The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the claim of deduction under section 54F of the Income Tax Act,1961 was not allowable if the assessee owns more than one residential house or property.
Arunava Bhattacharjee, the appellant assessee was an individual who sold a guest house of the assessee and claimed a deduction under section 54F of the Income Tax Act. The assessing officer allowed the deduction and the Commissioner of Income Tax (Appeals) disallowed the deduction.
Thus the assessee appealed against the order passed by the Commissioner of Income Tax (Appeals).
Sunil Surana, the counsel for the assessee contended that the condition as prescribed under section 54F of the Income Tax Act that the assessee could not own more than one residential house other than the new asset, on the date of transfer of the original asset, were not attracted for claiming deduction under section 54 of the Income Tax Act.
It was further submitted that the rejection of the claim by the Commissioner was not as per the law and was liable to be deleted.
Sanjay Mukherjee, the counsel for the revenue relied on the decision of the Commissioner and contended that the assessee owned more than one residential house, other than the new asset on the date of transfer of the original asset, hence, the assessee was not eligible to claim deduction under section 54F of the Income Tax Act and allowing the same in the assessment order was irregular and disallowed by the Commissioner of Income Tax (Appeals).
The bench observed that merely mentioning section 54/54F of the Income Tax Act in the assessment order does not mean that the assessee was not entitled to a deduction and the Commissioner exercised his revision jurisdiction on the wrong footing which was not sustainable in the eyes of law.
The two-member bench comprising Sanjay Garg ( Judicial )and Girish Agrawal (Accountant) held that the impugned revision order passed by the Commissioner under section 263 of the Income Tax Act was bad in law and is liable to be quashed while allowing the appeal filed by the assessee.
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