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Facts
The assessee, an NRI, entered into a Development Agreement-cum-General Power of Attorney (DAGPA) for developing his land. The AO treated the assessee's share in the project cost as undisclosed income and calculated capital gains. The CIT(A) sustained the addition. The assessee claimed deduction under section 54F, which was denied by the authorities below.
Held
The Tribunal held that the assessee could raise the claim for deduction under section 54F before the appellate authorities as it was relatable to the escaped income. The Tribunal further held that the share in bungalows to be constructed under the Joint Development Agreement would qualify as investment in construction of a new residential house for the purpose of section 54F.
Key Issues
Whether the share in bungalows to be constructed under a development agreement qualifies as investment for deduction under Section 54F, and whether such a claim can be raised during reassessment proceedings when not originally claimed.
Sections Cited
143(3), 147, 148, 54F
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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
करदाताका""त"न"ध"व/ : Shri A V Raghuram, Advocate Assessee Represented by राज"वका""त"न"ध"व/ : Dr. Sachin Kumar, Sr. AR Department Represented by सुनवाईसमा"तहोनेक""त"थ/ : 18/03/2026 Date of Conclusion of Hearing घोषणा क" तार"ख/ : 30/03/2026 Date of Pronouncement ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-10, Hyderabad, dated 09/09/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (for short, “the Act”), dated 2 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd 21/11/2019 for the Assessment Year (AY) 2013-14. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the order of the Id. CIT(A) is erroneous both on facts and in law.
2. The Id. CIT(A) erred in sustaining the addition made by the AO of Rs.22,77,120 as undisclosed income under the head Long Term Capital Gains' on entering into development agreement.
The Id. CIT(A) erred in denying the deduction u/s.54F of Act on the alleged ground that the appellant has not claimed any deduction in the return of income filed in response to notice issued u/s.148 of the Act and further has not filed any evidence in support of investment of sale consideration in the residential unit within the time frame as prescribed by the Act for claiming exemption u/s.54F of the Act.
4. The authorities below failed to appreciate that the requirement of section 54F of the Act is investment within three years in respect of construction, and in so far as the appellant is concerned, there is a deemed investment as per the entire entitlement by virtue of development agreement. The authorities below ought to have appreciated that the rights granted under development agreement is only on the condition that the appellant will be given developed area.
5. Without prejudice to the above grounds, the Id. CIT(A) erred in sustaining the action of the AO in computing capital gains on the entire value of development agreement. The authorities below failed to appreciate that the value of undivided land retained by the appellant in development agreement cannot be considered as it always belonged to the appellant, and what is to be considered is the value of land surrendered in the development agreement.
Any other ground that may be urged at the time of hearing.”
Succinctly stated, the assessee, a Non-Resident Indian (NRI), had filed his return of income for AY 2012-13 declaring an income of Rs. 26,04,670/-.
3 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd 3. Thereafter, the case of the assessee was reopened under section 147 of the Act. Notice under section 148 of the Act, dated 28/03/2019, was issued to the assessee. In compliance, the assessee filed his return of income declaring an income of Rs. 26,40,670/-, i.e., as was originally returned.
During the course of the assessment proceedings, it was observed by the AO that the assessee had purchased vacant land admeasuring 1 Acre vide Document No.1629/2008, dated 11/04/2008, for a consideration of Rs. 5,47,500/-. Thereafter, the assessee had, during the year under consideration, vide Document No.58/2012, dated 05/01/2012, entered into a Development Agreement-cum-General Power of Attorney (DAGPA) registered with SRO, Shankerpally, with M/s. SARK Projects for the development of the aforementioned land into “individual bungalows” with a sharing ratio of 48:52 in favour of the developer. The AO observed that the assessee’s share in DAGPA worked out at Rs. 26,61,120/-, being 48% of the project cost.
The AO vide his order passed under section 143(3) r.w.s 147 of the Act, dated 20/11/2019, determined the capital gains with respect to the aforesaid property transaction entered into by the assessee as per DAGPA vide Document No.58/2021, dated 05/01/2012, registered with SRO, Shankerpally, R.R. District at Rs. 22,77,120/-, as under: “Computation of Capital Gains:
4 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd Assessee's share in the market value of the property (Development Agreement cum GPA Doc No. 58/2012 dated 05-01-2012) Rs. 26,61,120/- Less: Indexed cost of acquisition As discussed in para 11 above. Rs. 3,84,000/- Indexed cost of improvement Rs. NIL Assessee's share of income under the head Rs.22,77,120/- Long Term Capital Gains Thus, the income of the assessee was determined by the AO at Rs. 48,81,590/-.
6. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.
The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the Ld. Authorised Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements pressed into service by them to drive home their respective contentions.
Shr. A V Raghuram, Advocate, the Ld. AR, at the threshold of hearing of the appeal, submitted that the CIT(A) had erred in not appreciating that the sale consideration to be received by the assessee on the transfer of the subject land to the developer as per the terms of the “Joint Development Agreement” (JDA), i.e., the share in the bungalows to be constructed on the said land (agreed to be allotted to 5 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd him) would fall within the meaning of “investment in construction of the new residential house” as provided in section 54F of the Act, therefore, no income was liable to be brought to tax in his hands under the head “Capital gains”. Apart from that, the Ld. AR submitted that though the claim of deduction u/s 54F of the Act was not raised by the assessee in his original return of income or the revised return, but it can still be raised, as the relevant material was available on record before the appellate authorities, i.e., CIT(A) and the Tribunal. The Ld. AR in support of his contention, has relied upon the order of the Hon’ble High Court of Madras in the case of CIT vs. Abhinitha Foundation (P.) Ltd (2017) 396 ITR 251 (Mad).
Per contra, the Ld. Departmental Representative (for short, “DR”) relied on the orders of the authorities below. The Ld. DR submitted that as the assessee had not raised the claim for deduction in his return of income, therefore, he cannot in the course of the present proceedings under section 147 of the Act, which are for the benefit of the revenue, raise the claim for deduction u/s 54 which was not raised by him in the original return of income. The Ld. AR to support his contention has relied upon the judgment of the Hon’ble High Court of Rajasthan in the case of Jai Steel (India), Jodhpur Vs. ACIT (2013) 36 taxmann.com 523 (Rajasthan).
6 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd 11. Apropos the Ld. DR’s contention that as the proceedings under section 147 of the Act are for the benefit of the revenue, the assessee cannot raise a claim for deduction which was not raised by him in the original return of income, we principally concur with the Ld. Sr. DR. As the object and purpose of the proceedings under section 147 is for the benefit of the revenue and not the assessee, therefore, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, and, in disguise, seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to 'escaped income’, and reagitate the concluded matters. Our aforesaid view is supported by the judgment of the Hon’ble Supreme Court in CIT Vs. Sun Engineering Works 9P) Ltd. (1992) 198 ITR 297 (SC). The Hon’ble Supreme Court based on its exhaustive deliberations on the aforesaid issue, had observed as under: “37. The principle laid down by this Court in V. Jaganmohan Rao's case (supra) therefore, is only to the extent that once an assessment is validly reopened by issuance of notice under section 32(2) of the 1922 Act (corresponding to section 148 of the 1961 Act), the previous under-assessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous under-assessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not effect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of 'under-assessment' based on clauses (a) to (d) of Explanation (I) to section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Roa's case (supra), therefore, cannot be read to imply as laying down that in the reassessment proceedings validly initiated the assessee can seek reopening of the whole assessment and claimed credit in respect of items finally 7 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd concluded in the original assessment. The assessee cannot claim recomputation of the income or redoing of an assessment and be allowed a claim which he either failed to make or which was otherwise rejected at the time of original assessment which has since acquired finality. Of course, in the reassessment proceedings it is open to an assessee to show that the income alleged to have escaped assessment has in truth and in fact not escaped assessment but that the same had been shown under some inappropriate head in the original return, but to read the judgment in V. Jaganmohan Roa's case (supra) as if laying down that reassessment wipes out the original assessment and that reassessment is not only confined to 'escaped assessment' or 'under- assessment' but to the entire assessment for the year and start the assessment proceedings de novo giving right to an assessee to reagitate matters which he had lost during the original assessment proceeding, which had acquired finality, is not only erroneous but also against the phraseology of section 147 and the object of reassessment proceedings. Such an interpretation would be reading that judgment totally out of context in which the questions arose for decision in that case. It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur v. Union of India [1971] 3 SCR 9 this Court cautioned: "It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment."
Although, section 147 is part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that construction should be preferred which makes the machinery workable. Since the proceedings under section 147 are for the benefit of the revenue and not an assessee and are aimed at garnering the 'escaped income' of an assessee, the same cannot be allowed to be converted as 'revisional' or 'review' proceedings at the instance of the assessee, thereby making the machinery unworkable.
As a result of the aforesaid discussion we find that in proceedings under section 147 the ITO may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of notice under section 148 and where reassessment is made under section 147 in respect of income which has escaped tax, the ITO's 8 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd jurisdiction is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the under- assessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The ITO cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters which are not the subject matter of proceedings under section 147. An assessee cannot resist validly initiated reassessment proceedings under this section merely by showing that other income which had been assessed originally was at too high a figure except in cases under section 152(2). The words 'such income' in section 147 clearly refer to the income which is chargeable to tax but has 'escaped assessment' and the ITO's jurisdiction under the section is confined only to such income which has escaped assessment. It does not extend to reconsidering generally the concluded earlier assessment. Claims which have been disallowed in the original assessment proceeding cannot be permitted to be reagitated on the assessment being reopened for bringing to tax certain income which had escaped assessment because the controversy on reassessment is confined to matters which are relevant only in respect of the income which had not been brought to tax during the course of the original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as 'escaped income'. Indeed, in the reassessment proceedings for bringing to tax items which had escaped assessment, it would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non- taxability of the items at all. Keeping in view the object and purpose of the proceedings under section 147 which are for the benefit of the revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to 'escaped income', and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings related to the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of 'reassessment' cannot be reduced beyond the income originally assessed.
It would be seen that whereas in the case of Anglo French Textile Co. Ltd. (supra) the question as to the rights of an assessee to claim 'redoing', 'revising' or 'recomputing' entire income during the reassessment proceedings was left open, that question did not come up for consideration in the case of H.R. Shri Ramulu ( supra) or H.M. Esufali H.M. Abdulahi (supra) or even in V. Jaganmohan Rao's case (supra). Some of the High Courts, therefore, fell in error in reading those judgments, divorced from the context in which the precise questions came up for consideration in those cases, and to hold that the assessee could 'reagitate' the concluded issues and claim relief in respect of items, finally concluded in the original assessment proceedings, during the 9 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd reassessment proceedings, unconnected with the escapement of income. We cannot, therefore, approve in broad propositions laid in that regard in Indian Refrigeration Industries (P.) Ltd.'s case (supra), Ramsevak Paul's case (supra ), Assam Oil Co. Ltd.'s case (supra), Standard Motor Products of India Ltd.'s case (supra), Rangnath Bangur's case (supra), State Bank of Hyderabad's case (supra) and Indian Rare Earth Ltd.'s case (supra).
Keeping in view the above principles, we may now turn our attention to the question formulated by the High Court as noticed in the earlier part of the judgment.
The Tribunal rightly found that the loss which the assessee wanted to be set off against the 'escaped income' could not be allowed to be so set off because in the original assessment proceedings, no 'set off' was claimed or permitted and the original assessment had acquired finality when the appeal against the order of assessment failed before the AAC and the assessee took no further steps to agitate the issue. The Tribunal was also right in concluding that the items which the assessee wanted to be taken into account in the proceedings under section 147 were unconnected with the escapement of income. The High Court clearly fell in error in holding otherwise. Since the original assessment had been concluded finally against the assessee, it was not permissible for the assessee in the reassessment proceedings to seek a review/revision of the concluded assessment for the purpose of computation of the escaped income. The High Court clearly fell in error by permitting the assessee to reagitate, in the reassessment proceedings under section 147(a), the finally concluded assessment proceedings and to grant to him relief in respect of items not only earlier rejected, but also unconnected with the escapement of income by assuming as if the original assessment had not been concluded or was 'still open'.
Therefore, our answer to the question formulated by the High Court and noticed in the earlier part of this judgment is that in the reassessment proceedings it is not open to an assessee to seek a review of the concluded item, unconnected with the escapement of income, for the purpose of computation of the escaped income.
The appeals, consequently, succeed and are allowed. The orders of the High Court are set aside and those of the Tribunal restored. Since the assessee had not put in any appearance, there shall be no order as to costs.” (emphasis supplied by us) We, thus, in terms of our aforesaid deliberations, are of the view that considering the purpose of the proceedings under section 147 which are for the benefit of the revenue and not an assessee, the assessee in the 10 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd present case before us though could not seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, but in the backdrop of the fact that his case was reopened for bringing to tax the “Long Term Capital Gain” on the transfer of the subject property, thus remained well within his right to raise his claim for deduction u/s 54F of the Act, as the same was relatable to his 'escaped income'. We, thus, in terms of our aforesaid observations, are unable to persuade ourselves to concur with the Ld. DR that the assessee had wrongly raised the claim for deduction u/s 54F of the Act in the course of proceedings initiated in his case u/s 147 of the Act.
Coming to the issue involved in the present appeal, we find that the controversy therein involved lies in a narrow compass, i.e., as to whether or not the sale consideration to be received by the assessee (land owner) in lieu of transfer of his land to the developer as per the terms of the “Joint Development Agreement” (JDA), i.e., share in the bungalows to be constructed on the said land (agreed to be allotted to him) can be brought within the meaning of “investment in construction of the new residential house” as provided in section 54F of the Act?
Before dealing with the issue, we deem it apposite to observe that the assessee had not raised the claim of deduction under section 54F of the Act either in his original return of income or the return of income filed 11 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd in response to notice under section 148 of the Act. Ostensibly, the assessee had submitted before the CIT(A) that as he had invested the entire sale consideration in a residential property (his share in the constructed portion), which is allowed to be claimed as a deduction under section 54F of the Act, therefore, the long-term capital gains (LTCG) in his hands would be determined at Rs. NIL. However, the CIT(A) observed that as the assessee had not only failed to raise the aforesaid claim of deduction in his return of income, but had also not adduced any evidence to support his claim that he had invested the sale consideration in the residential unit within the time frame prescribed for claim of deduction under section 54F of the Act, thus, rejected his said contention.
14. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.
15. Admittedly, it is a matter of fact borne from the record that the assessee had neither in his original return of income nor in the return filed in response to notice u/s 148 of the Act, raised the claim for deduction under section 54F of the Act with respect to the capital gains arising on the transfer of the property pursuant to DAGPA executed with M/s. SARK Projects for the development of land into individual bungalows. However, we are of the view that as the assessee has 12 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd raised the aforesaid claim for deduction before the CIT(A), therefore, irrespective of the fact that the same was not raised in the original return or in the return of income filed in compliance to notice under section 148 of the Act, the appellate authority ought to have considered the same. Our aforesaid view, that even if the claim made by the assessee does not form part of the original return or revised return, it can still be raised, if relevant material is available on record before the appellate authorities, i.e., CIT(A) and the Tribunal by themselves; or on remand by the AO is supported by the judgment of the Hon’ble High Court of Madras in the case of CIT vs. Abhinitha Foundation (P.) Ltd (2017) 396 ITR 251 (Mad).
Coming back to the core issue involved in the present case, i.e., as to whether or not the sale consideration to be received by the assessee (land owner), in lieu of the transfer of his land to the developer as per the terms of “Joint Development Agreement”, i.e., share in the individual bungalows to be constructed on the said land (which is agreed to be allotted to him), can be brought within the meaning of “investment in construction of the new residential house” as provided in section 54F of the Act, is covered by the judgments of the Hon’ble High Court of Karnataka in the case of CIT Vs. K.G. Rukminiamma (2011) 331 ITR 211 (Karnataka) and in CIT vs. Sambandam Udaykumar (2012) 345 389 (Karnataka). Also, we find that the ITAT, “A” Bench, Hyderabad 13 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd in the case of Gyana Kumari Rojanala vs. ITO, dated 15/10/2025, had after relying upon the aforesaid judicial pronouncements, concluded that the residential apartments/duplexes, which as per “Joint Development Agreement” (JDA) were agreed to be allotted to the assessee (land owner) would qualify as an investment towards construction of “a residential house” under section 54F of the Act. For the sake of clarity, we deem it apposite to cull out the observations of the Tribunal, as under: “13. We shall now take up the second issue involved in the present appeal, i.e., as to whether or not the sale consideration to be received by the assessee (land owner) in lieu of transfer of her land to the developer as per the terms of the “Joint Development Agreement” (JDA), i.e. share in the residential apartments /duplexes to be constructed on the said land (agreed to be allotted to her), can be construed as and brought within the meaning of “investment in construction of the new residential house” as provided in Section 54F of the Act. We find that the subject issue is squarely covered by the order of a coordinate bench of the Tribunal, i.e., ITAT “G” Bench, Mumbai, in the case of Shilpa Ajay Varde Vs. Pr. Commissioner of Income-tax-22, Mumbai, dated 14.11.2018. The Tribunal had, in its order, observed as under: “The dispute between rival parties concerns as to entitlement of the assessee for deduction u/s 54F of the value of the two new residential flats bearing number 701 and 702 within provisions of Section 54F of the 1961 Act on the grounds that the said flats are not even being constructed by the developer “Honest Infra‟ and they are future properties, thus the assessee is not entitled for deduction u/s 54F.”
The Tribunal answered the aforesaid issue, as under:
Further even on merits, we have observed that assessee along with co-owners of the property has entered into an registered development agreement with the developer on 31.12.2012 which was registered on 10.01.2013 and possession was handed over on 10.01.2013. The assessee was to get Rs. 40 lacs as monetary compensation and also to get four new residential flats in consideration under the said development agreement from the developer “Honest Infra‟ as her share of consideration under development agreement dated 14 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd 31.12.2012. The four new residential flats bearing numbers 701, 702 , 1001 and 601 in the building are to be constructed on said property by the developer, thus, what the assessee is to get from developers are yet to be built new residential flats bearing flat no. 701, 702, 1001 and 601 in the building proposed to be constructed by “Honest Infra‟ under the said registered development agreement dated 31.12.2012, these flats were allotted specifically by the developer in favour of the assessee under development agreement which entitled assessee to sell, dispose of or even create charge on these flats. Thus, effectively it could be said that the share of consideration in lieu of property for development given by the assessee to the developer, to the extent of these four residential flats is retained by the builder which will be invested by the developer by utilising its own funds for constructing these flats on behalf of the assessee. This effectively means that consideration under the development agreement dated 31.12.2012 which other wise assessee was entitled to receive is now withheld by the developer which will be invested for constructing these flats on behalf of the assessee which will satisfy the requirement of making investment in construction of new residential flat as is provided u/s 54F of the 1961 Act. Section 2(14) is very widely defined to mean property of any kind held by an tax-payer, whether or not connected with his business or profession. The exceptions are also provided u/s 2(14) wherein property shall not be included in the definition of capital asset. We have also observed that CBDT own circulars bearing 471 dated 15.10.1986 and 672 dated 16.12.1993 are relevant, wherein allotment of flat under self financing scheme is held to be construction for the purposes of capital gains. Thus, in our considered view the AO rightly allowed deduction u/s 54F of the 1961 Act to the assessee vide assessment order dated 20.10.2015 passed u/s 143(3) by the AO and to that extent the said assessment order cannot be termed as perverse or erroneous so far so it is prejudicial to the interest of Revenue calling for interference u/s 263 of the 1961 Act.
Also, support is drawn from the judgment of the Hon’ble High Court of Karnataka in CIT Vs. K.G. Rukminiamma (2011) 331 ITR 211 (Kar). The Hon’ble High Court had observed that the assessee, who owned certain property, had entered into a Joint Development Agreement (JDA) with a builder to develop the said property. According to the development agreement, the assesse was entitled to 48% of the super built-up area in the form of four residential flats. The Hon’ble High Court had held that the four residential flats constitute “a residential house” for the purpose of Section 54 of the Act. Also, we may herein observe that the Hon’ble High Court of Karnataka had in CIT Vs. Sambandam Udaykumar (2012) 345 ITR 389 (Kar), inter alia, observed, that once it was demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in the construction of residential house even though transactions are not complete in all respects and as required 15 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd under law, that would not disentitle the assessee from the benefit contemplated under Section 54 of the Act.
We, thus, in the backdrop of the facts involved in the present case, read in the light of the aforesaid settled position of law, are of the view that the residential apartments/duplexes that were agreed to be allotted to the assessee, viz. (i). 47% share in the duplex (independent) houses; and (ii). 36.5% share in the residential apartments, as per the Joint Development Agreement (JDA), dated 06.11.2013, in lieu of transfer of her land admeasuring 7,254 sq. yards (i.e 1 Acre – 3974 Sq. yards) situated at Village: Manchirevula, Narsingi, District: Ranga Reddy to the developer, being an investment towards construction of “a residential house” qualifies for exemption under Section 54F of the Act.”
16. Resultantly, we set aside the order of the CIT(A) and direct the AO to allow the assessee’s claim for exemption under Section 54F of the Act in terms of our aforesaid observations. The Grounds of appeal Nos. 3 & 4 are allowed in terms of our aforesaid observations.
We, thus, respectfully follow the aforesaid judicial pronouncements, and set aside the matter to the file of the AO, who is directed to readjudicate the case after considering the assessee’s claim for deduction under section 54F of the Act in the backdrop of our aforesaid observations, subject to the satisfaction of the other pre- conditions therein contemplated.
In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the open court on 30th March, 2026. S - (मधुसूदन साव"डया) (रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखासद"य/ACCOUNTANT MEMBER "या"यकसद"य/JUDICIAL MEMBER d/- Hyderabad, dated 30/03/2026. 16 Surender Kumar Bhojwani vs. ITO (Int. Taxn-1), Hyd **OKK/sps