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2022 (9) TMI 1085 - AT - Income TaxDisallowance of exemption claimed u/s 54 - Long Term Capital Gain on sale of residential house property - whether the assessee is entitled to deduction u/s 54 of the Act or not and what is the date of acquisition of new residential house for the purpose of deduction u/s 54? - HELD THAT:- Provision of Section 54 shows that whether any individual or a HUF invest, the capital gain arise on transfer of residential house within a period of 1 year before or two years after the date of transfer of the house property then the amount of capital gain invested in purchase of new house property, the capital gain was not chargeable to tax. Here the fact shows that the residential property was sold on 12th May, 2006 and agreement to purchase the new house property was registered on 16th March, 2005, whereas the possession of the new house property was granted to the assessee on 16th July, 2005. As admitted fact that the date of possession was not available before the learned Assessing Officer and therefore, he took the date of agreement to sale as the date of purchase of the property. Therefore, he denied the deduction under Section 54 of the Act. This fact was available before the learned CIT (A), however, he rejected the same stating that this is additional evidence filed by the assessee and same is not in conformity with the Rule 46A of the Income Tax Rules, 1962. We find that Rule 46A, does not mandate compulsorily by making return application for admission of additional evidence. It is for the CIT (A) to record the reason if such additional evidences are admitted. CIT (A) rejected the claim of the assessee on flimsy ground - we set aside the whole issue to the file of AO with a direction to the assessee to submit the evidence of possession letter of the new property, AO may examine the same and decide the issue whether the claim of the assessee is eligible for deduction u/s 54F or not. The learned AO may grant an opportunity of hearing to the assessee. After hearing, the AO may decide the issue on the merits of the case. Accordingly, the appeal of the assessee is allowed for statistical purposes.
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