2026 (2) TMI 866

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.... The learned Pr. CIT, Hyderabad-4 erred in invoking the jurisdiction u/s 263, despite absence of any error in the assessment order which was passed after taking into consideration of all the material facts disclosed by the assessee and the Assessing Officer took one of the plausible views on the issue under consideration. Ground No.4 The learned Pr. CIT, Hyderabad-4 ought not to have invoked the jurisdiction u/s 263, since, the order is not prejudicial to the interest of revenue as there is no error in the assessment order. Ground No.5 The learned Pr. CIT, Hyderabad-4 erred in invoking the jurisdiction u/s 263, since, during the assessment, there was a specific query from the Assessing Officer on the issue under consideration and the assessment was completed basing on the reply. from assessee to such query. Ground No.6 The learned Pr. CIT, Hyderabad-4, ought not to have invoked the jurisdiction u/s 263, for the reason that the assessee is having two properties outside India which in his opinion is violation of Section 54F which made the assessment order u/s 143(3) as prejudicial to the interest of revenue. Ground ....

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....duction u/sec.54F of the Act needs to be disallowed. He accordingly set aside the order of the Assessing Officer with a direction to recompute the long-term capital gains while passing the impugned order. 4. Aggrieved by the order of Pr. CIT, the assessee filed the present appeal. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that as per the provisions of sec.54F of the Act and after amendment vide Finance Act, 2014, the claim of deduction is allowable only when the investment is made in a residential house in India. Therefore, as per the proviso to sub-sec. (1) to sec.54F of the Act, if the assessee owned more than one residential house in India other than the new asset at the time of transfer of the asset, the claim of deduction u/sec.54F is not allowable. He has further submitted that when the investment in residential house in India is a mandatory condition for availing the deduction u/sec.54F, then the exception of owning more than one residential house is also in India and not outside India. In support of his contention, he has relied upon the order of ITAT, Cochin Bench, Cochin in the case of Smt. Maries Joseph, Thrissur vs. DCIT....

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....ime of transfer of original asset only in India and not outside India. In support of his contention, he has relied upon the decision of Visakhapatnam Bench of the Tribunal in the case of DCIT [International Taxation] vs. Babu Rajendra Prasad [2023] 201 ITD 704 (Visakhapatnam - Trib.) and submitted that this Tribunal has considered an identical issue and held that owning more than one residential house at the time of transfer of the original asset by the assessee including the property situated in USA is in violation of the proviso to sec.54F(1) of the Act and thereby the assessee is not entitled to claim benefit of sec.54F of the Act. He has relied upon the impugned order of Pr. CIT. 6. We have considered the rival submissions as well as relevant material on record. There is no dispute regarding the fact that the assessee owned more than one house at the time of transfer of the original asset including the one at Dubai and another at USA. However, the assessee claimed the deduction u/sec.54F of the Act on the ground that the houses owned by the assessee outside India cannot be considered for the purpose of proviso to sec.54F(1) of the Act. During the scrutiny assessment, the Ass....

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....y I am eligible for deduction u/s 54F of Income Tax Act, 1961, Hence I have claimed an amount of Rs. 1,00,92,000/- towards the deduction u/s 54F. Conditions to claim deduction u/s 54F of Income Tax Act, 1961 Satisfaction with the conditions The benefit of section 54F is available only to an individual or HUF I am an Individual * Transfer of any long term capital asset not being a residential House Property. * Investment to be made in residential House Property * The assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India. * Long term Capital Asset which was transferred is a Commercial Property * I have made an Investment in Residential House Property * I am holding only one House Property in India at the time of Transfer of Commercial Property. In view of the above I am eligible for deduction u/s 54F, hence it is requested to allow the claim made u/s 54F for the amount of Rs. 1,00,92,000/ -. This is for your kind information and records. Thanking you, Yours....

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....on the issue under consideration, therefore, we modify the impugned order of the Pr. CIT to the extent of giving finding on merits of the claim and set-aside the matter to the record of the Assessing Officer for adjudication of this issue without having any influence on the findings of the learned Pr. CIT on this issue. We Order accordingly. 7. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 06.02.2026. ============= Document 1 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT 50 INICO HE TAX DEPARTMENT 1. PAN AHQPB8508F 2. Name of the assessee SUMANTH BADIGA 3. Address of the assessee C/O JASPER INDUSTRIES PRIVATE LIMITED, 5-10-173, VASANTHA CHAMBERS, FATEH MAIDAN ROAD, BASHEERBAGH, HYDERABAD 500004, Telangana, India 4. Assessment Year 2020-21 5. Status INDIVIDUAL 6. Residential Status Resident 7. Date of filing of Return of Income 11/09/2020 8. Acknowledgement Number of Return of Income 542400851110920 9. Date of processing u/s 143(1)(a) of the Income-tax Act. 25/11/2021 10. Income Computed under section 143(1) of the Act 11. Date of service of Notice und....