Appellate enhancement beyond the appeal scope is impermissible, and section 54F deduction was allowed.

An appellate authority cannot enlarge the scope of an appeal by introducing a new head of income or making an enhanced addition beyond the subject matter of the original dispute without following the prescribed procedure. Here, the appeal arose only from denial of deduction under section 54F, and the issue relating to transfer of the residential property had already attained finality. The attempt to treat the share sale proceeds as income from other sources was therefore beyond the appellate dispute and amounted to unsustainable enhancement of income. The assessee was entitled to the claimed section 54F deduction, and relief was granted on the only substantive issue addressed.

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Issues: Whether the appellate authority could introduce a new head of income and make an enhanced addition when the appeal before it arose only from denial of deduction under section 54F, and whether the assessee was entitled to the claimed deduction.

Analysis: The appeal before the appellate authority arose from the assessment order that had denied deduction under section 54F. The appellate authority had already accepted the assessee's position on the transfer of the residential property, and the controversy on that issue had attained finality. In such a situation, the appellate authority could not travel beyond the original dispute and create a new head of income by treating the share sale proceeds as income from other sources. The resulting exercise amounted to enhancement of income without compliance with the procedural safeguards.

Conclusion: The appellate authority's addition under the new head of income was unsustainable, and the assessee was entitled to deduction under section 54F.

Final Conclusion: The assessment was restored to the extent necessary to grant the claimed deduction and the assessee obtained complete relief on the only substantive issue decided.

Ratio Decidendi: An appellate authority cannot enlarge the subject matter of appeal by introducing a new head of income or enhancing income beyond the scope of the dispute without following the prescribed procedure.

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