Section 54F reinvestment deduction may be entertained on appeal despite omission; remitted to AO for de novo verification.

Omission to claim reinvestment relief for capital gains in the original return does not automatically bar appellate consideration; the appellate forum may entertain fresh claims and legal points even if not filed originally. The Tribunal applied the principle that limits on the Assessing Officer's power to admit revised returns do not curtail appellate jurisdiction, but found that statutory and factual conditions for reinvestment relief (nature of asset, timing and quantum of investment, and compliance) were not verified below. The matter is remitted to the Assessing Officer for de novo verification and a speaking order after hearing the assessee.

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Issues: (i) Whether the assessee's claim for deduction under section 54F of the Income-tax Act, 1961, made for reinvestment of capital gains arising from sale of a depreciable asset though not claimed in the original return, could be entertained at the appellate stage and, if so, whether the matter should be remitted to the Assessing Officer for verification of statutory conditions.

Analysis: The Tribunal examined the legal position distinguishing the limited restriction on the Assessing Officer from the broader powers of appellate authorities to entertain points of law and fresh claims; it relied on the principle that the limitation on AO's power to admit claims by way of revised return does not curtail the appellate forum's jurisdiction to consider a claim in accordance with law. The Tribunal noted relevant precedents recognising availability of exemptions under sections 54E/54F in respect of capital gains on depreciable assets but observed that factual and statutory conditions under section 54F (nature and character of assets, timing and quantum of investment, and compliance with statutory conditions) had not been verified by the authorities below. In the interest of substantial justice and having regard to the appellate jurisdiction, the Tribunal directed a de novo examination by the Assessing Officer after affording the assessee a reasonable opportunity of being heard.

Conclusion: The omission to claim deduction under section 54F in the original return does not, by itself, preclude appellate consideration; the issue is remitted to the Assessing Officer for de novo verification of statutory conditions and a speaking order after hearing the assessee. This result is partly in favour of the assessee and the grounds are allowed for statistical purposes.

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