Tax Tribunal Grants Relief: Negligible Value Variance and Single Unit Flat Purchase Deduction Approved.

The Tribunal ruled in favor of the assessee on both contested issues. Firstly, it deleted the addition under section 50C of the Income Tax Act, as the variance between the sale consideration and stamp duty value was only 2.7%, deemed negligible and not indicative of tax evasion. Secondly, the Tribunal allowed the deduction under section 54F for the purchase of two flats, accepting the assessee's claim that the flats constituted a single unit based on architectural plans and substantial investment within the prescribed period. Consequently, the Tribunal overturned the lower authorities' decisions, granting relief to the assessee.

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Issues:
1. Addition u/s 50C for the variance between sale consideration and stamp duty value.
2. Allowability of deduction u/s 54F for the purchase of two flats.

Analysis:
1. Addition u/s 50C:
The case involved a dispute over the addition made by the Assessing Officer under section 50C of the Income Tax Act due to the variance between the sale consideration and stamp duty value of the property sold. The Assessing Officer proposed an addition of Rs. 10,21,262 to the total income of the assessee based on this variance. However, the Tribunal found the addition to be unwarranted as the difference was only 2.7% of the sale consideration, which was deemed negligible. Citing judicial precedents, the Tribunal held that minor deviations below a threshold limit of 5% do not necessarily indicate tax evasion. The Tribunal referred to a decision of the Mumbai Bench in a similar case to support its decision. Consequently, the addition under section 50C was deleted, and Ground No.4 of the assessee's appeal was allowed.

2. Allowability of deduction u/s 54F:
The second issue revolved around the allowability of deduction under section 54F for the purchase of two flats, which the assessee claimed constituted a single unit based on architectural plans and interior design. The Assessing Officer had denied the deduction on the grounds that the flats were acquired through separate agreements and failed to meet the statutory conditions. However, the Tribunal considered the architectural certificate provided by the assessee and the substantial investment made within the prescribed period, including depositing funds in the Capital Gains Account Scheme (CGAS). Relying on the judgment in the case of CIT vs. Devdas Naik, the Tribunal directed the Assessing Officer to delete the addition made under section 54F in favor of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, overturning the decisions of the lower authorities and ruling in favor of the assessee on both issues.

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