2021 (12) TMI 535 - AT - Income Tax

Tribunal Allows Assessee's Appeal on Section 54/54F Disallowance, Penalty Deleted

The Tribunal allowed the assessee's appeal regarding the disallowance of benefits under Section 54/54F of the Income Tax Act. The Tribunal accepted the ... Benefit of deduction u/s 54 v/s 54F - CIT(A) allowed the Claim U/s 54F instead of Section 54 - HELD THAT:- The sale deed was executed for sale of residential plot on 28/10/2009 and the assessee had given contract for construction of the house on 12/11/2009. It is a trite law that the benefit of Section 54 is available only to an individual or HUF when the asset transferred should be a long-term capital asset, being a residential house property and sold within a period of one year before or two years after the date of - transfer of old house, the -taxpayer should - acquire- another residential house or should construct a residential house within a period of three years from the date of transfer of the old house. In case of compulsory acquisition the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional). In the present case, the sale deed was executed on 28/10/2009 and the construction was started within one year from the date of sell. Therefore, considering the totality of facts and circumstances of the case, the assessee is entitled to get benefit of deduction u/s 54 and we allow the claim u/s 54 of the Act to the assessee Issues:- Disallowance of benefit under Section 54/54F of the Income Tax Act- Dispute over deduction claimed under Section 54F instead of Section 54- Levying and confirming penalty under Section 271(1)(c) of the ActIssue 1: Disallowance of benefit under Section 54/54F of the Income Tax Act:The assessee appealed against the order of the ld. CIT(A) for not allowing the benefit of Section 54/54F of the Income Tax Act. The AO only considered an amount of Rs. 3,50,000 withdrawn from the bank and did not include the rest of the payment amount of Rs. 2,61,250, stating lack of details for the payment. The assessee sold a residential property and invested Rs. 6,11,250 for construction of a new house. The Tribunal observed that the assessee submitted supporting documents like the construction agreement, affidavit, valuation report, and photographs, trying to prove the source of funds. Referring to legal precedents, the Tribunal emphasized that suspicion cannot replace evidence. The Tribunal found that the conditions for claiming deduction under Section 54 were met, and allowed the claim of Rs. 6,11,250 under Section 54 of the Act.Issue 2: Dispute over deduction claimed under Section 54F instead of Section 54:The CIT(A) allowed the claim under Section 54F instead of Section 54, which was disputed. However, the Tribunal noted that the claim itself was not disputed, only the section under which the deduction was claimed. The AO had allowed the claim under Section 54, but the CIT(A) allowed it under Section 54F. The Tribunal clarified the basic conditions for claiming deduction under Section 54 and highlighted that the deduction itself was not in dispute. Ultimately, the Tribunal allowed the claim of Rs. 6,11,250 under Section 54 of the Act.Issue 3: Levying and confirming penalty under Section 271(1)(c) of the Act:The assessee filed an appeal against the penalty levied under Section 271(1)(c) of the Act. Since the Tribunal allowed the claim of deduction under Section 54 of the Act in favor of the assessee, it concluded that the penalty had no basis. Therefore, the Tribunal directed the deletion of the penalty. Consequently, both appeals of the assessee were allowed, and the order was pronounced in open court on 10/11/2021.This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the Tribunal's decision on each issue, ensuring a comprehensive understanding of the legal aspects and outcomes of the case.