Tribunal directs reassessment of deduction & rejects excess jurisdiction in capital gains tax ruling.

The Tribunal allowed the assessee's appeal, directing the Assessing Officer to reconsider the deduction under section 54F with additional evidence. The Tribunal also overturned the direction to tax capital gains for A.Y. 2015-16, ruling that the ld. CIT(Appeals) exceeded jurisdiction.

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Issues involved:
1. Disallowance of deduction under section 54F by Assessing Officer.
2. Disallowance of deduction for cost of construction of residential house property.
3. Direction to tax capital gains for A.Y. 2015-16 by ld. CIT(Appeals).

Issue 1: Disallowance of deduction under section 54F by Assessing Officer:
The Assessing Officer disallowed the assessee's claim for deduction under section 54F, restricting it to a lower amount. The claim was related to the exemption of long-term capital gain arising from the sale of property. The Assessing Officer held that the exemption claimed for the purchase of land did not fall under the purview of "construction of house property." Additionally, the cost of construction of the residential house property was disallowed as the evidence of completion within the stipulated time was not provided by the assessee. The total income was determined accordingly.

Issue 2: Disallowance of deduction for cost of construction of residential house property:
The ld. CIT(Appeals) allowed the claim of the assessee for deduction under section 54F regarding the investment made in purchasing a plot for constructing a residential house. This decision was based on a CBDT Circular clarifying that the cost of the plot could be included in the cost of the residential house for claiming the deduction. However, the claim for deduction related to the cost of construction of the house property was not allowed due to lack of evidence showing completion within the prescribed time. The disallowed amount was sustained to a lower extent by the ld. CIT(Appeals.

Issue 3: Direction to tax capital gains for A.Y. 2015-16 by ld. CIT(Appeals):
The ld. CIT(Appeals) directed the Assessing Officer to tax the capital gains for A.Y. 2015-16 due to the non-completion of the house construction within the prescribed period. The direction was challenged by the assessee, arguing that it exceeded the jurisdiction of the ld. CIT(Appeals) as the assessment year was not under appeal during the proceedings. The Tribunal found that the ld. CIT(Appeals) did not have the authority to give such a direction for an assessment year not in appeal. Citing relevant case law, the Tribunal canceled the direction given by the ld. CIT(Appeals) and allowed the ground raised by the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to reconsider the deduction under section 54F in light of additional evidence provided by the assessee. The Tribunal also canceled the direction of taxing capital gains for A.Y. 2015-16, as it was beyond the jurisdiction of the ld. CIT(Appeals). The order was pronounced in an open court on January 18, 2019.

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