Case Law Details
M M Pandit HUF Vs ACIT (ITAT Lucknow)
ITAT Lucknow held that benefit of exemption cannot be disallowed merely because the same was claimed u/s 54F of the Income Tax Act instead of claiming u/s 54 of the Income Tax Act. Such mistake is inadvertent and typographical mistake.
Facts- The assessee has sold a residential house & invested the amount in purchase of residential flat. The assessee claimed benefit u/s 54F of the Act in the return of income. AO disallowed the claimed with a view that the assessee claimed benefit erroneously u/s 54F of Act instead of claiming the benefit u/s 54 of Act which was the correct section under which the assessee was eligible for benefit, and made the addition of Rs.1,05,00,000/-.
CIT(A) dismissed the appeal of the assessee. Being aggrieved, assessee preferred the present appeal.
Conclusion- We hold that the conclusion arrived by learned CIT(A) and the Assessing Officer that the assessee’s claim u/s 54 of IT Act is a new claim is, factually wrong in the specific facts and circumstances of the present appeal before us. The assessee had already made this claim in the return of income, although, in an inadvertent and bonafide typographical mistake, the section under which the benefit was claimed, was erroneously mentioned as 54F instead of section 54 which is the correct section. Thus, we direct the Assessing Officer to compute benefit u/s 54 of IT Act on merits, having regard to applicable law and relevant facts and circumstances; and we order the Assessing Officer to allow assessee’s claim u/s 54 of IT Act accordingly.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
(A) Appeal vide I.T.A. No. 95/Lkw/2023 has been filed by the assessee for assessment year 2016-17 against impugned appellate order dated 28/07/2023 (DIN & Order No.ITBA/NFAC/S/250/2022-23/1050179295(1) of learned CIT(A). The grounds of appeal are as under:
1. The order of the learned CIT(A) is legally non-tenable on the facts as well as the jurisprudence.
2. The learned CIT(A) erred in confirming the addition made by the Assessing Officer.
3. The learned CIT(A) erred in not awarding the benefit of section 54.
4. The learned CIT(A) erred in not following the judgment o f Hon’ble Supreme Court in Goetze India Ltd. vs. CIT [2006] 284 ITR 323 (SC) in true letter & spirit.
(B) In this case the assessment order dated 07/12/2018 was passed by the Assessing Officer u/s 143(3) of Income Tax Act, (IT Act for short), whereby the assessee’s total income was determined at Rs.1,24,32,260/- as against the returned income of Rs.19,42,360/-. In the aforesaid assessment order, addition of Rs.1,05,00,000/- was made by rejecting the assessee’s claim u/s 54/54F of IT Act. Perusal of record shows that the assessee filed the copy of sale deed & purchase deed in support of the claim. On perusal of the records, it is noticed that assessee sold a residential house bearing House no. 34/021, 9-A, Shahnajaf Road, Lucknow for a sale consideration of Rs.1,05,00,000/- against the market value of Rs.74,10,080/- on 10.03.2016 and further invested Rs.1,06,00,000/- in Flat No.103, Imperial Block, Eldeco Green Apartments, Lucknow for which sale deed was executed on 30/03/2016. Hence, assessee has sold a residential house & invested the amount in purchase of residential flat. Thus the assessee sold a residential house and invested the amount in purchase of residential flat. In respect of the aforesaid transactions, the assessee claimed benefit u/s 54F of the Act in the return of income. The Assessing Officer issued a show cause notice to the assessee as to why the exemption u/s 54F may not be disallowed in its case as the sale is of residential house and the exemption u/s 54F is applicable against the sale/transfer of capital asset not being a residential house. Assessee submitted before the Assessing Officer that inadvertently the deduction was claimed u/s 54F though the assessee was eligible for benefit u/s 54 of I.T. Act . The assessee placed reliance on the ITAT Order in the cases of ITO v Anirudh Ashok Jajoo (2015) 56 Taxmann.com 221/68 SOT 266 (URO) (Pune). However, the Assessing Officer took adverse view of the fact that the assessee claimed benefit erroneously u/s 54F of Act instead of claiming the benefit u/s 54 of Act which was the correct section under which the assessee was eligible for benefit, and made the aforesaid addition of Rs.1,05,00,000/-.
(B.1) Aggrieved, the assessee filed appeal in the office of learned CIT(A). Vide impugned appellate order dated 28/02/203, the learned CIT(A) dismissed the assessee’s appeal. The learned CIT(A) was of the view that the assessee could not amend return filed by the assessee for making a new claim for deduction. Aggrieved again, the assessee has filed appeal in Income Tax Appellate Tribunal.
(C) In the course of appellate proceedings in Income Tax Appellate Tribunal, the assessee filed a letter dated 12th April, 2023 stating as under:
“As I am a senior citizen, 74 year old now and undergoing medica l treatment for age related ailment. I request you to kindly arrange to put my appeal before the Hon’ble I.T.A.T. on a fast track mode so that it may be heard and decided expeditiously. ”
(C.1) The assessee’s appeal came up for hearing before us on 08/05/2023. At the time of hearing before us, learned Counsel for the assessee was present along with the Karta of the assessee HUF. Learned Counsel for the assessee submitted that the assessee was eligible for the benefit u/s 54 of IT Act but due to a bonafide and inadvertent typographical mistake, the claim was made erroneously u/s 54F of IT Act instead of section 54 of IT Act which is the correct section under which the assessee is eligible for benefit. He submitted that there was no dispute on the fact that on merits, the assessee was eligible for benefit u/s 54 of IT Act and in support of this, learned Counsel for the assessee drew our attention to paragraph 4 of the assessment order, the relevant portion of which is reproduced as under:
“4. Assessee in one of the replies submitted that one property was sold, the sale consideration of which was invested in purchase o f residential house and accordingly claimed exemption u/s 54F of the 1961.The assessee filed the copy of sale deed & purchase deed support of its claim. On perusal of the records, it is noticed that assessee sold a residential house bearing House no. 34/021, 9-A, Shahnajaf Road, Lucknow for a sale consideration of Rs.1,05,00,000/-against the market value of Rs.74,10,080/- on 10.03.2016 and further invested Rs.1,06,00,000/- in Flat No.103, Imperial Block Eldeco Green Apartments, Lucknow for which sale deed was executed on 30/03/2016. Hence, assessee has sold a residential house & invested the amount in purchase of residential flat. ”
(C.1.1) Learned Counsel for the assessee further submitted that the assessee has not made any new claim u/s 54 of Act and instead, the assessee had already made the claim in the return of income. He submitted further that no adverse view should be taken against the assessee for bonafide and inadvertent typographical mistake made in the return of income wherein the claim was erroneously made u/s 54F instead of section 54, which is the correct section, under which the assessee is eligible for benefit. He submitted further that the assessee was eligible for benefit u/s 54 of Act which should be granted to the assessee and Revenue should not derive undue advantage of a bonafide and inadvertent typographical misake made by the assessee. Learned counsel for the assessee also relied on the following judicial precedents:
(i) Shrikar Hotels (P.) Ltd. v. Commissioner of Income-tax-I, Lucknow 79 taxmann.com 63 (Allahabad)
“In the present case, Assessee claimed deduction under a provision in Chapter VIA and in the return also a claimed deduction with reference to Section 80 IB(7) but sub-clause mentioned was (a) and not (b). Sub-clcaat (a) talks of a larger degree of deduction and if that was not admissible a smaller degree of deduction, under same section but in another sub-clause could have been allowed. Here it cannot be said that Assessee had not claimed any deduction whatsoever in return.” (Quoted)
(ii) Commissioner of Income-tax-V v. Natraj Stationery Products (P.) Ltd. 177 Taxman 168 (Delhi)
“Considered in the background of these facts and circumstances, the Tribunal has rightly held that the respondent/assesses was not required to file a revised return since it had not made any ‘new claim’ and hence, the ratio o f the judgment of the Supreme Court in Goetze (India) Ltd. v. CIT [20061284ITR 323 was not applicable.” (Quoted)
(iii) CIT V Malayala Manorama Co. Ltd. [2018] 96 taxmann.com 498 (Kerala)
“In the facts and circumstances of this case we hence answer the first question of law framed in favour of the assessee and against the Revenue that there could have been a deduction considered under Section 80G, by the Assessing Officer without a revised return being filed since the claim for deduction was made; but under a wrong provision. The necessary facts for a claim to be set up was available in the return.” (Quoted)
(iv) Income Tax Officer Vs. Armine Hamied ITAT MUMBAI “T” BENCH, MUMBAI
“Here is a case in which a claim for exemption was rightly made, but only a wrong section was quoted while making a claim, which is qualitatively different from was no fresh claim was such In our considered view, therefore, the Assessing Officer was indeed in error in adopting such a hyper pedantic approach and in holding that there was a fresh claim for exemption under section 54F.” (Quoted)
(v) Assistant Commissioner Of Income vs Jai Kumar Gupta (HUF), Mumbai IN FACT “F” BENCH MUMBAI
“Therefore, in the facts of the present case, since the capita l gain arises from sale of residential house, the assessee is eligible to claim deduction under section 54 of the Act. That being the case, the Jai Kumar Gupta (HUF) restrictions imposed under the proviso to section 54F(1) of the Act will not apply to the assessee. Therefore, we do not feel the necessity to deliberate on the issue whether the property at Vapi is a residential or commercial building.” (Quoted)
(C.2) Learned Sr. D.R. for the Revenue relied on the orders of Assessing Officer and learned CIT(A).
(C.2.1) We have heard both the sides. We have perused materials on record. We are of the view that the assessee’s claim for benefit u/s 54 of IT Act made during assessment proceedings, and during appellate proceedings before the learned CIT(A) and now again during the appellate proceedings before us in Income Tax Appellate Tribunal; is not a new claim. The assessee had already made this claim in the return of income though, in an inadvertent and bonafide typographical mistake, the section under which the benefit was claimed, was erroneously mentioned as 54F of IT Act instead of section 54 of IT Act which is the correct section. The claim of the assessee made during appellate proceedings before the learned CIT(A) and earlier during the assessment proceedings that the assessee was eligible for benefit u/s 54 of the IT Act has not been disputed on facts having regard to the transactions made by the assessee. Neither assessment order nor the learned CIT(A), in their respective orders, have taken the view that on merits the assessee was not eligible for benefit u/s 54 of the IT Act. On perusal of records, we find no materials to suggest that on merits, the assessee was not eligible for benefit u/s 54 of IT Act. It is not even the case of Revenue that on merits the assessee is not eligible for benefit u/s 54 of IT Act. The assessee’s claim u/s 54 of IT Act was not allowed by the Assessing Officer and by the learned CIT(A) only on the technical ground that the assessee made the claim u/s 54F of IT Act instead of section 54 of IT Act. We have already expressed the view earlier that the claim made by the assessee u/s 54 of IT Act was not a new claim. Accordingly, we hold that the conclusion arrived by learned CIT(A) and the Assessing Officer that the assessee’s claim u/s 54 of IT Act is a new claim is, factually wrong in the specific facts and circumstances of the present appeal before us. The assessee had already made this claim in the return of income, although, in an inadvertent and bonafide typographical mistake, the section under which the benefit was claimed, was erroneously mentioned as 54F instead of section 54 which is the correct section. Further, the issue in dispute in the present appeal before us is squarely covered in favour of the assessee by the aforesaid judicial precedents in the cases of Shrikar Hotels (P.) Ltd. v. Commissioner of Income-tax-I, Lucknow (supra), Commissioner of Income-tax-V v. Natraj Stationery Products (P.) Ltd. (supra), CIT V Malayala Manorama Co. Ltd. (supra), Income Tax Officer Vs. Armine Hamied ITAT MUMBAI “T” BENCH, MUMBAI (supra) and Assistant Commissioner Of Income vs Jai Kumar Gupta (HUF), (supra). In view of the foregoing, and respectfully following the aforesaid judicial precedents and in the specific facts and circumstances of the present case before us, we direct the Assessing Officer to compute benefit u/s 54 of IT Act on merits, having regard to applicable law and relevant facts and circumstances; and we order the Assessing Officer to allow assessee’s claim u/s 54 of IT Act accordingly.
(D) In the result, the appeal of the assessee stands allowed for statistical purposes.
(Order pronounced in the open court on 11/05/2023)
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