2020 (1) TMI 407 - HC - Income Tax

Court Upholds Condonation of Delay & Deductions Under Income Tax Act

Pr. Commissioner of Income Tax-17 New Delhi Versus sh. Akshay Sobti, Sh. Pradeep Sobti, Smt. Seema Sobti

Pr. Commissioner of Income Tax-17 New Delhi Versus sh. Akshay Sobti, Sh. Pradeep Sobti, Smt. Seema Sobti - [2020] 423 ITR 321 (Del) Issues Involved:1. Condonation of delay in re-filing applications.2. Deduction under Section 54 of the Income Tax Act, 1961.3. Deduction under Section 54EC of the Income Tax Act, 1961.4. Addition on account of suppression of maintenance charges under the head 'income from house property.'Issue-wise Detailed Analysis:1. Condonation of Delay in Re-filing Applications:The court addressed the condonation of delay in re-filing applications for ITA 991/2019, ITA 992/2019, and ITA 996/2019. The delays of 39 days, 34 days, and 39 days respectively were condoned for reasons stated in the applications, and the applications were disposed of accordingly.2. Deduction under Section 54 of the Income Tax Act, 1961:The appeals under Section 260A of the Income Tax Act, 1961, emanated from ITAT orders dismissing the Revenue's appeals and upholding the CIT (A) orders allowing deductions under Section 54 and 54EC, consequently deleting the additions made by the Assessing Officer (AO). The case involved the sale of a property at Jor Bagh, New Delhi, and the subsequent investment in a new house property at 'Magnolias DLF Golf Links.' The AO disallowed the deduction under Section 54 on the grounds that the date of acquisition (10.02.2006) was beyond the one-year period provided under Section 54 and prior to the date of transfer. The CIT (A) held that the booking of the flat with the builder constituted construction of a new residential house, not purchase, and since construction was completed within three years of the sale of the original asset, the assessee was entitled to relief under Section 54. The ITAT upheld this view, and the High Court found no cogent ground to deny the benefit of Section 54, emphasizing the beneficial nature of the provision for assessees replacing the original long-term capital asset with a new one.3. Deduction under Section 54EC of the Income Tax Act, 1961:The AO made a disallowance of Rs. 50,00,000/- under Section 54EC, which was contested. The CIT (A) and ITAT relied on the judgment of the High Court of Madras in CIT vs. Coromandal Industries Ltd., which clarified that the restriction on investment in bonds of Rs. 50,00,000/- was effective from 01.04.2015 for AY 2015-16 and subsequent years. The High Court upheld this view, noting that the restriction did not apply to the assessment year in question and that the provision was intended to avoid litigation for previous years.4. Addition on Account of Suppression of Maintenance Charges under the Head 'Income from House Property':The AO made an addition of Rs. 14,07,474/- on account of suppression of maintenance charges received from rented property. The CIT (A) found that no maintenance charges were received by the appellant, as confirmed by the tenant and verifiable from the statement of account, TDS certificates, and Form 26AS. The ITAT upheld this finding, and the High Court noted that the presumption drawn by the AO was based on conjectures and surmises without proper inquiry, thus upholding the deletion of the addition.Conclusion:The High Court dismissed the appeals, finding no substantial question of law requiring consideration. The court upheld the factual findings of the lower tax authorities and ITAT, emphasizing the beneficial nature of the provisions under Sections 54 and 54EC for assessees replacing long-term capital assets. The court also found no merit in the Revenue's arguments regarding the suppression of maintenance charges.