Tribunal Partially Upholds Appeal on Capital Gains, Orders Verification

The Tribunal partly allowed the appeal, confirming additions on account of Short Term Capital Gains (STCG) and directing verification for deduction under Section 54F for Long Term Capital Gains (LTCG). The order regarding LTCG was set aside, while the order on STCG was upheld. The appeal was heard on 25th June 2021.

---

---

Issues Involved:
1. Confirmation of additions made on account of Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG).
2. Eligibility for exemption under Section 54F of the Income Tax Act.
3. Validity of the appellate order passed in the name of the deceased assessee's husband.

Issue-wise Detailed Analysis:

1. Confirmation of Additions on Account of LTCG and STCG:
The appellant challenged the confirmation of additions made by the Assessing Officer (AO) and sustained by the Commissioner of Income Tax (Appeals) [CIT(A)] on account of LTCG and STCG amounting to Rs. 4,91,800/- and Rs. 27,30,000/- respectively. The AO determined these amounts based on the sale of four flats received by the assessee through a development agreement with M/s Samyuktha Constructions, Hyderabad. The AO calculated the sale consideration of land at Rs. 6,72,000/- and the cost of acquisition at Rs. 1,80,200/-, resulting in LTCG of Rs. 4,91,800/-. Similarly, the AO arrived at the sale consideration of the built-up area at Rs. 27,30,000/- for the four flats, which was treated as STCG. The Tribunal upheld the AO's and CIT(A)'s findings, confirming the computation of income under LTCG and STCG.

2. Eligibility for Exemption Under Section 54F:
The appellant claimed exemption under Section 54F of the Income Tax Act for the investment made in a new flat. The AO rejected the claim as the appellant neither purchased the flat before the end of the financial year nor deposited the amount in the specified account. However, the Tribunal observed that the assessee had made the investment within the stipulated time and used the amount for acquiring the new asset. Citing the decision of the ITAT Bangalore in Ramaiah Dorairaj v. ITO and the judgment of the Hon'ble Karnataka High Court in K. Ramachandra Rao, the Tribunal held that the assessee is eligible for deduction under Section 54F, even if the amount was not deposited in the specified account, as the intention was to invest in the new property. The Tribunal directed the AO to verify the facts and allow the deduction under Section 54F for LTCG.

3. Validity of the Appellate Order Passed in the Name of the Deceased Assessee's Husband:
The appellant contended that the CIT(A) erred in passing the order in the name of the deceased assessee's husband, who passed away on 12 June 2013. However, this ground was withdrawn by the appellant during the appeal hearing and was dismissed as withdrawn by the Tribunal.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes. It confirmed the additions made on account of STCG and directed the AO to verify the facts regarding the investment in the new asset and allow the deduction under Section 54F for LTCG. The order of the CIT(A) in respect of LTCG was set aside, and the order in respect of STCG was confirmed. The appeal was pronounced in the open court on 25th June 2021.

---