Murugan Doraisamy Vs ITO (ITAT Chennai)
Income Tax Appellate Tribunal (ITAT), Chennai Bench, has remitted the case of Murugan Doraisamy, a non-resident individual, back to the Assessing Officer (AO) for re-examination concerning a denied deduction under Section 54F of the Income Tax Act, 1961. The Tribunal observed that the AO had rejected the claim solely on procedural grounds without verifying whether the assessee had substantially complied with the conditions for investment in a new asset.
The appeal filed by Murugan Doraisamy was against a final assessment order dated January 28, 2025, for the assessment year 2022-23. The central point of contention was the denial of a deduction claimed under Section 54F, which allows exemption from long-term capital gains if the net consideration from the sale of a long-term capital asset (other than a residential house) is invested in purchasing or constructing a new residential house.
According to the Assessing Officer, Murugan Doraisamy had sold two properties, with his share being 50%. The AO denied the Section 54F deduction primarily because the assessee failed to deposit the net sale consideration into a specified Capital Gains Account Scheme (CGAS) bank account within the due date for filing the income tax return under Section 139(1) of the Act. The AO noted that while the assessee applied for opening the CGAS account on July 28, 2022, the funds were only credited to this account on October 3, 2022, a date beyond the statutory deadline for filing the return.
