The Income Tax Appellate Tribunal (ITAT), Bangalore bench has asked the Assessing Officer to re-consider a claim for deduction under Section 54F of the Income Tax Act, 1961 where the anme of the wife was added as co-owner of the property due to vastu reasons.
The assessee sold a site located at Anjanapura and earned a capital gain and has claimed deduction under section 54F of the Act in respect of the capital gain. The Pr.CIT noticed that the assessee has owned two residential properties and one commercial property on the date of sale of the plot (capital asset).
The Principal CIT invoked his revisional jurisdiction by holding that in order to avail the deduction under section 54F of the Act, the assessee should not own more than one residential property on the date of sale of the capital asset.
The Officer was of the view that the AO has allowed the deduction under section 54F of the Act without making any enquiry/verification as required under the law and the AO has completed the assessment without any application of mind. Accordingly, he held that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Accordingly, he initiated revision proceedings under section 263 of the Act.
The assessee maintained that the residential property located at Berlie Street, Bangalore, actually belonged to her husband and her name was included in the purchase deed on sentimental reasons, i.e., in order to meet the requirements of Vaastu and also for the purpose of availing loan at concessional rates.
Concluding the matter, the Tribunal held that the impugned revision order passed by the learned Principal CIT was justified as there is no dispute with regard to the fact that the AO did not examine the eligibility of the assessee to claim deduction under section 54F of the Act as per the requirement of the provisions of section 54F of the Act.
“Though the learned AR submitted that the assessee has furnished the details of property held by her before the AO, it is not clear as to the context in which the reply was furnished by the assessee to the AO. The learned AR submitted that the assessee has filed the reply as per the oral request made by the AO. Hence, it is not clear from the record as to whether the AO has examined the claim for deduction under section 54F and allowed the same after due application of mind,” the Tribunal said.
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