Case Law Details
Shri Srikanth Vs ITO (ITAT Chennai)
In the case of Shri Srikanth Vs. ITO, as adjudicated by the Income Tax Appellate Tribunal (ITAT) Chennai, the central issue revolved around the eligibility of the assessee for deduction under Section 54 of the Income Tax Act, 1961 (the Act), concerning reinvestment of capital gains from the sale of an original asset, specifically a residential property. The appeal by the assessee was directed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 25.05.2023, pertaining to the assessment framed by the Assessing Officer (AO) under section 143(3) of the Act.
The assessee, in his return of income, declared a total income of Rs. 7,11,320/- under capital gains, arising from the sale of an immovable property in West Mambalam, Chennai, for a consideration of Rs. 5,05,00,000/-. In the computation, the assessee claimed a deduction under Section 54 of the Act, both for investment made on his own name and in the name of his wife, totaling Rs. 3,00,00,000/-.
However, the AO allowed indexed cost of acquisition only of Rs. 11,68,039/- and deduction u/s. 54 of the Act only in respect of the investment made on the assessee’s name, thus recomputing the capital gain. The assessee appealed against this decision before the CIT(A), revising the working of capital gains and claiming exemptions under Section 54 of the Act for investments made in a new residential unit both in his name and his wife’s name.
The CIT(A) allowed certain deductions but disallowed others, including a claim of Rs. 40 lakhs made to a builder and an exemption claimed in respect of investments made in the name of the assessee’s wife. The assessee contested these disallowances before the ITAT Chennai.
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