2021 (10) TMI 16 - AT - Income Tax

Appellate Tribunal directs fresh examination of denial of tax exemptions

S. Ramesh Versus ITO Ward-4 (3) (5) Bengaluru

The Appellate Tribunal allowed the appeal for statistical purposes, setting aside the previous order and directing a fresh examination of all issues ... Exemption u/s. 54F - Denial of claim as assessee has not made any investment in purchase/construction of any residential house - assessee himself has admitted that the existing residential property owned by him consisted of 3 independent houses out of which one is self-occupied and other two have been let out for rent. Since the assessee is having more than one residential house, the conditions prescribed u/s 54F of the Act has been violated - HELD THAT:- We have noticed that the assessee has paid the amount of ₹ 80.00 lakhs on 22.4.2013, while the vacant plot was sold on 30-8-2012, meaning thereby, the assessee has invested the a sum of ₹ 80 lakhs, out of sale consideration of ₹ 85.00 lakhs in purchasing a new residential property. The fact that the assessee got the property only in 2018 is due to reasons beyond the control of the assessee, which has been narrated in the earlier paragraphs. Hence the assessee should not suffer for the delinquency of the builder and accordingly we are of the view that the assessee should be granted deduction u/s 54F of the Act for the amount of ₹ 80 lakhs given to the builder within the prescribed time, subject to fulfillment of other conditions. Since there was no occasion for the AO to examine details of purchase of new property, we are remitting this issue for examining the details of purchase of new residential house property. Assessee is owning three residential houses - The ground floor is used by the assessee and the first floor has been let out to two tenants. The assessee invited our attention to the building plan and some other documents. Accordingly the Ld A.R contended that there is no violation of sec.54F of the Act on this aspect. In our view, this fact also requires examination at the end of the AO. If the assessee owns only one residential property, which consisted of three residential units, in our view, it should be considered as one residential house only. In this regard, we derive support from the decision rendered by the co-ordinate bench in the case of Shri Bhatkal Ramarao Prakash [2019 (2) TMI 1059 - ITAT BANGALORE] Appeal of the assessee is treated as allowed for statistical purposes. Issues:Challenge to order dated 25.1.2019 for assessment year 2013-14; Denial of exemption u/s. 54F; Disallowance of deductions for brokerage, commission, and cost of improvement; Disallowance of interest claimed u/s. 24(b); Disallowance of loss from profession; Levying of interest u/s. 234A, 234B, and 234C.Analysis:1. The assessee appealed against the denial of exemption u/s. 54F of the Income-tax Act, 1961. The case involved the sale of a property and subsequent investment in a residential complex. The Assessing Officer (AO) disallowed the deduction on grounds that the property was sold to another person and the assessee owned multiple residential houses. The Appellate Tribunal found that the assessee had indeed invested in a new residential property within the prescribed time, despite delays by the builder. The issue was remitted to the AO for further examination.2. The AO also disallowed deductions claimed for brokerage, commission, cost of improvement, and interest u/s. 24(b). The Appellate Tribunal directed a fresh examination of these issues as the main issue of exemption u/s. 54F was remitted back to the AO. The decision was based on the need for a comprehensive review of all related matters.3. The disallowance of the loss from the profession was another issue raised in the appeal. The AO had questioned the substantiation of the claimed loss. The Appellate Tribunal found that the loss was correctly claimed and allowable as a deduction. The matter was to be reviewed along with other issues upon remittance to the AO.4. The levy of interest u/s. 234A, 234B, and 234C was challenged by the appellant. The Tribunal directed the deletion of erroneously levied interest, emphasizing the need for a fair and accurate assessment based on the final determination of all issues.5. The Tribunal's decision to remit the main issue of exemption u/s. 54F back to the AO for detailed examination impacted the resolution of all other related issues raised in the appeal. The comprehensive review of all aspects was deemed necessary for a just and informed decision-making process.In conclusion, the Appellate Tribunal allowed the appeal for statistical purposes, setting aside the previous order and directing a fresh examination of all issues related to the denial of exemption u/s. 54F and other associated deductions and levies. The judgment highlighted the importance of thorough scrutiny and fair consideration of all relevant factors in tax assessments and appeals.