LI Network
Published on: December 15, 2023 at 11:40 IST
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has emphasized that the deduction under Section 54 of the Income Tax Act cannot be disallowed solely because the long-term capital gain (LTCG) was not deposited in the capital gain account scheme.
The tribunal, comprising Saktijit Dey (Vice President) and M. Balaganesh (Accountant Member), maintained that when the essential conditions of Section 54(1) are fulfilled, the taxpayer retains the right to claim the deduction under Section 54 of the Income Tax Act.
The appellant, a resident individual, faced a reopened assessment under Section 147 due to information about the sale of an immovable property.
Despite challenges from the Principal Commissioner of Income Tax (PCIT) regarding the non-deposit of the capital gain amount in the capital gain account scheme, the ITAT declared the exercise of power under Section 263 to be invalid.
The tribunal quashed the order passed under Section 263 and reinstated the assessment order.
The ruling establishes that hyper-technicalities regarding the capital gain deposit should not jeopardize the entitlement to deduction under Section 54. The ITAT emphasized the importance of adherence to the conditions specified in Section 54(1) for claiming the deduction.
Case Title: Ms. Sarita Gupta Versus PCIT