Tax Appeal: Deduction u/s. 54F granted, 54B restored by Judicial Member

The appeal involved the denial of deduction u/s. 54F of the Act by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14. The Judicial Member allowed proportionate deduction based on investments made before filing the return, contrary to the CIT(A)'s decision. Additionally, the deduction u/s. 54B of the Act was allowed by the Judicial Member, restoring the AO's decision. Consequently, the appeal of the assessee was allowed, with deductions granted under both sections.

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Issues:
1. Denial of deduction u/s. 54F of the Act.
2. Enhancement of income u/s. 54B of the Act.

Denial of deduction u/s. 54F of the Act:
The appeal involved the denial of deduction u/s. 54F of the Act by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14. The Assessing Officer (AO) disallowed the deduction claimed by the assessee for not investing in a new property within the stipulated time. The assessee contended that they had made investments and furnished receipts before the filing of the income tax return. The Judicial Member referred to a decision of the Hon'ble High Court of Bombay where proportionate exemption was allowed based on the amount paid before the return filing. The Judicial Member noted that the assessee had indeed made investments before filing the return and allowed proportionate deduction, contrary to the CIT(A)'s decision. Grounds 3 and 4 raised by the assessee were allowed.

Enhancement of income u/s. 54B of the Act:
The assessee claimed deduction u/s. 54B of the Act for reinvestment in agricultural land, which was initially allowed by the AO. However, the CIT(A) sought a remand report and enhanced the total income of the assessee based on the purchase of agricultural land in individual and HUF capacities. The Judicial Member referred to a decision of the Surat Bench of Tribunal, emphasizing that the HUF could claim exemption under section 54B of the Act even if the property was registered in the name of a coparcener. The Judicial Member also cited a decision of the Hon'ble High Court of Delhi, stating that the provisions of section 54 of the Act should be interpreted liberally in favor of the taxpayer. Based on these precedents, the Judicial Member allowed the deduction u/s. 54B of the Act, restoring the AO's decision. Ground No. 5 raised by the assessee was allowed.

In conclusion, the appeal of the assessee was allowed, with deductions granted under both u/s. 54F and u/s. 54B of the Act. The order was pronounced on 5th December 2022 by Shri S.S. Viswanethra Ravi, Judicial Member.

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