SECTION 54F DEDUCTION CAN BE ALLOWED EVEN IF THE AMOUNT IS NOT DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME: ITAT CHENNAI

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SECTION 54F DEDUCTION CAN BE ALLOWED EVEN IF THE AMOUNT IS NOT DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME: ITAT CHENNAI

09/08/2023

SECTION 54F DEDUCTION CAN BE ALLOWED EVEN IF THE AMOUNT IS NOT DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME: ITAT CHENNAI

The taxpayer has sold the property for Rs.60,00,000/- and has also claimed sale expenses of Rs.9,220/-.
The taxpayer had also received Rs 2,00,00,000 for a 2.09-acre property in survey number 226/1, 226/2A, 2269B, located in Sembakkam village of Thirupore Panchayat Sangh.

The taxpayer has claimed deduction under Section 54F in respect of property purchased for Rs.2,00,00,000/- on 04.10.2017.

After considering the taxpayer's explanation against the show cause notice, the assessing officer has rejected the claim of deduction under Section 54F of the Act on the ground that the taxpayer has not fulfilled the procedural requirement laid down by the law to deposit in the Capital Gains Account Scheme with a nationalised bank before the due date of filing of returns.

Accordingly, the assessing officer assessed the income at ₹1,99,22,230 by taking capital gains at ₹1,89,34,171/-.
Even though the taxpayer has not invested the sales proceeds in the Capital Gains Account Scheme, complying with the conditions under Section 54F(1) of the Act, executing the sale agreement by paying an advance amount of ₹50 lakh on 09.01.2016, buying an independent house for ₹2 crore and paying the balance amount of ₹1.50 crore on the date of registration of sale deed on 04.10.2017.

The provisions of Section 54F of the Act are beneficial provisions and are to be liberally considered in the aspect of limitation period.

But, investment in residential property is essential which the taxpayer has proved with evidence and complied with before the lower authorities.

Under the above facts and circumstances of the case, we set aside the order of CIT (A) and direct the assessing officer to allow the taxpayer to deduct Section 54F of the Act.

INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI

SHRI T. PANDIAN V/S THE INCOME TAX OFFICER CHENNAI

SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER

I.T.A. No.3107/Chny/2019 (Assessment Year: 2016-2017)

24.03.2023

READ JUDGEMENT HERE