BIPASHA ROY CHOUDHURY,UK vs. ACIT (INTERNATIONAL TAX), CIRCLE 1(1), KOLKATA, KOLKATA

PDF · subscribers
ITA 1748/KOL/2025Status: DisposedITAT Kolkata28 April 2026AY 2010-117 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the construction of the new residential house was completed within the period stipulated under Section 54 of the Income Tax Act. The assessee was entitled to the deduction under Section 54 as the new flat was allotted in exchange for the old property.

What were the facts?

The assessee, a non-resident British citizen, was issued a notice under Section 148 for reopening her assessment. The Assessing Officer disallowed a deduction under Section 54 for the cost of construction of a new flat, leading to a confirmed tax demand. The CIT(Appeals) dismissed the assessee's appeal for lack of submissions and evidence.

What were the issues?

Whether the assessee is entitled to deduction under Section 54 for a new residential house constructed under a development agreement, and whether the reassessment proceedings were validly initiated.

Which sections of the Income-tax Act were involved?

Section 148,Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA

Before: Shri Duvvuru RL Reddy, Vice-(KZ)

The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), Kolkata-22 dated 23.07.2025 passed for Assessment Year 2010- 2011. 1

2.

Brief facts of the case are that Dr. Bipasha Roy Choudhury is a British Citizen and permanently residing at 8, Farmers Close Sale, Cheshire M 33 2L J. United Kingdom and her residential status is non-resident and by occupation she is a Medical Practitioner and earning and receiving income from outside India and her income in India is below taxable limit. The grandfather of the assessee Late Jogendra Chandra Roy Chowdhury purchased a plot of land through registered Deed of Conveyance and constructed a residential house thereon in accordance to the sanctioned plan. The Income Tax Department intended to reopen the case of the assessee’s father Shri Subhabrata Roy Choudhury. It appears from the reasons recorded for initiation of proceedings u/s 148 and for obtaining approval of the CIT that the PAN has been recorded that of Bipasha Roychoudhury and not of Subhabrata Roy Choudhury. Both the JCIT, Range-1, IT Kolkata and CIT IT and TP, Kolkata has given the consent to reopen in the case of Bipasha Roy Choudhury. Late notice u/s 148 had been issued to Bipasha Roy Choudhury under her personal PAN ALWPC4469N. Objections was made to the AO. The ld. Assessing Officer rejected the objection and passed an order dt. 13.09.2017 but without PAN. Bipasha Roychowdhury submitted a note of dissent dt. 11.10.2017. The ld. Assessing Officer disallowed the execution u/s 54 of the IT Act 1961 being the cost of construction of the new flat and determined the long-term capital gain at Rs.19,60,998/-.

3. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) in his appellate order dismissed the appeal of the assessee saying that in the instant case, the appellant has failed to make any submissions in support of grounds of appeal, this gives rise to an undisputable conclusion that the assessee has got nothing more to say in this regard. The appeal of assessee was dismissed by the ld. CIT(Appeals) without going into the merit of the case as the appellant has failed to substantiate her claim with any supporting documentary evidences. In the absence of supportive evidences, the grievance raised by the appellant could not be verified, hence, demand of Rs.6,41,970/- as shown by the System was confirmed by the ld. CIT(Appeals) and the long-term capital gain of Rs.19,60,998/- as made by the ld. Assessing Officer was confirmed by the ld. CIT(Appeals) dismissing the appeal of the assessee.

4.

On being aggrieved with the order of ld. CIT(Appeals), the assessee preferred an appeal before the Tribunal. It was the submission of the ld. Counsel for the assessee that the father of assessee Dr. Subhabrata Roy Chowdhury became the co-owner of the entire property being one fourth undivided share. An unregistered deed of agreement for development was entered between Shri Satyabrata Roychowdhury, Smt. Ratna Roychowdhury, Shri Subrata Roychowdhury and Dr. Subhabrata Roychowdhury as owners and Builcon Construction Pvt. Ltd. as developer on 20th March, 2008 and the possession was handed over to the developer on 27th February, 2010. The completed flat was delivered by Builcon Construction Pvt. Ltd. to the assessee

along with the co-owners on 15.02.2012 and Kolkata Municipal Corporation issued the Completion Certificate on 21st November, 2012. After the death of Dr. Subhabrata Roy Chowdhury on 10th June, 2014, the legal heirs of his share were inherited to his son Shri Shatadru Roychowdhury and his daughter Dr. Bipasha Roychowdhury as the wife of Dr. Subhabrata Roy Chowdhury predeceased him. The developer constructed the entire house in terms of development agreement and as such the assessee did not deposit any sum with capital gains deposit account scheme as the assessee did not make any single payment to developer for the construction and the developer has constructed the same as consideration for the development agreement. Regarding issuance of notice under section 148, it was stated that the notice has been generated by the computer system of the Income Tax Department showing the PAN of Dr. Bipasha Roychowdhury, i.e. PAN ALWPC4469N and naturally the PAN of his father cannot be filed. Though Dr. Bipasha Roychowdhury was the legal heir of his father and assessee objected for issuance of notice under section 148 of the Act on 8th September, 2017 before the ld. Assessing Officer, but the ld. Assessing Officer rejected the written objection. The ld. Counsel pleaded before the Bench that the assessee was not the owner of the house property in question during the assessment year as such the assessment order may be quashed as proceedings based on defective notice in the eyes of law. It is an admitted fact that the developer was handed over the property in question on 17th February, 2010 according to the certificate issued by the developer. The property was developed and handed over to the assessee on 15.02.2012 as per the letter of possession. The ld.

Counsel pleaded that the ld. Assessing Officer did not allow deductions under section 54 of the Income Tax Act on the ground that assessee has not fulfilled the conditions under section 54 of the Act. Ld. Counsel also pleaded that the ld. Assessing Officer has specifically written the assessee to deposit the amount in any Bank account or Institution as specified by the Government for the purpose of furnishing income tax return, which the assessee failed to do and also failed to comply with the conditions laid down under section 54 of the Act and added to the income of assessee. Section 54 provides exemption to capital gains arising from the transfer of a residential house property, the income of which is chargeable to income from house property. The assessee being an individual, the capital asset transferred to a residential house property and the house property is a long-term capital asset. To avail exemption, the new house should be purchased within one year before or within two years after the date of transfer of the residential house property or construction should be completed within three years from the date of transfer of residential house property. Acquisition of new flat under a development agreement in exchange of an old building, amounts to construction of new flat for the purpose of claiming deduction under section 54 of the Income Tax Act, 1961. Therefore, ld. Counsel pleaded before the Bench to set aside the order of ld. CIT(Appeals).

5.

On the other hand, ld. Departmental Representative pleaded before the Bench to uphold the order of ld. CIT(Appeals) as the assessee has not fulfilled the conditions laid down under section 54 of the Act.

6.

I have heard the rival submissions and perused the material available on record. It is noticed that the development agreement is dated 20th March, 2008 and the possession was handed over to the developer on 27th February, 2010. The completed flat was delivered to the assessee by the Builcon Construction Pvt. Ltd. (builder) on 15th February, 2012 and the Completion Certificate has also given on 21st November, 2012. The new residential house has admittedly been constructed within the period provided under section 54 of the Act. The conditions more so the restrictions imposed by Section 54(2) would not come in the way in so far as the new flat had been allotted to the assessee in exchange of old flat and consequently as the construction has been completed within the time frame provided under section 54, the assessee is entitled to get deduction under section 54 of the Act. In these circumstances, the ld. Assessing Officer is directed to grant the assessee benefit of deduction under section 54 of the Act as claimed.

7.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 28/04/2026.

Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 28th day of April, 2026 Copies to :(1) Bipasha Roy Choudhury, 8, Farmers Close, Sale Chesghire, M33 2LJ, United Kingdom, United Kingdom-999999 (2) Assistant Commissioner of Income Tax (International Tax), Circle-1(1), Kolkata, Aayakar Bhawan Poorva, 110, Shanti pally, Kolkata-700107, W.B. (3) CIT(A), Kolkata-22; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Latest GST High Court judgments

Search GST case law →