The assessee preferred an appeal against the order passed by the Commissioner of Income Tax (Appeals)–National Faceless Appeal Centre for Assessment Year 2016–17. The reassessment was completed under section 147 read with sections 144 and 144B of the Income-tax Act, 1961, wherein the Assessing Officer brought to tax an amount of ₹51,48,592 as short-term capital gains on sale of immovable property, along with a small amount of bank interest.

In the appellate proceedings, the assessee filed additional evidence, which was admitted by the Commissioner (Appeals), and a remand report was called for from the Assessing Officer. Upon consideration of the material placed on record, the Commissioner (Appeals) restricted the addition to ₹10,00,000, holding that the assessee had received only that amount as her share from the sale of ancestral property, supported by bank statements and sale documentation.

Before the Tribunal, the assessee challenged the treatment of the property as a short-term capital asset. From the records, it was noted that the building in which the flat was situated had been constructed in the year 2010, the occupation certificate had been issued on 16.06.2010, and the property was sold on 17.02.2016. These facts clearly established that the property had been held for more than the prescribed period. The Tribunal held that the property sold was a long-term capital asset and directed that the taxability of the assessee’s share of ₹10,00,000 be determined accordingly.

The assessee had also raised a claim for exemption under section 54 of the Act for the first time before the Commissioner (Appeals). The Tribunal noted that during remand proceedings, the Assessing Officer had verified that the assessee had purchased another residential property for ₹15,00,000 in May 2006. Since the claim under section 54 was a legal claim and the relevant facts stood verified on record, the Tribunal held that there was no justification for denying the exemption merely because it was raised at the appellate stage.

Accordingly, the Tribunal directed the Assessing Officer to allow exemption under section 54 amounting to ₹10,00,000 and held that the capital gains were to be assessed as long-term capital gains. The appeal of the assessee was allowed.

Source Link- https://itat.gov.in/public/files/upload/1768281360-qGWKvH-1-TO.pdf

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