2023 (12) TMI 1036 - AT - Income Tax

Tribunal Grants Tax Exemption for Property Sale; Overturns Penalty Due to Timely Investment in New Gurgaon Property.

The Tribunal allowed the appeal, finding that the assessee invested the entire sale proceeds from the property sold in Delhi into a new property in ... LTCG - eligibility or claim of exemption of u/s. 54F - As per AO new asset cannot be considered as acquired within 02 years of transfer of original asset - HELD THAT:- The assessee sold residential property on 17.04.2014 for Rs. 70,00,000/- and the entire sale proceeds were invested from 01.05.2014 to 08.07.2014 in purchase of property named “ The Grands Arch” from the builder “Ireo”. - New property acquired vide Possession letter dated 04.07.2016 and conveyance deed dated 29.04.2016. Since the assessee has invested the entire sale proceeds for the purchase of new house within three months of sale of the old house, the assessee is eligible for claim of exemption of u/s. 54F - Appeal of the allowed is allowed. Issues involved: Appeal against Assessing Officer's order for AY 2015-16.Grounds of Appeal:1. Challenge to the legality and factual accuracy of the order.2. Allegation that Assessing Officer disregarded observations in DRP order.3. Dispute regarding eligibility for Section 54 exemption based on property documents submitted.4. Discrepancy in payment details and absence of seller's name in conveyance deed.5. Failure to address the issue of a specific payment during assessment proceedings.6. Dispute over initiation of penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961.Summary of Judgment:The Assessing Officer (AO) issued a notice u/s 142(1) asking for details of a property bought in FY 2014-15. The assessee sold a property in Delhi on 17.04.2014 and claimed exemption u/s 54 for investing in a property in Gurgaon. The AO held that the new property was not acquired within 2 years of the original property transfer. However, the assessee invested the entire sale proceeds in the new property within three months of the sale, making them eligible for exemption u/s 54F as per CBDT Circular No. 672 dated 16.12.1993.The Tribunal found that the assessee had indeed invested the sale proceeds promptly in the new property, fulfilling the conditions for exemption u/s 54F. Therefore, the appeal was allowed, and the penalty proceedings were set aside.