Surplus left after claiming deduction U/s. 54F can be set off against LTCG in succeeding year

S. Baljit Singh Ryait Vs. ITO (ITAT Chandigarh)

Invocation of jurisdiction under section 263 by successor commissioner on same issue having already been examined by predecessor Commissioner is invalid.

The issue and the error as per the learned Commissioner which had occurred in the order of the assessing officer which required initiation of review proceedings in the present case was that the assessee had wrongly claimed and been allowed deduction under section 54F of the Act from the long-term capital gain earned by it on account of construction of house undertaken by it to the extent of Rs. 15,06,457. The reasoning being that the deduction on account of purchase of land and construction undertaken on the said land, under sections 54 and 54F, had been claimed and been allowed to the assessee in the preceding assessment year, i.e., assessment year 2004-05. The contention of the Revenue is that once the deduction under sections 54 and 54F of the Act has been claimed on account of house constructed against capital gains earned during the year, any surplus remaining there­from cannot be carried over to the next year and claimed as deduction from capital gain earned in the succeeding year.

Clearly and undisputedly this issue was examined by the Commissioner in proceeding initiated under section 263 of the Act vide his notice dated 14-12-2007 and due reply filed by the assessee, after considering which and after being satisfied by which the proceedings were dropped. The present proceeding having been initiated on the identical issue are clearly unsustainable in law since it simply tantamounts to review of the order of the Commissioner and not of the assessing officer. The co-ordinate Bench of the Income Tax Appellate Tribunal in the case of Satya Prakash Gupta (supra) has in identical circumstances held that the successor Commissioner becomes functus officio in this regard after the exercise conducted by the predecessor Commissioner. Therefore, we have no hesitation in holding that the order passed under section 263 is not sustainable on this ground alone.

Surplus left after claiming deduction U/s. 54F can be set off against LTCG in succeeding year

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