Commissioner of Income Tax vs Mr. B. Tiburtius

K. Raviraja Pandian, J.—The appeal is filed against the order of the Income Tax Appellate Tribunal Madras ''A'' Bench dated 20.4.2007

made in I.T.A. No. 795/Mds/2003 for the assessment year 1998-99.

The assessee is an individual. For the relevant assessment year, the assessee filed income tax return and claimed deduction u/s 54F on purchase

of house property during the financial year relevant to the assessment year 1997-98 and the same was allowed by the Department. Subsequently,

for the instant assessment year, the assessee claimed deduction u/s 54F for an amount of Rs. 8,01,055/- being the amount spent towards repairs

i.e., improvement of the house purchased during the earlier previous year. The assessing officer disallowed the claim of the assessee. Aggrieved by

the order of the assessing officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income

Tax (Appeals) allowed the claim of the assessee following the decision of the Madras High Court in the case of Commissioner of Income Tax Vs.

P.V. Narasimhan, . Aggrieved by the order of the Commissioner of Income Tax (Appeals), the revenue filed appeal before the Income Tax

Appellate Tribunal The Income Tax Appellate Tribunal relying upon the decision of this Court in the case of Commissioner of Income Tax Vs.

P.V. Narasimhan, upheld the order of the Commissioner of Income Tax (Appeals) and dismissed the appeal of the Department. The correctness

of the said order is canvassed by the revenue in this appeal by formulating the following questions of law:

Whether in the facts and circumstances of the case, the Tribunal was right in holding that improvement of residential property also would be eligible

for the benefit of Section 54F of the Income Tax Act?

Learned Counsel appearing for the revenue submitted that in the facts and circumstances of the case the invocation of Section 54-F of the

Income Tax Act is not applicable to the facts of the present case. The assessee has only improved the assets purchased arising out of the capital

gain, which is not contemplated u/s 54F of the Income Tax Act.

We heard the argument of the learned Counsel for the revenue and perused the materials on record.

The Tribunal in its order has categorically stated that the assessee has explained that he did not make any investment in new property. The

assessee did purchase only one property in 1997-98 and the amount of Rs. 8,01,005/- spent in the assessment year 1998-99 was only towards

the improvement of the property. Before the Commissioner of Income Tax (Appeals), the assessee did furnish an affidavit stating that he did not

own any property other than No. 18, Radhakrishnan Nagar, Thiruvanmiyur, Chennai 600 041. The Commissioner of Income Tax (Appeals)

sought the comments of the assessing officer on the factual details. The assessing officer by his letter dated 23.12.2002 confirmed that there was

no purchase of second property by the assessee and the assessing officer also mentioned in that letter the assessee was eligible for deduction u/s

54F(1) to the extent of Rs. 41,46,865/-.

From the above said factual circumstances of the case, and following the decision of this Court in the case of Commissioner of Income Tax Vs.

P.V. Narasimhan, wherein it was held that the expenses involved in construction of first floor could be allowed u/s 54 of the Income Tax Act.

Further, in view of the explanation offered by the assessing officer himself pursuant to the clarification sought for by the Commissioner of Income

Tax (Appeals) that the assessee is entitled to deduction u/s 54F, we do not find any material for entertaining this appeal and the appeal is therefore

dismissed.