2015 (12) TMI 704 - AT - Income Tax

Appeal granted for tax exemption under Section 54F emphasizing evidence verification and documentation

Smt. Selvi Venkatasubramani Versus Income-tax Officer, Ward 9 (4), Bangalore.

The Tribunal allowed the appeal for statistical purposes, emphasizing the importance of verifying additional evidence to determine the eligibility for ... Claim of deduction u/s 54F - AO denied the claim of deduction on the ground that the assessee owned more than one residential house on the date of sale of the original asset - Held that:- As regards the denial of claim u/s 54F on the ground that the assessee did not deposit the sale proceeds in the capital gain account as per the provisions of subsec.( 4) of sec.54F, we note that this issue is now settled by the decisions of Fatima Bai vs. ITO reported in (2008 (10) TMI 563 - KARNATAKA HIGH COURT) and in the case of Smt.Vrinda P.Issac (2012 (8) TMI 608 - KARNATAKA HIGH COURT) wherein held if the assessee has utilised the entire capital gain by purchase of a house or construction of the new house within the stipulated period, the benefit of sec.54F cannot be denied.Accordingly, if the assessee has constructed the new house and utilised the sale proceeds and capital gain within the period of limitation as provided u/s 54F, then the claim of the assessee u/s 54F cannot be denied. As regards the objections of the authorities below in respect of the assessee owning more than two residential houses and utilisation of the sale proceeds for construction of new house, we find that the assessee has produced relevant record in support of the claim along with affidavit. Prima facie it appears that the residential house at Kilpauk, Chennai was demolished on 18/5/2007 and thereafter, construction was completed by 2/9/2009 as per the certificate issued by the Corporation of Chennai. Further, the assessee has also produced the certificate of Chartered Engineer, confirmation letter issued by the demolisher of the property as well as bank account details along with details of the contractor who has carried out the construction work. Since these evidences were not examined by the authorities below, therefore, in the facts and circumstances of the case as well as in the interest of justice, we admit the additional evidence and set aside the issue to the record of the AO to verify the additional evidence filed by the assessee in support of the claim and then decide the issue as per law and in the light of the observations made by us. - Decided in favour of assessee for statistical purposes. Issues:1. Denial of exemption u/s 54F of the IT Act.2. Justification for not giving an opportunity to the Appellant before passing the appellate order.3. Dispute regarding the demolition of the property at Kilpauk, Chennai.4. Classification of the property at Gedalahalli as a residential house.5. Interpretation of the decision of the Hon'ble Delhi High Court in Mehta D.P. v CIT(2001) 251 ITR 529(Del).6. Direction given by the CIT(A) in respect of a specific amount without seeking information from the Appellant.Analysis:1. The appeal involved the denial of exemption u/s 54F of the IT Act to the assessee by the AO, based on the ownership of more than one residential house on the date of the original asset's sale. The CIT(A) upheld this denial, questioning the lack of proof of the property's demolition at Kilpauk, Chennai, and the utilization of sale proceeds for the new residential house. The Tribunal admitted additional evidence submitted by the assessee, directing the AO to verify it to decide the issue in line with the law.2. The Appellant raised concerns about the denial of natural justice by the CIT(A) for not providing an opportunity before passing the appellate order. However, the Tribunal's focus shifted towards the substantive issue of exemption u/s 54F, where evidence submission and verification took precedence over procedural matters.3. The dispute over the demolition of the property at Kilpauk, Chennai, was crucial in determining the applicability of the exemption. The Tribunal considered evidence such as affidavits, certificates, and bank account details to establish that the residential house was demolished before the sale of the original asset, countering the AO's claim of multiple property ownership.4. The classification of the property at Gedalahalli as a residential house was contested, with the Appellant arguing its unsuitability for habitation. This issue, although raised, did not receive detailed analysis in the judgment, as the focus remained on the primary issue of exemption u/s 54F.5. The Appellant cited the decision of the Hon'ble Delhi High Court in Mehta D.P. v CIT(2001) to support the contention that an uninhabitable building was not eligible for exemption u/s 54 of the Act. However, the Tribunal's decision relied more on the evidence presented by the assessee regarding the demolition and construction timelines.6. The direction given by the CIT(A) regarding a specific amount without seeking information from the Appellant was challenged. The Tribunal did not delve deeply into this issue in the judgment, as the primary focus was on the substantive matter of exemption u/s 54F and the verification of additional evidence to support the Appellant's claim.In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of verifying additional evidence to determine the eligibility for exemption u/s 54F of the IT Act. The judgment highlighted the significance of supporting documentation and the need for thorough examination of facts to make informed decisions in tax matters.