2023 (2) TMI 162 - AT - Income Tax

Tribunal decision: Verify depreciation claim on buses, reassess under Section 54B. Consider additional evidence for deduction under Section 54F.

The Tribunal partly allowed the appeal against the Principal Commissioner of Income Tax's order under Section 263, directing the Assessing Officer to ... Revision u/s 263 - whether the assessee is entitled to deduction u/s. 54B - HELD THAT:- Since the provisions of section 54B are almost identical and are in pari materia to the provisions of section 54 and 54F of the Act, therefore, SEEMA SABHARWAL VERSUS THE ITO, WARD-4, PANCHKULA [2018 (2) TMI 863 - ITAT CHANDIGARH] case can be safely applied in this case also in relation to the issue of purchase of agricultural land within the stipulated period. Moreover, the facts of the present case are on better footing as otherwise, in this case, the assessee had deposited the proceeds of the sale deed in the capital gains account, though, a little bit belatedly as per the observation of the Ld. CIT(A), whereas, the assessee had claimed that he had deposited the sale deed proceeds within due date. Thus since the assessee had purchased the agricultural land within the stipulated period and also produced the evidence of the same at the time of assessment proceedings and further there was no doubt about the intention of the assessee from very beginning to invest the said amount for purchase of agricultural land, therefore, the view of the Ld. PCIT is not correct in exercising her revision jurisdiction u/s.263 of the Act on this issue. Claim of Depreciation on buses: Exercise of revision Jurisdiction by the PCIT - HELD THAT:- Assessee owned 7 buses and claimed depreciation upon those buses. However, no details regarding acquisition of the said 7 buses were furnished by the assessee before the AO, nor were called for by the AO. AO allowed the claim of depreciation without verifying the value of the buses and their date of acquisition. AR on the other hand has stressed that the issue was examined by the AO. After considering the rival submissions, we are of the view that the Ld. PCIT has rightly directed the AO to examine this factual aspect. The order of the PCIT, therefore, on this issue is upheld and the AO is directed to verify the depreciation claim on buses. Claim of deduction u/s. 54F - rectification order passed by the AO u/s. 154 of the Act stating that the assessee had furnished additional evidence before the Ld. CIT(A) in respect of the aforesaid claim which the Ld. CIT(A) has refused to admit - HELD THAT:- After considering the rival submissions, we restore this issue to the file of the Assessing Officer with a direction to admit the evidence/documents relating to the above claim, examine the said documents and explanations furnished by the assessee and decide the issue a fresh in accordance with the law. Grant of lesser claim u/s. 54B - HELD THAT:- Assessee has brought to our attention to the ground against the order of the CIT(A) in relation to the rectification order passed u/s. 154 of the Act to submit that the AO has again given lesser relief u/s. 54B of the Act at Rs. 80 lacs only, whereas, the claim of the assessee was of Rs. 95,90,000/-. This issue, in our view, is also required to be examined by the assessing officer. So, this issue is restored to the file of the assessing officer for the limited purpose with the direction that the AO will examine the quantum of claim allowable to the assessee u/s. 54B. Issues Involved1. Deduction under Section 54B of the Income Tax Act.2. Claim of depreciation on buses.3. Deduction under Section 54F of the Income Tax Act.4. Quantum of claim under Section 54B of the Income Tax Act.Detailed Analysis1. Deduction under Section 54B of the Income Tax ActThe Principal Commissioner of Income Tax (PCIT) exercised revision jurisdiction under Section 263 of the Income Tax Act, observing that the assessee did not deposit the sale proceeds of agricultural land into the capital gains account before the due date of filing the return. The PCIT argued that the Assessing Officer (AO) exceeded his jurisdiction by giving relief to the assessee in an order passed under Section 154 of the Act.The Tribunal referred to the decision of the Coordinate Chandigarh Bench in the case of 'Mrs. Seema Sabharwal vs. Income Tax Officer,' which held that if an assessee proves that they have invested the capital gains in purchasing or constructing a new residential house within the stipulated period, the exemption under Section 54 cannot be denied even if the amount was not deposited in the capital gains account before filing the income tax return. The Tribunal concluded that since the assessee purchased agricultural land within the stipulated period and provided evidence during the assessment proceedings, the PCIT's view was incorrect.2. Claim of Depreciation on BusesThe PCIT noted that the AO allowed the claim of depreciation on buses without verifying the relevant documents, including evidence of purchases and the written down value of the buses. The Tribunal upheld the PCIT's direction to the AO to examine this factual aspect, agreeing that the AO should verify the depreciation claim on buses.3. Deduction under Section 54F of the Income Tax ActThe assessee agitated the denial of deduction under Section 54F in an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee claimed that additional evidence was furnished before the CIT(A), which was not admitted. The Tribunal restored this issue to the AO, directing the AO to admit and examine the evidence/documents related to the claim and decide the issue afresh in accordance with the law.4. Quantum of Claim under Section 54B of the Income Tax ActThe assessee contested that the AO granted a lesser amount of relief under Section 54B (Rs. 80,00,000 as against Rs. 95,90,000). The Tribunal directed the AO to examine the quantum of the claim allowable under Section 54B and decide accordingly.ConclusionThe Tribunal concluded that the appeal against the order of the PCIT under Section 263 is partly allowed, directing the AO to verify the depreciation claim on buses and to reassess the quantum of the claim under Section 54B. The appeal relating to the order passed under Section 154 is allowed for statistical purposes, directing the AO to admit and examine the additional evidence for the deduction under Section 54F. The Tribunal also noted that the pending appeal before the CIT(A) has become infructuous and should be withdrawn by the assessee.