an increased income. The CIT found this estimation erroneous and prejudicial to revenue. The CIT also noted the failure to examine the claim of exemption under section 54F. The assessee argued that there was no error in the assessment order, but the CIT disagreed. Consequently, the assessment order was set aside for a de novo assessment, directing the Assessing Officer to re-examine the profit estimation and denying the exemption under section 54F.

Claim of exemption under section 54F:
The CIT observed that since the sale proceeds of agricultural land were invested in acquiring a non-agricultural asset, the assessee was deemed ineligible for exemption under section 54F. The Assessing Officer had allowed the claim initially, but the CIT disagreed in the section 263 order. The assessee contended that there was no restriction preventing the claim of exemption under section 54F, even if exemption under section 54B was availed. The ITAT analyzed the statutory provisions of section 54B and 54F, finding no explicit restriction on claiming both exemptions. Citing a previous case, the ITAT concluded that the assessee was entitled to exemption under both sections. Consequently, the ITAT held that the assessee was eligible for exemption under section 54F for the amount invested in purchasing an apartment, overturning the CIT's decision and restoring the Assessing Officer's order.

In conclusion, the ITAT partially allowed the appeal, emphasizing the eligibility of the assessee for exemption under section 54F and setting aside the CIT's decision on this issue. The judgment highlighted the absence of restrictions in the statutory provisions, affirming the right of the assessee to claim exemptions under both section 54B and 54F.

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