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I-T - Whether arbitral award passed subsequent to ITAT's denial for benefit u/s 54F, can be pleaded as additional evidence before ITAT for claiming eligibility of said provision - NO: HC

By TIOL News Service

MUMBAI, JAN 20, 2017: THE ISSUE IS - Whether arbitral award passed subsequent to the appellate order for denial of exemption benefit u/s 54F by ITAT, can be claimed as continuation of original proceedings before ITAT for seeking amendment of application for additional evidences so as to claim eligibility u/s 54F. NO is the verdict.

Facts of the case:

The assessee is an individual. It had been denied the benefit of exemption u/s 54F. While disposing of the appeal, the Tribunal observed, as did the Commissioner that as per Section 54F, assessee was supposed to construct a residential house within three years or purchase a residential house within two years of receipt of sale proceeds of a capital asset in order to avail the benefit of the said Section and to save himself from the payment from capital gains tax. Within the period allowed in law, assessee had not entered into any agreement to purchase the flat(s) nor did he construct a residential house. It was not the case of assessee that the consideration received from disposal of asset had been appropriated towards purchase of new premises. The assessee merely relied upon a letter of allotment. No agreement was entered into during the period of three years contemplated by Section 54F. That apart, the amount of capital gain which would have accrued was not deposited in the designated capital gain account under the Scheme of the Act by the due date of filing his return. Assessee made an application to Tribunal seeking permission to file a compilation described as "Additional Evidences Paper Book". The said application was considered by Tribunal, but the same was dismissed.

On appeal, the HC held that,

++ in the view of this court, arbitral award is a result of a conscious effort to settle the dispute between the builders and the assessee resulting in the award. It is not in any manner a continuation of the original transaction to acquire three flats by which assessee was seeking to ensure compliance with the requirements of the law, in particular the provisions of Section 54F. We find that the amendment now sought and which seeks to include the copy of the arbitral award as well as certain correspondence the appellant seeks to extend reliance upon the additional evidence to these documents over and above the Additional Evidences Paper Book filed before the Tribunal. The documents have sought to be relied upon in the form of the Arbitral award is pursuant to an Arbitral agreement dated 20th December, 2013 as we have observed earlier which is more than a year after the impugned order was passed. Furthermore, the correspondence sought to be relied upon in the above present Chamber Summons as part of the amendment sought, are the very same documents which were filed before the Tribunal along with the Additional Evidences Paper Book. This amendment sought by assessee is impermissible.

(See 2017-TIOL-139-HC-MUM-IT)


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