Merely because capital gains were not deposited in the capital gains account scheme, exemption U/S 54 cannot be denied, if other conditions are fulfilled: ITAT Delhi

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Merely because capital gains were not deposited in the capital gains account scheme, exemption U/S 54 cannot be denied, if other conditions are fulfilled: ITAT Delhi

Sarita Gupta (ITA No.1174/Del/2022)

Facts:

  1. The assessee has made investment in purchase of new residential property of the entire capital gain amount, hence, claimed exemption under section 54 of the Income Tax Act. After verifying all the details, the Assessing Officer accepted the return of income filed by the assessee and accordingly completed the assessment.
  1. Post completion of assessment, learned PCIT called for and examined assessment record and while doing so, it was found that the capital gain amount was not deposited in the capital gain account scheme during the interim period till its utilization in purchase/construction of new property. The aforesaid facts were not considered/inquired into by the Assessing Officer.
  1. Thus, PCIT set aside the order the assessment order due to non- consideration of these facts under section 263 of the Income Tax Act.

ITAT Delhi held as below:

  1. In our view, learned PCIT has adopted a hyper-technical approach while dealing with the issue. When the basic conditions of section 54(1) has been satisfied, in our view, the assessee remains entitled to claim the deduction under section 54 of the Act.
  1. In any case of the matter, there is no prejudice caused to the Revenue as the assessee in terms of section 54(1) of the Act is entitled to deduction.
  1. In the aforesaid view of the matter, we hold that exercise of power under section 263 of the Act to revise the assessment order in the instant case is invalid. Accordingly, we quash the order passed under section 263 of the Act and restore the assessment order.

 

The copy of the order is as under:

 

1702012353-ita no. 1174 of 2022, sarita gupta vs. pcit

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