Tribunal grants Assessee's appeal on section 54F deduction, emphasizes fund source verification

The tribunal allowed the appeal of the Assessee regarding the deduction under section 54F of the Income Tax Act. It emphasized the necessity of verifying the source of funds for construction when granting such deductions. The tribunal held that denying the deduction without specific inquiry into the construction funds was impermissible. The decision set aside the order of the CIT(Appeals) and favored the Assessee.

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Issues Involved:
Delay in filing appeal, allowability of deduction u/s.54F of the Income Tax Act, 1961.

Analysis:

1. Delay in Filing Appeal:
The appeal was filed with a delay of 60 days. The Assessee provided a sworn affidavit explaining the reasons for the delay, which was deemed satisfactory by the tribunal. The delay was condoned, and the appeal was admitted for hearing.

2. Allowability of Deduction u/s.54F:
The main issue revolved around the allowability of deduction u/s.54F of the Income Tax Act. The Assessing Officer had computed long term capital gains at a higher value than the actual sale consideration, invoking section 50C of the Act. The Assessee claimed exemption u/s.54F for a new house constructed using the sale proceeds. The First Appellate Authority did not allow the deduction, citing reasons like missing bills and vouchers, despite the Inspector verifying the construction. The tribunal noted that the Revenue Authorities did not dispute the construction of the new house or the source of funds. The tribunal referred to judicial precedents where deductions were allowed under similar circumstances. The tribunal held that denying the deduction without specific inquiry into the source of construction funds was not permissible. Consequently, the appeal of the Assessee was allowed, setting aside the order of the CIT(Appeals).

Conclusion:
The tribunal partly allowed the appeal of the Assessee concerning the allowability of deduction u/s.54F of the Income Tax Act, emphasizing the importance of verifying the source of funds for construction when considering such deductions.

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