Sumanth Badiga Vs DCIT (ITAT Hyderabad)
The appeal was filed by the assessee against the order dated 14.02.2025 passed by the Principal Commissioner of Income Tax (Pr. CIT), Hyderabad-4, for Assessment Year 2020–21 under Section 263 of the Income Tax Act, 1961.
The assessee, an individual and NRI, filed a return of income on 11.09.2020 declaring long-term capital gains of Rs. 9,97,46,100 after claiming deduction of Rs. 1,00,92,000 under Section 54F. The case was selected for scrutiny under CASS, and the Assessing Officer (AO) completed the assessment under Section 143(3) read with Section 144B on 02.09.2022, accepting the returned income.
Upon examination of records, the Pr. CIT observed that the assessee had claimed deduction under Section 54F despite owning two residential houses outside India, one in Dubai and another in the USA. According to the Pr. CIT, deduction under Section 54F is not allowable if the assessee owns more than one residential house other than the new house on the date of transfer of the original asset. He held that the AO allowed the deduction without verifying this issue, rendering the order erroneous and prejudicial to the interests of the Revenue. Accordingly, a show cause notice under Section 263 was issued on 16.01.2025.
