2025 (4) TMI 1129 - AT - Income Tax

Taxpayer Wins Appeal: Section 54 Exemption Upheld Despite Initial Non-Claim in Income Tax Assessment

ITAT Kolkata allowed taxpayer's appeal challenging income tax disallowance. The tribunal ruled that since the assessee did not originally claim exemption ... Disallowance of claim u/s. 54 - intimation u/s. 143 (1) disallowing the alleged claim - HELD THAT:- An intimation is issued in respect of a return filed by the assessee. Such intimation is to make adjustment in regard to certain specific issues which are provided in the provisions of section 143 (1) (a). The assessee had admittedly not made a claim u/s. 54 in the return filed by him. Since the assessee has not made the claim u/s. 54, hence it no more lies in the realm of the 143 (1) (a) to enter into any issue which has not been claimed by the assessee and for making any disallowance. As there is no claim u./s. 54 of the Act in the return filed by the assessee, the disallowance made in the intimation u/s. 143 (1) (a) in respect of the valuation itself is inadmissible. This being so, the addition as made in the intimation u/s. 143 (1) (a) and ad decided by the Ld. CIT(A) stands deleted. Appeal of the assessee is allowed. The Appellate Tribunal (ITAT Kolkata) allowed the assessee's appeal against the Ld. CIT(A)'s order under section 250 of the Income Tax Act, 1961 for AY 2019-20. The key issue concerned the disallowance under section 54 of the Act in the intimation issued under section 143(1)(a). The assessee had not claimed exemption u/s. 54 in the original return filed on 30.08.2019. The Tribunal held that since 'the assessee has not made the claim u/s. 54, hence it no more lies in the realm of the 143(1)(a) to enter into any issue which has not been claimed by the assessee and for making any disallowance.' Consequently, the disallowance in the intimation and the subsequent direction by the Ld. CIT(A) for valuation adjustment were 'inadmissible.' The Tribunal deleted the addition and allowed the appeal.