PANATTU URUMIS CHACKO,ERNAKULAM V. THE INCOME TAX OFFICER, NON CORPORATE WARD 1(1), KOCHI

ITA 790/COCH/2023

AI Insights

The case revolves around the denial of a deduction under section 54 of the Income Tax Act, 1961, to the assessee, Panattu Urumise Chacko, for the assessment year 2017-18. The Assessing Officer (AO) had denied the deduction on the grounds that the construction of the new house was not completed within the statutory three-year period. This decision was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee appealed to the Income Tax Appellate Tribunal, arguing that the delay was caused by floods which led to a scarcity of materials and labor, and that substantial investments had been made within the required timeframe. The Tribunal, referencing a judgment from the Madras High Court, decided in favor of the assessee, emphasizing a liberal interpretation of the law considering the circumstances.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 42015 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 16-11-2023
• Other Referred Cases: CIT Vs. Sardarmal Kothari
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIY ALBERT
• Assessee Lawyers: TERRY V JAMES
• Keywords: Set aside; Competent authority
• Section: 54

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : BY VIRTUAL HEARING BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No. 790/Coch/2023 Assessment Years : 2017-18 SA No. 217/Coch/2023 (In ITA No.790/Coch/2023) Assessment Years : 2017-18 Panattu Urumise Chacko, 34/1552, Panattu House, Edappally, Ernakulam – 682 024. PAN – ACEPC 5419 M Vs. The Income Tax Officer, Non Corp Ward-1(1), Kochi. APPELLANT RESPONDENT Assessee by : Shri Terry V James, Advocate Revenue by : Smt. GirIy Albert, Sr. DR Date of Hearing : 19.09.2024 Date of Pronouncement : 15.10.2024 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 22/09/2023 in DIN No. ITBA/NFAC/S /250/2023-24/1056428966(1) for the assessment year 2017-18. 2. In the present case, the deduction claimed by the assessee u/s 54 of the Act was denied by the AO on the reasoning that the new house ITA No.790/Coch/2023 S.A No.217/Coch/2023 Page 2 of 4 . was not constructed within 3 years. The view taken by the AO was subsequently confirmed by the ld. CIT(A). 3. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 4. The ld. AR before us fairly admitted there was a delay in obtaining the occupancy certificate from the competent authority, which was due to floods in the month of August 2018 and September 2019. As such, due to floods, there was severe scarcity of materials and labour to finish the work within the time. Nevertheless, the assessee is made substantial investment by buying the piece of land and doing construction activity on such land. Therefore, the benefit of deduction u/s 54 of the Act cannot be denied. 5. On the other hand, the ld. DR vehemently supported the orders of the authorities below. 6. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the deduction claimed by the assessee under section 54 of the Act has been denied by the authorities below, as the assessee failed to complete the construction within the statutory time limit. As such, there was a delay in obtaining the occupancy certificate from the competent authority, which was obtained on 11/12/2019. Therefore, deduction was denied. However, it is undisputed fact that the assessee has made substantial investment in the property within the period of 3 years. Therefore, we are of the view that the assessee cannot be denied the benefit of deduction u/s 54 of the Act. In holding ITA No.790/Coch/2023 S.A No.217/Coch/2023 Page 3 of 4 . so, we draw support and guidance from the judgment of Hon’ble Madras High Court in the case of CIT Vs. Sardarmal Kothari 30 ITR 286, wherein it was held as under:- The assessees had claimed exemption of capital gain tax under section 54F. The Assessing Officer rejected the same on the ground that the construction was not completed when he made a personal visit. The Commissioner (Appeals) and Tribunal allowed the assessees' claim. Held that it was not in dispute that the assessees had purchased the lands by investing the capital gain and they had also constructed residential houses. In order to establish the same, the assessees submitted before the Commissioner (Appeals) material evidence, viz., invitation card printed for the house warming ceremony to be held on 12-7-2003. The assessees had also produced the completion certificates from the municipal authority. On the basis of the above documents, the Commissioner (Appeals) concluded that the requirement of the statutory provision had been complied with by the assessees and that was reconfirmed by the Tribunal in the orders impugned. The Tribunal had also taken note of its own earlier order in the case of Mrs. Seetha Subramanian v. Asstt. CIT [1996] 56 TTJ (Mad.) 417/59 ITD 94 (Mad.), wherein the Tribunal has held that, in order to get the benefit under section 54F, the assessee need not complete the construction of the house and occupy the same. It is enough if the assessee establishes that the assessee had invested the entire net consideration within the stipulated period. Therefore, the Tribunal was justified in allowing the assessee's claim. 6.1 It is an admitted fact that the provisions of deduction u/s 54 of the were brought out in the statute considering the scarcity of the house in India, thus we are of the view that liberal approach should be adopted. Furthermore, we also note that the assessee has made substantial investment in the new property, therefore, we are of the view that the assessee cannot be denied the benefit of deduction u/s 54 of the Act. Accordingly, we set aside the finding of the ld. CIT(A) and direct the AO to delete the addition made by him. 7. In the result, the appeal filed by the assessee is hereby allowed. ITA No.790/Coch/2023 S.A No.217/Coch/2023 Page 4 of 4 . S.A. No. 217/Coch/2023 8. Since the issue involved in the appeal of the assessee has been disposed of, as discussed above, the stay petition filed by the assessee is dismissed as infructuous. 9. In the combined result, the appeal filed by the assessee is allowed and stay petition filed by the assessee is dismissed as infructuous. Order pronounced in court on 15th day of October, 2024 Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 15th October, 2024 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "