Arunava Bhattacharjee , Kolkata V. ACIT, Cir. 9(2), Kolkata

ITA 203/KOL/2022

AI Insights

The case involves Arunava Bhattacharjee, the appellant, who sold a guest house and claimed deductions under sections 54 and 54EC of the Income Tax Act for the assessment year 2016-17. The Principal Commissioner of Income Tax (Appeals)-1, Kolkata, revised the assessment order, disallowing certain deductions on the grounds that the appellant owned more than one residential house at the time of transfer, which was a condition under section 54F. However, the Tribunal clarified that section 54F's conditions did not apply to section 54, which was relevant to the appellant's case, leading to the quashing of the PCIT's revision order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128232 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-04-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 26-04-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 54; 263; 54F; 54EC

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘बी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Įी संजय गग[, ÛयाǓयक सदèय एवं Įी ͬगरȣश अĒवाल, लेखा सदèय के सम¢ Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T.A. No.203/Kol/2022 Assessment Year: 2016-17 Arunava Bhattacharjee........................................................... Appellant P 190/1, Bidhan Nagar Road, Ultadanga, Kolkata-700067. [PAN: AEIPB7392A] vs. ACIT, Circle-9(2), Kolkata.................................................................. Respondent Appearances by: Shri Sunil Surana appeared on behalf of the appellant. Shri Sanjay Mukherjee, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : April 20, 2023 Date of pronouncing the order : June 09, 2023 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 01.02.2021 of the Principal Commissioner of Income Tax (Appeals)-1, Kolkata [hereinafter referred to as ‘PCIT’] exercising his revision jurisdiction u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The ld. PCIT observed from the assessment records that the assessee had sold a Guest House, located at Ganganagar on 20.02.2016 at Rs.4,50,00,000/- which was acquired on 01.12.2007. The assessee computed Long Term capital gain of Rs.2,00,26,945/- from the sale of the aforementioned property and out of the said capital gain, the assessee had claimed a deduction of Rs.1,17,03,326/- u/s.54EC in ITR. But in its revised computation the assessee had I.T.A. No.203/Kol/2022 Assessment Year: 2016-17 Arunava Bhattacharjee 2 claimed deduction of Rs.1,18,22,046/- u/s.54/54F of the Act. However, in the assessment order the AO allowed deduction to the tune of Rs.1,17,03,326/- u/s. 54/54F against the assessee's claim of Rs. 1,18,22,046/-. The ld. PCIT further observed from the details of immovable asset as submitted by the assessee in Balance Sheet as on 31.03.2016 that the assessee was in possession of three residential unit viz. (1) 50% shareholding of property at 190/1 Biddhan Nagar Road, Kolkata-67, (2) Flat No.2601 Height Tower 8, Uniworld City, Rajarhal, Newtown, Kol-156 and (3) Flat No. 2201, Height Tower 8. Uniworld City, Rajarhat, New town, Kol-156 during the F.Y. 2015-16. But as per sub- section 1(b) of Section 54F, deduction u/s. 54F is not allowable if the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset. He therefore observed that the assessee owned more than one residential house, other than the new asset on the date of transfer (20.02.2016) of the original asset, hence, the assessee was not eligible to claim deduction u/s 54/54F of the Act and allowing the same in the assessment order was irregular and required to be disallowed. He show-caused the assessee in this respect. In response, the assessee submitted that during the assessment proceeding the assessee had claimed deduction of Rs.1,67,03,026/- u/s 54EC of the Act, whereas, the maximum deduction permissible under the said section was Rs.50,00,000/-. That thereafter the revised computation was furnished and the deduction u/s 54EC was claimed at Rs.50,00,000/- and further deduction of Rs.1,17,03,326/- was claimed u/s 54 of the Act. 3. Before the ld. PCIT, It was explained that section 54 was applicable in the case of the assessee not the section 54F. However, the I.T.A. No.203/Kol/2022 Assessment Year: 2016-17 Arunava Bhattacharjee 3 ld. PCIT proceeded to hold the order of the Assessing Officer as erroneous in law observing that as per section 54F of the Act, the assessee should not have owned more than one residential house other than the new asset on the date of transfer of the original asset. 4. The ld. Counsel for the assessee has invited our attention to the provisions of section 54 of the Act to submit that the condition as prescribed u/s 54F of the Act that the assessee could not own more than one residential house other than the new asset, on the date of transfer of the original asset, were not attracted for claiming deduction u/s 54 of the Act. That such conditions stipulated u/s 54F of the Act were not there under the provisions of section 54 of the Act. That the ld. PCIT proceeded on the wrong footing solely considering the provisions of section 54F of the Act. 5. The ld. DR could not rebut the above submissions. 6. Merely mentioning of section 54/54F in the assessment order does not mean that the assessee was not entitled to deduct u/s 54 of the Act. Therefore, the ld. PCIT has exercised his revision jurisdiction on the wrong footing which is not sustainable in the eyes of law. In view of this, the impugned revision order passed by the ld. PCIT u/s 263 is hereby quashed. 7. In the result, the appeal of the assessee stands allowed. Kolkata, the 9 th June, 2023. Sd/- Sd/- [ͬगरȣश अĒवाल /Girish Agrawal] [संजय गग[ /Sanjay Garg] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 09.06.2023. RS I.T.A. No.203/Kol/2022 Assessment Year: 2016-17 Arunava Bhattacharjee 4 Copy of the order forwarded to: 1. Arunava Bhattacharjee 2. ACIT, Circle-9(2), Kolkata 3.CIT (A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches