AO can not be directed to consider claim u/s 54/54F as assessee declared income as business or profession

When assessee himself declared income as business or profession AO could not be directed to consider claim u/s 54/54F of the Act 

In a recent judgment, ITAT Chennai held that when assessee himself declared income under the head “business or profession” and no capital gain was declared, no directing can be issued to Assessing Officer to consider the claim under section 54/54F of the Income Tax Act, 1961 (the Act).

ABCAUS Case Law Citation:
4232 (2024) (08) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in not considering a new plea seeking benefit of capital gain exemption under section 54 and/or under section 54F of the Act.

The appellant assessee was an individual and filed his return of income which the CPC accepted under section 143(1) of the Act against which, the assessee instituted first appeal.

Before the CIT(A), the assessee raised additional ground by stating that the assessee was prevented in claiming re-investment under section 54F of the Act, by mistake of previous Authorized Representative of the assessee. The CIT(A) rejected the additional ground by stating that no capital gain was declared in the return of income and hence, additional ground raised by the assessee did not arise at all.

The assessee submitted that matter be remitted to the file of the Assessing Officer for consideration of claim of deduction under section 54F of the Act.

However, the Income Tax Department opposed the same and submitted that the assessee declared income under the head “business or profession” and accordingly, the CPC accepted the same. As per intimation order passed by the CPC there was no liability standing on the assessee to pay any taxes as on today.

The Tribunal observed that the assessee’s case was due to mistake by the previous authorized representative and the assessee, the capital gain deduction under section 54F of the Act could not be claimed in the return of income. The assessee had placed reliance in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC) to argue that Tribunal has ample power to direct the Assessing Officer to consider new plea of deduction under section 54F of the Act.

The Tribunal noted that admittedly, no capital gain was shown in the return of income and no claim also made under section 54F of the Act. Had the assessee been declared capital gain in the return of income and no claim under section 54F of the Act thereon, the Tribunal would have directed the Assessing Officer to consider the same by taking support from the decision of the Hon’ble Supreme Court. However, the assessee himself declared income under the head “business or profession” and no capital gain admitted. Therefore, having no declaration of capital gain in the return of income, directing the Assessing Officer to consider the claim under section 54/54F of the Act, does not arise.

Further, the Tribunal opined that as rightly pointed out there was no tax liability standing in the hands of the assessee, therefore there was no infirmity in the order of the CIT(A) and it was justified.

Accordingly, the grounds raised by the assessee were dismissed.

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