Capital Gain exemption couldn’t be denied even if assessee claimed exemption under wrong section


Capital Gain exemption couldn’t be denied even if assessee claimed exemption under wrong section

[2021] 124 201 (Bangalore – Trib.)




Short Overview:


Section 54, read with sections 54F and 263, of the Income-tax Act, 1961


Capital gains


Profit on sale of property used for residence (Section 54 v. section 54F)


Assessment year 2013-14


Assessee declared long-term capital gain on sale of property and claimed deduction under section 54F which was allowed by Assessing Officer


However, Commissioner observed that assessee owned more than one residential house other than new asset on date of transfer of original asset



He set aside orders of Assessing Officer allowing deduction under section 54F


In assessment order, there was a reference to examination of claim under section 54 but it was not clear what enquiries were made by Assessing Officer


From description of property in sale deed, it appeared that there was a house


However, issue as to whether same could be said to be a residential house for purpose of section 54, was a matter that required examination


Issue was Whether since there was a failure on part of Assessing Officer to make necessary enquiry, Commissioner was justified in invoking jurisdiction under section 263 for remanding order for de novo consideration


Held, yes


Another issue was whether even if deduction claimed in return was under section 54F, claim of assessee should be considered under provision of section 54 if same was meant as one made under section 54


Held, yes


Conclusions :


Where assessee claimed in return deduction under section 54F but on date of transfer of original asset more than one residential house was owned by him and claim of deduction actually meant for deduction under section 54, deduction would be allowable under section 54


Sec. 54 exemption couldn’t be denied if assessee claimed exemption under wrong section


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