Mridula Agarwal Vs ITO (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, concerned Assessment Year 2012–13 and arose from an order of the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee challenged both procedural irregularities and substantive disallowance of exemption under Section 54 of the Income Tax Act.
The assessee argued that the CIT(A) passed an ex-parte order without granting proper opportunity of hearing. It was contended that representation was made on the last date, an adjournment was sought but refused, and written submissions submitted later through the system were not considered. The assessee further argued that the appeal was not decided on merits.
On substantive issues, the dispute related to partial denial of exemption under Section 54. The Assessing Officer (AO) allowed exemption of ₹33,61,165 against a claimed ₹64,23,843, disallowing ₹30,62,678. The disallowance was based on two grounds:
- The assessee invested in more than one residential property.
- Part of the investment made after filing the return of income was not deposited in the capital gains account scheme.
The Tribunal examined whether Section 54 permits exemption for investment in more than one residential property. It noted that various High Courts and tribunals had interpreted the expression “a residential house” to include plural units. The Tribunal referred to judicial precedents holding that the term “a” should not be construed strictly as singular and may include multiple residential units, especially in the context of Section 54.
