Varadhan Sureshbabu Vs ACIT (ITAT Chennai)
The ITAT Chennai held that a legitimate deduction claim cannot be denied merely because it was not correctly claimed in the return, and remanded the matter for fresh examination of Section 54F deduction.
In this case, the assessee had sold a property and initially claimed deduction under Section 54, though the property was commercial in nature. During assessment, the assessee sought to claim deduction under Section 54F, but was unable to revise the return.
The Assessing Officer rejected the claim and recomputed capital gains. The CIT(A) also upheld the denial relying on the Supreme Court ruling in Goetze (India) Ltd., stating that fresh claims cannot be entertained without a revised return.
However, the Tribunal noted that the fact of investment/construction was already on record and admitted by the AO, and therefore, denial solely on technical grounds was not justified. It emphasized that substantive eligibility must be examined over procedural lapses.
Accordingly, the ITAT set aside the issue and remanded the matter to the AO to verify the details and allow deduction under Section 54F in accordance with law, after providing reasonable opportunity to the assessee.
The appeal was thus allowed for statistical purposes, reinforcing that correct legal entitlement should not be defeated by wrong section reference in return.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee are against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short “CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) dated 27.10.2025 for Assessment Year (AY) 2017-18.
