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Tribunal allows deductions under sections 54EC and 54F, deems investments compliant with tax laws. The Tribunal remanded the denial of deduction u/s 54EC for further examination due to discrepancies in the dates of asset transfer, allowing the assessee ...
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Tribunal allows deductions under sections 54EC and 54F, deems investments compliant with tax laws.
The Tribunal remanded the denial of deduction u/s 54EC for further examination due to discrepancies in the dates of asset transfer, allowing the assessee to invest in two financial years within six months. Regarding the denial of deduction u/s 54F for a residential house under construction not acquired within two years, the Tribunal found the investment to be bonafide and compliant with tax laws, directing the deletion of the addition made by lower authorities. The appeal was partly allowed in favor of the assessee, addressing both issues effectively.
Issues: 1. Denial of deduction u/s 54EC for investment in two financial years within six months. 2. Denial of deduction u/s 54F for a residential house under construction not acquired within two years.
Analysis:
Issue 1: Denial of deduction u/s 54EC The appeal was against the denial of deduction u/s 54EC for an investment made in two financial years within six months. The confusion arose regarding the date of transfer of the asset, with the AO claiming it to be 06.10.2009, while the assessee argued it was 10.10.2009. The Tribunal found discrepancies in the dates and remanded the issue to the AO for further examination. The Tribunal referred to various judgments supporting the assessee's claim of being allowed to invest in two financial years within the stipulated period of six months. The Tribunal relied on the clarity of the proviso to section 54EC and allowed the aggregate claim of the assessee for Rs. 1 crore, subject to the AO's decision after verifying the dates.
Issue 2: Denial of deduction u/s 54F The assessee's claim for deduction u/s 54F for Rs. 86 lakhs was denied by the AO on the grounds that the residential house acquired was under construction and not completed within two years. During the hearing, it was revealed that the construction was not completed by the builder, leading to the transaction being canceled, and the corresponding income offered in the subsequent assessment year. The Tribunal noted that the assessee had made a bonafide investment in the under-construction flat, and the income was offered in the subsequent year as per the law. The Tribunal found no deliberate tax evasion and directed the deletion of the addition made by the lower authorities. Consequently, the Tribunal partly allowed the appeal filed by the assessee.
In conclusion, the Tribunal addressed the issues of denial of deductions u/s 54EC and u/s 54F, remanding one to the AO for further examination and allowing the other in favor of the assessee due to the bonafide nature of the investment and compliance with tax laws.
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