ITAT Allows Late Claim of Section 54F Exemption [Read Order]

The assessee, Bharat Jaswantlal Bhatt, sold a property for Rs. 60,27,000. The Stamp Valuation Authority assessed the value of the property at Rs. 86,74,012 for registration purposes.

The Assessing Officer (AO) reopened the assessment under Sections 144 r.w.s. 147 of the Income Tax Act, 1961, and taxed the entire amount of Rs. 86,74,012 as capital gain without:

• Considering the assessee’s 30% ownership share.
• Allowing cost of acquisition.
• Referring the matter to a District Valuation Officer (DVO).

The assessee furnished a valuation report from a government-approved valuer showing the fair market value as of 01.04.1981. The assessee also made a new claim under Section 54F (exemption on investment in residential property) before the Tribunal.

The Tribunal observed that:

• The AO wrongly taxed the full deemed value without deducting the cost or considering co-ownership.
• There was no proper adjudication on merits by either AO or CIT(A).
• CIT(A) rejected additional evidence without adequate reasoning.

In light of Mitesh Impex (Gujarat High Court), the Tribunal allowed the new claim under Section 54F to be examined.

Held: The matter should be remanded to the AO with directions to:

• Refer the valuation to DVO.
• Consider a Government-approved valuer’s report.
• Allow the assessee to claim exemption under Section 54F, subject to verification.

For more information, read the official order