Tribunal denies deduction under section 54F for multiple properties, upholds CIT(A)'s decision.

The Tribunal upheld the CIT(A)'s decision, dismissing the appeal and affirming that the appellant was not entitled to the deduction under section 54F(1) for both residential properties purchased within one year from the date of sale of the original asset, in accordance with the amended provisions effective from 01.04.2015. The appellant's claim for deduction was disallowed as it did not comply with the restriction to invest in only one residential house as per the amended section 54F.

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Issues Involved:
1. Legality of the appellate order dated 01-10-2018.
2. Confirmation of addition made by the AO by disallowing deduction claimed under section 54F of the Act.
3. Enhancement of assessment without issuing notice under section 251(1) of the Act.

Issue-wise Detailed Analysis:

1. Legality of the Appellate Order Dated 01-10-2018:
The appellant contested the appellate order dated 01-10-2018 passed by the CIT(A), Bangalore-7, arguing that it was opposed to law, facts, and circumstances of the case. The appellant had sold a vacant site and purchased two flats, claiming deductions under section 54F for both properties. The CIT(A) considered the amendments in section 54F effective from 01.04.2015, which specified that the exemption is available only if the investment is made in "one residential house in India." Consequently, the CIT(A) held that the appellant's claim for deduction under section 54F for both properties was not allowable.

2. Confirmation of Addition by Disallowing Deduction Claimed Under Section 54F:
The appellant argued that the deduction under section 54F should be allowed for both properties purchased. The CIT(A) noted that the amendment in section 54F by the Finance (No. 2) Act, 2014, effective from 01.04.2015, restricts the deduction to one residential house. Additionally, as per proviso (a)(ii) of section 54F(1), no deduction is allowable if the assessee purchases any residential house other than the new asset within one year after the date of transfer of the original asset. The appellant's claim was disallowed as they had purchased two residential houses within one year, making them ineligible for the deduction under the amended provisions.

3. Enhancement of Assessment Without Issuing Notice Under Section 251(1):
The appellant contended that the CIT(A) erred in directing the AO to withdraw the deduction of Rs. 28,85,940 allowed in the assessment order, resulting in an enhancement of assessment without issuing a notice under section 251(1). The CIT(A) issued a show cause notice to the appellant, conveying the legal position and requesting a response. Despite the appellant's written submissions, the CIT(A) was not satisfied and directed the AO to withdraw the allowed deduction, citing the amended provisions and the proviso to section 54F(1).

Tribunal's Decision:
The Tribunal upheld the CIT(A)'s decision, stating that the amended provisions of section 54F, effective from 01.04.2015, apply to the assessment year 2015-16. The Tribunal clarified that the law in force on the first day of the relevant assessment year is applicable. Since the appellant purchased two residential houses within one year from the date of sale of the original asset, the proviso (a)(ii) to section 54F(1) was applicable, disqualifying the appellant from claiming the deduction. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal, concluding that the appellant was not eligible for the deduction under section 54F(1) for both properties.

Conclusion:
The appeal filed by the assessee was dismissed, affirming that the assessee was not entitled to the deduction under section 54F(1) for both residential properties purchased within one year from the date of sale of the original asset, in light of the amended provisions effective from 01.04.2015.

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