DHADUVAI PRAKASH RAO (HUF),HYDERABAD V. ITO WARD-5(1), HYDERABAD

ITA 892/HYD/2024

AI Insights

The case involves Dhaduvai Prakash Rao (HUF), who sold ancestral immovable property and claimed exemption under section 54 of the Income Tax Act, 1961, which was later corrected to section 54F due to a clerical error. The Assessing Officer initially rejected the claim due to insufficient evidence regarding the construction expenses of a new house, which included payments for a housing loan and property tax. The CIT(A) upheld this decision as the assessee failed to provide documentary evidence during the appellate proceedings. The assessee appealed to the Income Tax Appellate Tribunal, which found that there was indeed evidence of a loan from Kotak Mahindra Bank and building permission from GHMC, and thus remitted the case back to the Assessing Officer for a detailed examination of these documents.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46415 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 10-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVES MADHUKAR
• Assessee Lawyers: MOHD. AFZAL
• Keywords: Capital Gains
• Section: 54; 54F

Judgement Text

"आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD BEFORE SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No.892/Hyd/2024 (निर्धारण वर्ा / Assessment Year: 2017-18) Dhaduvai Prakash Rao (HUF) Hyderabad [PAN : AAJHD4110M] Vs. Income Tax Officer Ward-5(1) Hyderabad अपीलधर्थी / Appellant प्रत्‍ यर्थी / Respondent निर्धाररती द्वधरध/Assessee by: Shri Mohd.Afzal, AR रधजस्‍ व द्वधरध/Revenue by: Shri AVES Madhukar, DR सुिवधई की तधरीख/Date of hearing: 09/10/2024 घोर्णध की तधरीख/Pronouncement on: 19/11/2024 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 06/08/2024 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, (“learned CIT(A)”), in the case of Daduvai Prakash Rao (HUF) (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal. 2. Brief facts of the case are that the assessee HUF sold its ancestral immovable property on 08/11/2016 along with two brothers, received share of consideration of Rs.2,64,00,000/- and claimed exemption under section 54 of the Income tax Act, 1961 (“the Act”). However, it was observed that the asset transferred is not a residential house and hence the assessee was asked to explain as to how the assessee is eligible for deduction under section 54 of the Act. In response, the assessee vide letter dated 05/12/2019 submitted 2 that due to inadvertence and clerical mistake, deduction has been claimed erroneously u/s 54 instead of 54F of the Act. 3. Along with the letter, the assessee filed revised computation of total income, shown capital gains of Rs.2,29,69,514/-, claimed entire gain as deduction u/s 54F being investment made in construction of house property at Rs.2,95,58,927/- and submitted date-wise breakup of expenditure from 04/04/2016 to 28/03/2016 amounting to Rs.2,72,64,435/- along with copies of some bills. On careful consideration, the learned Assessing Officer observed that the assessee has included the payment of housing loan and property tax amounting to Rs.56,88,252/- also as cost of construction expenses. Since the assessee has not submitted any evidence with regard to details of home loan taken, amount of loan, property on which loan was taken etc., the learned Assessing Officer rejected the claim of the assessee and reworked long term capital gains at Rs.41,96,998/-. 4. Aggrieved by the order of the learned Assessing Officer, assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee as the assessee has not filed any documentary evidences in support of its claim either during the assessment or during appellate proceedings. 5. Against which, assessee filed an appeal before me and taking my attention to page number 75 and 76 of the paper book with regard to loan taken from Kotak Mahindra Bank and vide page number 34 and 35 with regard to building permission sanction by the GHMC, learned AR submitted the Revenue authorities erred in assuming that the said expenditure is not incurred towards construction of house and disallowed the claim against law. He, therefore, pleaded that the assessee may be given an opportunity of being heard before the learned Assessing Officer to prove its claim by furnishing the relevant credible material evidences. 6. Learned DR on the other hand submitted that the assessee failed furnish any evidences in support of its claim either during assessment or appellate proceedings. Hence, the learned CIT(A) is right in disallowing the 3 claim of the assessee. He, therefore, pleaded to uphold the order passed by the learned CIT(A) and dismiss the appeal filed by the assessee. 7. I have heard both the parties and perused the material available on record. It is evident from the paper book filed by the assessee that the assessee had availed loan from Kotak Mahindra Bank and also obtained permission from the GHMC Town planning section for construction of the house. In view of the same, I am inclined to remit the matter back to the file of the learned Assessing Officer to examine the evidences filed by the assessee and to pass order accordingly after affording an opportunity of being heard to the assessee in the interest of justice. Assessee is also directed to adhere to the notices issued by the Revenue authorities and cooperate during the proceedings by furnishing relevant material evidences in support of its claim. 8. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the Open Court on 19th November, 2024. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Hyderabad, Dated: 19/11/2024 L.Rama, SPS 4 Copy forwarded to: 1. Shri Dhaduvai Prakash Rao (HUF), 5-2-946, Osman Gunj, Hyderabad 2. The Income Tax Officer, Ward-5(1), Hyderabad 3. The Pr.CIT, Hyderabad 4. The DR, ITAT, Hyderabad 5. GUARD File TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD "