Geroge Dominic Vs ACIT (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT), Cochin Bench, recently delivered a split verdict in the appeal filed by assessee George Dominic against the order of the Commissioner of Income Tax (Appeals)-II, Kochi, for the assessment year 2007-08. The Tribunal addressed two primary issues: the assessee’s entitlement to deduction under Section 54F of the Income Tax Act, 1961, and the reduction of declared agricultural income with a consequential assessment of the reduced amount as income from other sources.
While the ITAT upheld the disallowance of the Section 54F exemption, it provided a partial reprieve on the agricultural income dispute, remanding the matter back to the Assessing Officer for fresh consideration, emphasizing the principle of natural justice.
Dispute Over Capital Gains Exemption (Section 54F)
The first and central issue revolved around Section 54F of the Income Tax Act, which offers an exemption from Long Term Capital Gains (LTCG) if the net consideration from the sale of a long-term capital asset (not being a residential house) is invested in purchasing or constructing a new residential house within specified timelines.
Facts of the Case: During the assessment year 2007-08, George Dominic, along with co-owners, sold a piece of land, receiving Rs. 1,85,06,635 as his share of the sale consideration. For computing his capital gain, the assessee claimed a deduction under Section 54F, stating he had acquired a flat from M/s. JGT Constructions.
