TMI Blog2022 (9) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... re hereby quashed. Deduction u/s 54F - Assessee owning more than one house property or other property belongs to HUF - HELD THAT:- It appears that the PCIT has confused himself with the return of the individual and that of the HUF. - If the assessee owned only one house property and that was also a commercial property, then there is no necessity to examine the claim for deduction u/s.54F on the ground that the assessee owned more than one house property other than the new asset as on the date of transfer. - Matter restored back to CIT. - ITA No.8/Bang/2021 - - - Dated:- 30-8-2022 - Shri N. V. Vasudevan, Vice President And Shri Chandra Poojari, Accountant Member For the Assessee : Shri. Satish S, Advocate For the Revenue : Shri. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru ORDER PER N. V. VASUDEVAN, VICE PRESIDENT This is an appeal by the assessee against the order dated 20.03.2022 of Principal Commissioner of Income Tax (PCIT), Bengaluru - 4, passed under section 263 of the Income Tax Act, 1961 (Act), relating to Assessment Year 2015-16. 2. The assessee is a HUF. For the Assessment Year 2015-16, the assessee filed return of income declaring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In another hearing held on 09.11.2017, the AO has recorded the fact that the Chartered Accountant of the assessee appeared and produced details of deduction under section 54 like BBMP plan, vouchers, etc. Thereafter, the AO passed an Order of Assessment under section 143(3) of the Act on 09.11.2017 observing as follows: 4) The assessee has declared income from House Property of Rs. 2,62,395/-, and income from other sources of Rs.3,18,621/-. Other than the CASS related information as above, assessee's Bank accounts and all other details filed by the AR were examined during the course of assessment. 5) After Verification of details filed by the assessee after examination of the Bank accounts and after obtaining the clarifications from the authorized representative, the assessment is concluded by accepting the returned income. 6. The PCIT in exercise of his powers under section 263 of the Act was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interest of the Revenue for the following reasons: 1) On verification of computation of total income statement it is noticed that the assessee arrived at long term capital gains of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Sri. Sangappa on 12-02-1959. (Copy of the document is enclosed as Annexure A) b) This land, along with other assets, was partitioned between my brother sri. G.S. Gangadhar and me, on 15-02-1968, under which each of us got 7 Acres and 37 Guntas as our shares. (Copy of the document is enclosed as Annexure B) c) Out of this land I got 4 Acres converted for residential purposes as per Order No. B.Dis. ALN.SR(S)- 64/199-2000 dated 13-10- 1999. This land was converted to escape from the acquisition proceedings of the Bangalore Development Authority. (Copy of the document is enclosed as Annexure - C ). d) However, the BDA has notified 4 Acres and 3 Guntas for acquisition. e) As directed in the Karnataka High Court's Order dated 30-08- 2006, BDA finally acquired 3 Acres and 13 Guntas leaving balance land of 30 Guntas to me. (Copy of the document is enclosed as Annexure D) 10. The PCIT however has not made any reference to the reply of the assessee dated 09.03.2020. He held that the Order of the AO was erroneous and prejudicial to the interest of the Revenue because the AO did not make enquiries which were required to be made before completing the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by him when the case was selected for limited scrutiny under CASS to examine deduction under section 54F of the Act, the PCIT cannot expand the scope of CASS by directing the AO to examine whether the gain on the sale of the plots by the assessee would give rise to LTCG or income from business. In this regard he placed reliance on decision of ITAT Bangalore in the case of M/s. Origami Cellulo Pvt. Ltd. Vs. The PCIT ITA No.394/Bang/2020 order dated 15.9.2021 and certain other decisions of the various other Benches of ITAT taking identical view. It was also pointed out that a merely possibility of income from sale of plots being regarded as income from business, cannot be the basis to invoke jurisdiction u/s.263 of the Act. Besides, the above submissions were also made regarding the merits of the case on how the HUF did not own more than 2 residential houses. Learned DR placed reliance on the Order of the PCIT and submitted that on admitted facts, the AO did not make proper verification and hence the Order has to be upheld. 12. We have given a careful consideration to the rival submissions. A copy of the return of income filed by the assessee, which is an HUF, for Assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual and that of the HUF. In such circumstances, we are of the view that it would be just and appropriate to set aside the order of the PCIT and remit this issue to the PCIT for consideration afresh, in the light of the observations made as above. If the assessee owned only one house property and that was also a commercial property, then there is no necessity to examine the claim for deduction u/s.54F of the Act on the ground that the assessee owned more than one house property other than the new asset as on the date of transfer. 14. With regard to the order of PCIT directing the AO to examine the question whether the gain on sale of the plots by the assessee should be regarded as LTCG or income from business, we have already seen that the assessee s case was taken up for limited scrutiny viz., for examination of the claim of the assessee for deduction under section 54F of the Act. The law is well settled that the limited scrutiny scope cannot be extended by the AO and therefore the AO could not have gone into this question at all the in the course of making assessment of the assessee s total income for Assessment Year 2015-16. Consequently, the PCIT in exercise of his power ..... 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