SRIDHAR REDDY BAYAPU,HYDERABAD V. DCIT., CIRCLE-3(1), HYDERABAD

ITA 841/HYD/2024

AI Insights

The case revolves around the denial of exemption under Section 54 of the Income-tax Act, 1961, by the Assessing Officer and the Commissioner of Income-Tax (Appeals) to the assessee, Sridhar Reddy Bayapu, following the sale of his old residential property and subsequent purchase of a new one. The primary contention was whether the assessee had appropriately utilized the sale proceeds from the old property in compliance with Section 54, which allows for exemption of capital gains if the proceeds are reinvested in a new residential property within a specified period. The Tribunal examined the payments made by the assessee towards the new property and the timing of these transactions relative to the sale of the old property.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46057 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2016-2017
• Other Referred Cases: Humayun Suleman Merchant vs. CIT, Commr. of Customs vs. DilipKumar & Co, Commissioner of Income Tax vs. H.K. Kapoor (Decd.), CIT vs. J.R. Subramanya Bhat, CIT vs. Kapil Kumar Agarwal, CIT & Ors. vs. Shri. K. Ramchandra Rao
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Capital asset; Question of law; Capital Gains
• Section: 143(3); 143(2); 54; 139(1); 54F; 139; 73

Judgement Text

"1 आयकर अपीलȣय Ûयायाͬधकरण मɅ, हैदराबाद ‘बी’ बɅच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Įी मंजूनाथ जी, माननीय लेखा सदèय एवं Įी रवीश सूद, माननीय ÛयाǓयक सदèय SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.841/Hyd/2024 (िनधाŊरण वषŊ/ Assessment Year:2016-17) Sridhar Reddy Bayapu, Hyderabad. PAN: ABRPB6168L VS. The Deputy Commissioner of Income Tax, Circle – 3(1), Hyderabad. (अपीलाथŎ/ Appellant) (ŮȑथŎ/ Respondent) करदाता का Ůितिनिधȕ/ Assessee Represented by : Shri Mohd Afzal, Advocate राजˢ का Ůितिनिधȕ/ Department Represented by : Dr. Sachin Kumar, Sr. DR सुनवाई समाɑ होने की ितिथ/ Date of Conclusion of Hearing : 06.03.2025 घोषणा की तारीख/ Date of Pronouncement : 19.03.2025 O R D E R Ůित रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 14/08/2024, which in turn arises from the order passed by the A.O under Section 143(3) of 2 the Income-tax Act, 1961 (in short, ‘the Act’) dated 30/12/2018 for the assessment year 2021-22. 2. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The order of the Learned. CIT(A) is against the law, weight of evidence and probabilities of case. 2. The Learned Commissioner ought to have appreciated that the assessee has appropriated towards purchase of house an amount of the capital gains in the subject transaction, before the due date of filing of the return of income U/s. 139(1) of the IT Act, therefore, before the due date of filing of the return of income U/s. 139(1) of the IT Act, therefore erred in confirming the order of the Assessing Officer wherein, Rs. 70,00,000/- is disallowed with an assumption that the assessee had not deposited Rs. 70,00,000/- received on account of sale of house property in capital gains accounts scheme. 3. The Learned. Commissioner ought to have appreciated that the requirement of the section is that the assessee is required to purchase one year before or two years after the date of transfer or within a period of three years after that date constructed a residential house, therefore, the assessee satisfied the requirement of section by purchasing a house property within the time provided in section 54, therefore, erred in confirming the disallowance of Rs. 70,00,000/- made by the Assessing Officer. 4. The Learned Commissioner erred in confirming the order of the Assessing Officer where the amount of Rs. 70,00,000/- is disallowed with an incorrect assumption. 5. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary.” 3. Succinctly stated, the assessee had filed his return of income for the A.Y 2016-17, declaring an income of Rs. 6,40,510/-. Subsequently, 3 the case of the assessee was selected for scrutiny assessment under Section 143(2) of the Act. 4. Thereafter, the assessment was framed by the A.O vide his order passed under Section 143(3) of the Act, dated 30/12/2018, wherein the assessee’s claim for exemption raised under Section 54 of the Act on sale of a residential property for Rs.72.54 lacs based on investment made by him in a new residential property was declined. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A) who upheld the declining of the assessee’s claim for exemption under Section 54 of the Act, observing as under: “5.1. The facts of the case are that on 31/10/2015, the appellant B. Sridhar Reddy and Smt. Indira Reddy wife of the appellant, sold residential property for a consideration of Rs. 72,54,000/-. The appellant entered into an agreement of on 22/06/2015, for purchase of a Villa for a total sum of Rs. 2,15,00,000/-. It was submitted that he utilized the amount received on sale of his residential house of Rs. 72,54,000/- and also rs. 1,00,000/- housing loan sanctioned on 24/06/2015 towards purchase of property including an amount of Rs. 51,70,224/- out of his personal savings. Therefore, it was submitted that the appellant utilized the entire consideration of Rs. 72,54,000/- for the purchase of property and hence, was eligible for deduction U/s. 54F. In the assessment order, the AO observed that the amount of Rs. 70,00,000/- received as sale proceeds was not deposited in the capital gains account till the end of the financial year and that the said amount was not utilized for the purchase of the new Villa. Hence, the deduction U/s 54 was disallowed. 5.2. The appellant had attached the particulars of payment made for the purchase of a new property along with written submissions dated 27/07/2024. It is seen that a sum of Rs. 1.4 Crs has been paid during the period from 6/6/2015 to 18/11/2015. It is to be noted that subsequent to the sale of property on 31/10/2015, only a sum of Rs. 10,24,645/- is paid to be builder on 18/11/2015 and there are no further 4 payments till the end of the financial year. As per section 54(1), the appellant should have within a period of 3 years after sale of house property, constructed a residential house to be eligible for exemption U/s. 54 or the capital gains arising from the sale of house property, where section 54(2) stipulates that if the amount of capital gains has not been utilized within a year, it has to be deposited in a notified capital gains account. In the instant case, it is clear from the sequence of events that the amount of capital gains which is not utilized by appellant for the purchase of construction of new asset before the date of furnishing the return of income U/s. 139 has not been deposited by him before furnishing the return U/s. 139(1) in a Capital Gains Scheme account. The appellant has not utilized the capital gains arising out of the sale proceeds from the sale of property on 31/10/2015 for investment in the new asset within the due date of furnishing the return. It is to be noted that the appellant has not deposited the sale consideration or the capital gains arising thereof in a notified account at any time before the completion of the construction of the new asset. Therefore, this is a case of non-deposit in Capital Gains Account Scheme and not a case of delay of deposit in the notified account. 5.3. In the case of Humayun Suleman Merchant vs. CIT [2016] 73 taxmann.com 2 / 242 taxmann 189 / 387 ITR 421 (Bom.), it has been held that where the assessee had filed return of income and entire amount, which was subject to capital gain tax had not been utilized for purpose of construction of new house nor were unutilized amounts deposited in notified bank accounts in terms of Section 54F(4) before filing return of income, assessing officer rightly computed deduction U/s. 54F, restricting exemption U/s. 54F proportionately to amount invested. The Hon'ble Supreme Court in the case of Commr. of Customs vs. DilipKumar & Co [2018] 95 taxmann.com 327 / 69 GST 239 (Supreme Court) enunciated the following two principles while interpreting exemption clauses: (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity, it must be interpreted in favour of the Revenue. In the present appeal, the appellant had not complied with the mandatory provisions of section 54(2). The AO has also recorded a finding that no amount has been withdrawn out fo the sale proceeds of Rs. 70,00,000/- for the purpose of 5 investment in the new asset within the due date of furnishing of return U/s. 139(1). Hence, I uphold the action of the AO in denying the claim of deduction U/s. 54. Accordingly, Grounds 2 & 3 are dismissed.” 6. The assessee, being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 7. We have heard the learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 8. Shorn of unnecessary details, the assessee and his wife Smt. Indira Reddy had vide a registered sale deed, dated 31/10/2015 sold a residential house, viz. House No. 10-3-734/3 (admeasuring 271.66 square yards) situated at Vijaya Nagar Colony, Mallepally, Hyderabad, Telangana for a sale consideration of Rs. 72.54 lacs. That prior to the sale of the aforesaid property the assessee and his wife Smt. Indira Reddy, had vide an “agreement to sell”, dated 22/06/2015 agreed to purchase a semi-finished Villa No. 53 situated at Village: Tellapur, Ramachandrapuram Mandal, District: Medak, Telangana for a consideration of Rs. 52,60,000/-, Page 36 of APB. Further, the seller/builder, viz. M/s Pranit Projects Pvt. Ltd had agreed to complete the balance construction of the semi-finished Villa No. 53 (supra) in accordance with the specifications annexed with the “agreement to sell” 6 (supra) for an additional consideration of Rs. 1,62,40,000/-. Accordingly, the assessee had agreed for a payment aggregating to Rs. 2,15,00,000/- [Rs. 1,62,40,000/- (+) Rs. 52,60,000/-] to M/s Greenmark Developers Pvt. Ltd. (Formerly: M/s Pranit Projects Pvt. Ltd.) i.e the builder/seller of Villa No. 53 (supra). 9. As is discernible from the submissions filed by the assessee before us, Page 4 of APB read a/w the copy of the “registered sale deed”, dated 29.06.2017, Page 47 to 68 of APB read a/w the payment receipts issued by the builder/seller of the Villa No. 53 (supra), viz. M/s Greenmark Developers Pvt. Ltd. (Formerly: M/s Pranit Projects Pvt. Ltd.), Page 4 & Page 69-84 of APB, the assessee had made payments aggregating to Rs. 1,82,19,224/- towards investment made by him in Villa No. 53 (supra), as under: Sl No. Date Particulars Amount (Rs.) 1. 06/06/2015 Advance payment vide DD No. 000010. 10,00,000 2. 01/07/2015 188 21,60,000 3. 10/07/2015 196 13,40,000 4. 10/07/2015 195 15,00,000 5. 31/07/2015 313 15,00,000 6. 31/07/2015 314 21,59,000 7. 10/09/2015 364 21,00,000 8. 19/10/2015 377 14,00,000 9. 19/11/2015 416 10,24,645 10. 18/04/2016 547 13,25,000 11. 14/10/2016 931 8,00,000 12. 10/01/2017 1031 1,80,150 13. 10/01/2017 1030 5,00,000 14. 20/01/2017 1041 4,40,000 7 15. 08/05/2017 138 3,45,000 16. 08/05/2017 039 3,00,000 17 08/05/2017 1182 1,45,429 Total 1,82,19,224 10. The assessee based on the payments made to the builder/seller of the Villa No. 53 (supra), viz. M/s Greenmark Developers Pvt. Ltd. (Formerly: M/s Pranit Projects Pvt. Ltd.) for purchase of the aforesaid residential property, viz. Villa No, 53 (supra), had in his return of income for the subject year raised a claim for exemption under Section 54 of the Act of the Long Term Capital Gain (LTCG) arising on the sale of his old residential house, viz. House No. 10-3-734/3 situated at Vijaynagar Colony, Malleapally, Hyderabad that was sold for Rs. 72.40 lacs (supra). 11. Ostensibly, the AO while framing the assessment had declined the assessee’s claim for exemption under Section 54 of the Act, for the reason that the sale consideration of Rs. 70 lacs (out of Rs. 72.54 lacs) of the old residential house that was deposited in the assessee’s bank account was neither utilized/used by him for purchase of the new residential property i.e., Villa No. 53 (supra) nor deposited by him till the end of the financial year relevant to AY 2016-17 in the “Capital Gains Account Scheme” (CGAS) as was required per the mandate of law to claim exemption of the LTCG arising on sale of the old residential house. To sum up, the AO was of the view that as the assessee had not utilized the sale consideration of Rs. 70 lacs (out of Rs. 72.54 lacs) that 8 was received by him for purchase of the new residential property i.e Villa No. 53 (supra), therefore, the failure on his part to utilize the said amount disentitled him from raising a claim for exemption under Section 54 of the Act. 12. On appeal, the CIT(A) upheld the declining of the assessee’s claim for exemption under Section 54 of the Act by the AO, but interestingly he supplemented the latter’s view by another reason. The CIT(A) was of the view that as the assessee had out of the amount of Rs. 1.40 Crore that was invested by him in the new residential property during the period 06/06/2015 to 18/11/2015 only made a payment of a sum of Rs. 10,24,645/- to the builder/seller, viz. M/s Greenmark Developers Pvt. Ltd. (Formerly: M/s Pranit Projects Pvt. Ltd.) on 18/11/2015, and there were no further payments till the end of the financial year, therefore, he had failed to satisfy either of the twin conditions for claiming exemption u/s 54 of the Act, viz. (i). constructed a new residential property within a period of 3 years after the sale of his old residential property; or (ii). deposited in a “Capital Gains Account Scheme” (CGAS) the amount of capital gain that was not utilized for the purchase or construction of the new residential house before the “due date” of furnishing of the return of income under Section 139(1) of the Act. Accordingly, the CIT(A) besides approving the AO’s view had further based on his aforesaid deliberation upheld the declining of the assessee’s claim for exemption under Section 54 of the Act. 9 13. Considering the aforesaid facts, we find that the core issues involved in the present appeal boils down to two aspects, viz. (i). that as to whether or not the investment made by the assessee in the new residential property i.e., Villa No. 53 (supra) prior to the sale of the old property, viz residential house at Vijaya Nagar Colony, Mallepally, Hyderabad, Telangana would qualify for exemption under Section 54 of the Act.?; and (ii). that for availing the benefits under Section 54 of the Act, is it necessary that the sale proceeds of the old residential house must be used in the purchase or construction of the new residential house? 14. Before proceeding any further, we deem it fit to cull out the provisions of section 54 of the Act (as were available on the statute during the year under consideration), as under: “Profit on sale of property used for residence. 54. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head \"Income from house property\" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in 10 respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain: (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall [, subject to the third proviso to sub-section (1)] be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid:” 15. Ostensibly, section 54 of the Act contemplates two situations, viz., (i) investment of the LTCG arising on the transfer of the old residential house towards purchase of a new residential house within one year before or two years after the date of transfer of the old residential house; 11 or (ii) investment of the LTCG arising on the transfer of the old residential house towards construction of one residential house property in India within a period of three years after the date of transfer of the old residential house. 16. Considering the facts involved in the present case, we are of firm conviction that the assessee in the case before us had made an investment towards purchase of the new residential house property i.e., a semi-finished Villa No. 53 situated at Village: Tellapur, Ramachandrapuram Mandal, District: Medak, Telangana. Accordingly, the time period available to the assessee to purchase the new residential house property i.e., Villa No. 53 (supra) was spread over one year before or two years after the date on which the old residential house property was sold by him i.e., on 31/10/2015. As can be gathered from the “Chart” culled out by us hereinabove, the assessee had within the prescribed time frame i.e., from 31/10/2014 (one year before the transfer of the old residential property) upto 05/08/2016 [i.e the “due date” for filing of return of income under Sec. 139(1) for AY 2016-17 - as was extended by CBDT vide its order dated 19/07/2016] invested an amount of Rs. 1,55,08,645/-, viz. (i). towards the purchase consideration of Villa No. 53 (semi-finished); and (ii). towards payment to the builder/seller, viz. M/s Greenmark Developers Pvt. Ltd. (Formerly: M/s Pranit Projects Pvt. Ltd.) for completing the construction of the semi-finished Villa No. 53 (supra) in accordance with the 12 specifications annexed with the “agreement to sell” (supra). Accordingly, as the assessee had within the specified time period made an investment in the aforesaid new residential property, viz. Villa No. 53 (supra) much in excess of the sale consideration of Rs. 72.54 lacs of his old residential house, viz. House No. 10-3-734/3 situated at Vijaynagar Colony, Malleapally, Hyderabad, therefore, we find no reason for declining of his claim of exemption under Section 54 of the Act by both the lower authorities. 17. Alternatively, even if the CIT(A)’s view that the assessee had made investment in construction of the new residential property i.e., Villa No. 53 (supra) is to be accepted, then also there could have been no justification in declining his claim for exemption under Section 54 of the Act. Ostensibly, the CIT(A) had declined to consider the investment that was made by the assessee in the new residential property, viz. Villa No. 53 (supra), but we are unable to concur with the same. Although the assessee had prior to the sale of the old residential property made certain payments to the builder/seller, viz. M/s Greenmark Developers Pvt. Ltd. (Formerly: M/s Pranit Projects Pvt. Ltd.) for completing the construction of the new residential property, i.e the semi-finished Villa No. 53 (supra) in accordance with the specifications annexed with the “agreement to sell” (supra), but the same in our view would also be eligible for quantifying the assessee’s claim for exemption u/s 54 of the Act. We find that a similar issue had come up before the Hon'ble High 13 Court of Allahabad in the case of Commissioner of Income Tax vs. H.K. Kapoor (Decd.) [1998] 234 ITR 753 (All). The indulgence of the Hon'ble High Court was, inter alia, sought for adjudicating the following substantial question of law: “2. Whether, on the facts and the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that for availing of the benefits under section 54 of the Income-tax Act, 1961, it is not necessary that the construction of the new house should begin after the sale of the old house?” The Hon'ble High Court answered the aforesaid issue in favor of the assessee and approved the view taken by the Tribunal. It was observed by the Hon'ble High Court that the exemption of capital gains could not be refused to the assessee simply on the ground that the construction of the new residential house had begun before the sale of the old residential property. The Hon'ble High Court relied upon the judgment of the Hon'ble High Court of Karnataka in the case of CIT vs. J.R. Subramanya Bhat [1987] 165 ITR 571 (Kar), and observed, that it was immaterial that the construction of the new building was started before the sale of the old building. Accordingly, the Hon'ble High Court concurred with the view taken by the Tribunal, and observed, that the capital gains arising from the sale of the old property to the extent it was invested in the construction of the new residential property was exempt under Section. 54 of the Act. For the sake of clarity, the observations of the Hon'ble High Court are culled out as under: 14 “4. In the alternative, the assessee pleaded before the Income-tax Officer that he started the construction of another residential house at 64, Surya Nagar, Agra, on March 10, 1963, and that came to be completed within two years of the sale of the Golf Link house and that the capital gains to the extent of being invested in the construction of the Surya Nagar house was not taxable under Section 54 of the Act. The Income-tax Officer, however, took the view that the assessee had started construction of this house prior to the sale of the Golf Link house. He, therefore, rejected the alternative contention too of the assessee. 5. On appeal, the Appellate Assistant Commissioner had agreed with the Income-tax Officer. 6. On further appeal, the Appellate Tribunal reproducing Section 54 in its order found as follows: \"A perusal of the above provision will show that it does not lay down that the construction of any house must be begun after the sale of the old residential house and that the sale proceeds of the old residential house must be used for the construction of the new residential house. We are, therefore, of the opinion that the assessee complied with the requirement of Section 54 in respect of the construction of the house at 64, Surya Nagar, Agra, and that he is entitled to the exemption out of the capital gains from the sale of the house at Golf Link to the extent of the cost of construction of the house at 64, Surya Nagar, Agra. We, therefore, direct the Income-tax Officer to modify the assessment accordingly.\" 7. The question for consideration is whether exemption on capital gains could be refused to the assessee simply on the ground that the construction of the Surya Nagar, Agra house, had begun before the sale of the Golf Link house. Similar question came up for consideration before the Karnataka High Court in the case of CIT v. J.R. Subramanya Bhat [1987] 165 ITR 571. In the case before the Karnataka High Court, the date of the sale of the old building was February 9, 1977. The completion of the construction of the new building was in March, 1977, although the commencement of construction started in 1976. On these facts, the Karnataka High Court held that it was immaterial that the construction of the new building was started before the sale of the old building. We fully agree with the view taken by the Karnataka High Court. The Appellate Tribunal was right in holding that capital gains arising from the sale of the Golf Link house to the extent it got invested in the construction of the Surya Nagar house, will be exempted under Section 54 of the Act.” (emphasis supplied by us) 18. Apropos the second issue i.e., for availing the benefits under Section 54 of the Act, is it necessary that the sale proceeds of the old 15 residential house must be used in the purchase or construction of the new residential house, we do not find any substance in the view taken by the AO which thereafter had impliedly been approved by the CIT(A). On a perusal of Sec. 54 of the Act, it transpires that the same contemplates appropriation of the ‘capital gain’ arising on the sale of the old residential property towards purchase or construction of the new residential property. However, nothing can be gathered therefrom that it is necessary that the sale proceeds of the old residential house must be utilized by the assessee for the purchase or construction of the new residential house. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Madras in Moturi Lakshmi (Ms.) Vs. ITO (2020) 428 ITR 462 (Mad). The Hon’ble High Court in its order, had observed, that Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilized for the purchase or construction of a house property. Also, a similar view had been taken by the Hon’ble High Court of Punjab & Haryana in CIT Vs. Kapil Kumar Agarwal (2016) 382 ITR 462 (P&H) and the Hon’ble High Court of Karnataka in CIT & Ors. Vs. Shri. K. Ramchandra Rao (2014) 277 CTR 522 (Kar). 19. We, thus, in terms of our aforesaid observations, are unable to concur with either of the grounds based on which the CIT(A) had approved the declining of the assessee’s claim for exemption u/s 54 of 16 he Act. Accordingly, not being able to persuade ourselves to concur with the view taken by the lower authorities, we set-aside the order of the CIT(A) and direct the A.O to allow the assessee’s claim for exemption under Sec. 54 of the Act. 20. Before parting, we may herein observe, that the Ld. DR’s claim that as the assessee as on the date of transfer of the old residential house was an owner of more than one residential property, therefore, on the said count itself he was disentitled from claiming exemption under Section 54 of the Act but, we are unable to consider the same. We, say so, for the reason that the aforesaid contention of the learned DR does not emanate from the orders of the lower authorities. As observed by the ITAT, Special Bench in the case of Mahindra & Mahindra Ltd. Vs. Dy. CIT (2010) 122 ITD 216 (Mum) the learned DR has no jurisdiction to go beyond the order passed by the AO. It was further observed that the scope of argument of the departmental representative should be confined to supporting or defending the impugned order and he cannot be permitted to set up an altogether different case. 21. Also, we may herein observe, that the learned DR had stated that the assessee in his return of income for the subject year has raised the claim for exemption under Section 54F and not under Section 54 of the 17 Act. The learned DR to substantiate his claim has drawn our attention to the return of income filed by the assessee. 22. On the other hand, the learned AR submitted that though the assessee had in his return of income for the subject year made a wrong mention of his claim for exemption under Section 54F of the Act, but thereafter, he had in the course of assessment proceedings vide his letter dated 28/11/2018 filed with the AO rectified the said mistake. The learned AR to support his claim had placed on our record a copy of the aforesaid letter dated 28/11/2018 (supra). 23. Considering the aforesaid facts, we are of the affirm conviction that as the assessee had based on sale of his old residential property, viz. House No. 10-3-734/3 situated at Vijaynagar Colony, Malleapally, Hyderabad had made an investment towards purchase of the new residential house property, viz. Villa No. 53 (supra), therefore, no infirmity arises from the claim of exemption that was raised by him under Section 54 of the Act. Accordingly, we are unable to concur with the view taken by the lower authorities who have declined the assessee’s claim for exemption under Section 54 of the Act and set aside the same. The Grounds of appeal Nos. 2 & 3 are allowed in terms of our aforesaid observations. 24. The Grounds of appeal Nos. 1 & 5 being general are dismissed as not pressed. 18 25. Resultantly, the appeal filed by the assessee is allowed in terms of our abovesaid observations. 19th माच[, 2025 को खुलȣ अदालत मɅ सुनाया गया आदेश। Order pronounced in the Open Court on 19th March, 2025. Sd/- Sd/- Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सद˟/ACCOUNTANT MEMBER Sd/- Sd/- (Įी रवीश सूद) (RAVISH SOOD) Ɋाियक सद˟/JUDICIAL MEMBER Sd/- Sd Hyderabad, dated 19.03.2025. ***OKK/sps आदेशकी Ůितिलिप अŤेिषत/ Copy of the order forwarded to:- 1. िनधाŊįरती/The Assessee : Sridhar Reddy Bayapu, Villa No. 53, My Fair Villas, Tellapur, Hyderabad, Telangana-502032. 2. राजˢ/ The Revenue : The Deputy Commissioner of Income Tax, Circle – 3(1), Signature Towers, Kondapur, Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad 4. िवभागीयŮितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 5. The Commissioner of Income Tax 6. गाडŊफ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad "