The Tribunal rejected the Commissioner of Income Tax (Appeals) [CIT(A)]’s assertion that the document was manipulated, labelling it as a baseless allegation.
No Bar on Simultaneous Deduction u/s.54 & 54F of IT Act Against Same Asset: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) in the case of Ramdas Sitaram Patil vs. ACIT, Central Circle, Kolhapur, confirmed that an individual can simultaneously claim deduction under Sections 54 and 54F of the Income Tax Act for the same residential property.
Case Background:
The appellant, an individual taxpayer, had filed their Income Tax Return for the Assessment Year (A.Y.) 2016-17, declaring a total income of Rs. 96,55,810 on 07.03.2017. However, the Assessing Officer (AO) assessed the income at Rs. 2,59,13,610 under Section 143(3) of the Income Tax Act, disallowing the taxpayer’s claim for deductions under Sections 54 and 54F.
The sole issue in this appeal was whether the taxpayer was entitled to deductions under both Sections 54 and 54F for the purchase of the same residential property.
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AO’s View:
The AO denied the deductions on two grounds:
- A taxpayer cannot claim deductions under both Sections 54 and 54F for the same new residential property.
- The new residential property was purchased more than one year prior to the sale of the original asset, thus failing to meet the eligibility criteria for deduction.
Tribunal’s Observations:
Upon reviewing the facts, the Tribunal found that the AO’s interpretation was flawed. Although the sale consideration was paid more than one year before the sale of the original asset, the Tribunal emphasized that the law does not explicitly prohibit claiming deductions under both Sections 54 and 54F for the same asset. The key aspect in this case was the date of acquisition of the new property.
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Crucial Determination:
The Tribunal highlighted that the critical date for determining eligibility for deduction under Section 54 is the date when the taxpayer assumes possession and control of the new residential property. In this case, the sale deed unequivocally stated that the taxpayer took possession on 31st March 2015, which was within the one-year window preceding the sale of the original asset.
Tribunal’s Verdict:
The ITAT ruled that the taxpayer was indeed eligible to claim deductions under Sections 54 and 54F. The sale deed, being a legally binding document, confirmed the possession date and could not be dismissed as fabricated without substantial evidence. The Tribunal rejected the Commissioner of Income Tax (Appeals) [CIT(A)]’s assertion that the document was manipulated, labelling it as a baseless allegation.
Conclusion:
The appeal was allowed in favour of the taxpayer, reaffirming that there is no legal bar to claiming deductions under both Sections 54 and 54F for the same residential property, provided the property acquisition falls within the stipulated time frame.
This case sets a precedent that taxpayers can avail of simultaneous deductions under Sections 54 and 54F, provided they meet the conditions outlined by the law.
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