Case Law Details
Satish S. Prabhu Vs ACIT (ITAT Mumbai)
The Assessing Officer has disallowed the deduction claimed primarily for two reasons; firstly, the claim was not made either in the original return of income or by way of a revised return of income. Secondly; the flat transferred being a residential property, no deduction under section 54F of the Act can be allowed. Whereas, learned Commissioner (Appeals) has sustained the said disallowance on the reasoning that the assessee has suppressed the ownership of the second flat and the resultant capital gain and further, the flat sold being a residential property, deduction under section 54F of the Act cannot be allowed. Thus, from the aforesaid facts, it is clear that the assessee has transferred two flats and in lieu of those two flats has received two new flats on re–development. Merely because the assessee did not offer or disclose the capital gain from the second flat in the return of income would not disentitle him from availing the statutory deduction if otherwise he is entitled to it. Therefore, we are unable to accept the reasoning of learned Commissioner (Appeals) that since the assessee did not disclose the ownership of the second flat, he will not be entitled to deduction under section 54F of the Act. As regards the second aspect of the issue, whether the assessee is entitled to claim deduction under section 54 or 54F of the Act, from the facts on record it is clear that according to the Departmental Authorities, the flat transferred being a residential property, the assessee can claim deduction only under section 54 of the Act.
If that is the case, the deduction claimed by the assessee should have been allowed under the correct provision. Merely because the assessee has claimed deduction under section 54F of the Act, by treating the flat as a commercial property, assessee’s claim of deduction under section 54 of the Act cannot be disallowed if the assessee fulfills the conditions of section 54 of the Act. In the facts of the present case, the Departmental Authorities have no doubt that the flat transferred by the assessee is a residential flat and on re–development the assessee has also received a residential flat. That being the case, the assessee is certainly entitled for deduction under section 54 of the Act. Merely because the assessee claimed a deduction under the wrong provision, his claim cannot be disallowed if it is allowable under a different provision. In view of the aforesaid, while admitting the additional ground raised by the assessee being purely a legal ground which can be decided without requiring investigation into fresh facts, we direct the Assessing Officer to allow assessee’s claim of deduction under section 54 of the Act in respect of the second flat. Additional grounds are allowed. Consequently, the ground raised by the assessee claiming deduction under section 54F of the Act having become redundant is dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Aforesaid appeal by the assessee is directed against the order dated 7th February 2017, passed by the learned Commissioner of Income Tax (Appeals)–25, Mumbai, for the assessment year 2012–13.
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