ARVIND CHADHA,DELHI vs. CIRCLE 22(2), DELHI, DELHI

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ITA 8127/DEL/2025Status: DisposedITAT Delhi15 May 2026AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that an allotment in a residential unit, along with a purchase agreement and assignment, qualifies for the purpose of Section 54 deduction, even if the full payment was not made before construction completion. The disallowance made by the lower authorities was rejected.

What were the facts?

The assessee claimed a deduction under Section 54 of the Income Tax Act for the purchase of a residential property. The lower authorities disallowed a portion of the claim, stating that the entire amount was not paid before the completion of construction.

What were the issues?

Whether an allotment and assignment of a residential unit, with part payment, qualifies for deduction under Section 54 of the Income Tax Act. Whether a penalty under Section 270A is sustainable when the primary addition is deleted.

Which sections of the Income-tax Act were involved?

Section 54,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

Hearing: 23.04.2026Pronounced: 15.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘C’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA Nos.3081 & 8127/Del/2025 Assessment Year: 2017-18 Sh. Arvind Chadha, Vs. Income Tax Officer, C-16, West End Colony, Circle-22(2), New Delhi Delhi PAN: AAFPC2056B (Appellant) (Respondent) Assessee by Sh. Parikshit Aggarwal, CA Department by Sh. Om Prakash, Sr. DR

Date of hearing 23.04.2026 Date of pronouncement 15.05.2026 ORDER PER SATBEER SINGH GODARA, JM This assessee’s twin appeals ITA Nos.3081 & 8127/Del/2025 for assessment year 2017-18 arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s orders dated 29.02.2024 and 27.10.2025 having DINs and orders no. ITBA/NFAC/S/250/2023- 24/1061767997(1) and ITBA/NFAC/S/250/2025- 26/1082019270(1), involving proceedings under section 143(3)

ITA Nos.3081 & 8127/Del/2025

and 270A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively. Heard both the parties. Case file perused. 2 For the reasons stated in the assessee’s condonation averments, delay of 373 days in filing ITA No.3081/Del/2025 is condoned in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC). 3. We advert to the assessee’s quantum appeal ITA No.3081/Del/2025 raising his sole substantive grievance directed against both the learned lower authorities’ respective assessment and lower appellate findings refusing section 54 deduction amounting to Rs.42,32,670/- in issue. 4. We make it clear that there is no dispute between the parties regarding the fact that the assessee had claimed section 54 deduction aggregating to Rs.1.92 crores out of which his three installments of Rs.60 lakhs, Rs.15,94,251/- and Rs.10,73,079/- totalling to Rs.86,67,330/-; already stand accepted very fairly in the learned Assessing Officer’s assessment order. There is no indication given in his assessment discussion about the disallowance of the assessee’s remaining sum of Rs.42,32,670/-.

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ITA Nos.3081 & 8127/Del/2025

5.

That being the case, learned counsel submits that the only reason given in both the lower authorities’ respective findings is that the entire amount had not been paid before completion of construction of the new residential houses. The assessee had firstly executed the purchase agreement regarding this flat in issue with the original allottee Ms. Neelam Bhandari on 30.01.2017 and paid Rs.60 lakhs to her which followed the latter’s assignment in the concerned residential unit in his favour by a tripartite arrangement (pages 39 to 50) finalized thereafter. This being the clinching factual position, we are of the considered view that going by the CBDT’s twin circulars No. 471, dated 15.10.1986 and 672, dated 16.12.1993; as considered in the Commissioner of Income Tax vs. Mrs. Hilla J.B. Wadia, (1993) 69 Taxman 114 (Bom) and Smt. Shashi Varma Vs. Commissioner of Income-Tax [(1997) 224 ITR 106 (MP)], the issue stands very well settled against the department that even an allotment in such an instance qualifies for construction of the residential property as well. We thus accept the assessee’s claim of section 54 deduction of Rs.42,32,670/- qua the remaining amount in very terms. The Revenue’s vehement contentions supporting the impugned disallowance are rejected

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ITA Nos.3081 & 8127/Del/2025

therefore. The assessee’s instant quantum appeal ITA No.3081/Del/2025 succeeds. Same order to follow in the assessee’s section 270A consequential penalty appeal ITA No.8127/Del/2025 as the same has no legs to stand anymore. 6. These assessee’s twin appeals ITA Nos. 3081 & 8127/Del/2025 are allowed. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 15th May, 2026 Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15th May, 2026. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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