Assessee Entitled to Sec. 54F Exemption if Claim Made While Filing ITR in Response to Notice Under Sec. 148 | ITAT

Case Details: Satyanarayana Viswanadha vs. Income-tax Officer - [2025] 170 taxmann.com 474 (Visakhapatnam-Trib.)

Judiciary and Counsel Details

• K. Narasimha Chary, Judicial Member & S Balakrishnan, Accountant Member
• Siva Rama Kumar, AR for the Appellant.
• Dr. Aparna Villuri, CIT(DR) for the Respondent.

Facts of the Case

The assessee-individual executed a development agreement with a firm for the construction of an apartment by transferring his land. The assessee didn’t file the return of income for the relevant assessment year and was served a notice under section 148. In response, the assessee filed a return of income admitting total income.

Assessing Officer (AO) issued a notice to the assessee requesting the assessee to show cause as to why the long-term capital gain on the land transfer should not be assessed tax. In response, the assessee submitted an explanation and stated that the assessee had not received any consideration in the relevant assessment year. Thus, the assessee was not liable to tax, and the assessee could claim the total gain as an exemption under section 54F.

Considering that no exemption was claimed under section 54 in return, the AO added long-term capital gain to the assessee’s income. On appeal, CIT(A) upheld the order of AO. Aggrieved by the order, the assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the assessee was eligible for deduction under section 54F of the Act from the long-term capital gains. Though the assessee claimed while filing the return of income in response to the notice under section 148, Appellate Authorities were not barred from entertaining the fresh claim.

Accordingly, the order of the lower authorities was set aside, and the Assessing Officer was directed to verify the facts regarding acquiring the new asset and allow deduction under section 54F in respect of long-term capital gains.

List of Cases Reviewed

• R. Venkata Dhana Lakshmi v. ITO [2021] 89 ITR (Trib) (S.N.) 28 (ITAT [Visakha] [Para 8] – followed.