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Maninder Kartik, Gurgaon vs DCIT, Delhi - (Income Tax Appellate Tribunal) (20 Sep 2023)

Depositing unutilized amount in special account is only a procedural matter, non-compliance thereof cannot result in negating deductions claimed under Section 54 of IT Act


Direct Taxation

In the assessment order, the Assessing Officer made addition of Long Term Capital Gain of Rs.90,72,800 upon sale of house property. The assessee has claimed deduction under Section 54 of the Income Tax Act, 1961 however, the same was denied by the Assessing Officer.Against this order, the assessee appealed before the Learned CIT(A). The Learned CIT(A) allowed deduction for the amount spent up to the date of filing of return of Rs.27 lakhs only. The assessee has claimed that, the assessee has complied with the requirement and has made the rest of the payment was not accepted by the Learned CIT(A).

Depositing the unutilized amount in a special account is only a procedural matter, and non-compliance thereof cannot result in negating the deduction claimed under Section 54 of the Act, if the other requirements are complied with.

Present Tribunal refers to the order of the Madras High Court in the case of CIT vs. Venkata Dilip Kumar. In this case, it was held that where assessee is in a position to satisfy the requirements as envisaged in under Section 54(2) or 54(1) of the Act and the assessee could not be denied exemption under Section 54 for mere non-compliance of requirement under section 54(2) of the Act.

Examining the present case and touchstone of the case laws, it is a claim of the assessee that the assessee has made the required payment in the next week itself from the date of filing of return. Hence, the assessee has claimed that he is eligible for deduction. The factual veracity as to whether the balance payment has been done within the specified period needs to be checked by the Assessing Officer. Hence, present Court remit this issue to the file of the Assessing Officer to examine the payment during the specified period and thereafter pass order as per law. Appeal of the assessee allowed.


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