TMI Blog2022 (12) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... eady existing property details, other information. Thus in our considered opinion that the Assessing Officer has not conducted necessary inquiry before allowing deduction u/s. 54F, but simply allowed the claim made by the assessee. Section 54F of the Act is not applicable, if the assessee at time of transfer of original assets, owns more than one residential house, other than the new assets acquired by him. Thus without applications of the provisions of law, the assessing officer has granted the relief to the assessee which otherwise the assessee is not eligible for the claim of deduction u/s. 54F of the Act. PCIT has invoked the provisions of Section 263 thereby set aside the erroneous assessment order passed by the Assessing Officer and directed the A.O. to pass a fresh assessment order after allowing adequate opportunities to the assessee in accordance with law following the prescribed procedure and duly examining the issue of allowability of deduction u/s. 54F - Decided against assessee. - ITA No. 97/Ahd/2021 - - - Dated:- 21-12-2022 - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Appellant : Ms. Arti N Shah, A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest is 35%. The second land was sold on 22.01.2015 for a consideration of Rs. 5,28,30,000/- wherein assessee s share of interest is 50%. Out of the total capital gains on account of sale of aforesaid two lands, the assessee claimed deduction of Rs. 3,96,79,796/- u/s. 54F of the Act on purchase of new residential house. However on perusal of statement of fixed assets being part of balance sheet for the financial year 2014-15, the assessee was the owner of the two residential houses namely one at Ambli Gam, Tal House with book value of Rs. 15,73,000/- and another Residential Bungalow with book value of Rs. 1,02,53,518/-. Therefore as on the date of purchase of new house, the assessee was in possession and ownership of two residential houses. As per the provisions of section 54F deduction would not be admissible, if the assessee, at the time of transfer of original asset, owns more than one residential house, other than the new residential house acquired by him. Thus the Assessing Officer did not bring any documents on record that he had made enquiry or verification before allowing the deduction u/s. 54F of the Act. Similarly, on perusal of indexation benefit claimed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee from these three co-owners vide deed number 3380/ dated 01.06.2013. At Page No. 3 of the sale deed dated 04.03.2020, it ha6 been clearly stated that the said property purchased by assessee on 01.06.2013 vide deed number 3380 from aforesaid three co-owners consisted of house/home alongwith land. Therefore, as on the date of purchase1 of property in the FY 2013-14 (immediately preceding previous year to the relevant previous year), the said immovable property consisted of a house alongwith land and not merely an open plot of land as claimed by assessee now. Therefore, as on the date of sale of aforesaid lands, assessee was the owner of two residential houses one being Ambali Gam, Tal House and other being Residential Bungalow with book values Rs. 15,73,5007- and Rs. 1,02,53,5187-respectively. (ii) It has further been stated by the assessee that the said house was inhabitable as on the date of transfer. In this regard it is pertinent to mention here that nowhere in section 54F of the Act it has been contemplated that the house owned by the assessee should be habitable for it to qualify as a residential house. Without prejudice to the above, assessee has not demonstr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capita! asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. In view of the above provisions of the Act, it is observed that deduction u/s. 54F of the Act shall not be admissible if the assessee, at the time of transfer of original asset, owns more than one residential house, other than the new asset acquired by him. Here the word owns has been mentioned in the proviso which means if the assessee is owner of more than one residential house, he shall not be eligible for deduction u/s. 54F of the Act which is the case of present assessee. (iii) It has also been contended by the assessee that AO had made thorough enquiry with regard to allowbility of deduction u/s. 54F of the Act. However, it is observed that the inquiry made by the AO is insufficient. The AO had not made any examination of the fact as to whether the assessee was in possession of more than one residential house or not. The AO had not applied his mind with regard to ownership of two residential houses by the assessee despite the fact that the ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of provisions of section 263 of the Act thereon which is not the case here. 5. Thus the ld. PCIT set aside the assessment order dated 22.08.2017 and directed the Assessing Officer to pass fresh assessment order after allowing adequate opportunities to the assessee, in accordance with law following prescribed procedure and duly examining the issue of allowability of deduction u/s. 54F of the Act. 6. Aggrieved against this Revision order, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The order passed by the learned Principal Commissioner of Income-tax, Ahmedabad-1 (learned PCIT) is bad in law and liable to be quashed. It is submitted that it be so held now. 2. The learned PCIT grossly erred in law and on facts in assuming jurisdiction u/s. 263 and setting aside the order u/s. 143(3) passed by the Assessing Officer in respect of the claim of deduction u/s. 54F inspite of the fact that entire claim of the appellant was fully inquired into by the learned Assessing Officer during the course of assessment proceedings by making sufficient inquiries. It is submitted that the learned Assessing Officer has taken one of the plausi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment order are the details about the return of income filed, change in officers and issuance of notices and attendance of the Authorized Representative before the Assessing Officer. The remaining operative portion of the assessment order is as follows: 4. During the year under consideration, the assessee has derived the income from House Property, Long Term Capital Gain and Income from Other Sources, 5. After examination of the details made available by the assessee and discussion held with the AE of the assessee, the total income of the assessee is computed as under:- Total Income as per R/Income Rs. 16,43,52,760/- Total income assessed Rs. 16,43,52,760/- Assessed u/s. 143(3) of the I.T. Act accordingly. Allowed credit for prepaid taxes, if any, after due verification charged interest u/s.234 as applicable. Demand Notice , Challan are issued accordingly. 7.1. Thus the Assessing officer has not discussed any details either in the assessment order or in the notices issued to the assessee whether the assessee fulfills the conditions as prescribed u/s. 54F o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Commissioner of Customs (Import), Mumbai vs. M/s. Dilip Kumar Company and Ors. vide judgment dated 30/07/2018 in C.A. No. 3277 of 2007 as follows: .. 51. In Hari Chand Case (supra), as already discussed, the question was whether a person claiming exemption is required to comply with the procedure strictly to avail the benefit. The question posed and decided was indeed different. The said decision, which we have already discussed supra, however, indicates that while construing an exemption notification, the Court has to distinguish the conditions which require strict compliance, the non compliance of which would render the assessee ineligible to claim exemption and those which require substantial compliance to be entitled for exemption. We are pointing out this aspect to dispel any doubt about the legal position as explored in this decision. As already concluded in para 50 above, we may reiterate that we are only concerned in this case with a situation where there is ambiguity in an exemption notification or exemption clause, in which event the benefit of such ambiguity cannot be extended to the subject/assessee by applying the principle that an obscure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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