ITO-8(2)(1), MUMBAI, MUMBAI vs. SAHIL RAJESH VORA, MUMBAI

ITA 4811/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2023-2425 pages
AI SummaryDismissed

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2023-24. The assessee, an individual, sold equity shares in Sila Solutions Pvt. Ltd. for Rs. 30,00,05,924/- and disclosed capital gains. The assessee claimed a deduction of Rs. 29,44,87,101/- under Section 54F of the Income-tax Act, 1961, for acquiring a new residential house. An agreement for purchase was executed on 31.10.2023. The assessee invested Rs. 11.5 crore initially and parked Rs. 18.5 crore in the Capital Gains Accounts Scheme before the due date of filing the return. The new residential house was in a project with an expected completion date of 31.05.2025, as per the allotment letter. The Assessing Officer (AO) noted that the MAHARERA website indicated a project completion date of June 2029, beyond the three-year period prescribed by Section 54F. The AO held the assessee ineligible for the exemption.

What did the Tribunal hold?

The Tribunal held that the assessee satisfied the conditions for claiming exemption under Section 54F of the Act. The Tribunal relied on various High Court judgments, including Pr. CIT v. C. Gopalaswamy (Karnataka High Court), CIT v. Girish L. Ragha (Bombay High Court), and CIT Vs. Kuldeep Singh (Delhi High Court). These judgments established that the essence of Section 54F is whether the assessee has invested the capital gains in the purchase or construction of a residential house. Merely because the construction was not completed in all respects or possession was not obtained within the prescribed period, the benefit under Section 54F cannot be denied. The Tribunal noted that the assessee had purchased the residential property within the stipulated time frame and deposited the unutilized amount in the Capital Gains Scheme Account before the due date of filing the return. The Tribunal found that the AO's addition, as affirmed by the CIT(A), was deleted. The appellate order of the CIT(A) was upheld, and the grounds of appeal of the Revenue were dismissed. The issue regarding owning more than one residential house was not expressly decided.

What were the issues?

1. Whether the CIT(A) erred in law by allowing the deduction of Rs.29,44,87,101/- despite the assessee failing to deposit the unutilized sale consideration in the Capital Gains Accounts Scheme (CGAS) before the due date of filing the return under Section 139(1)? 2. Whether the CIT(A) was justified in allowing the claim when the actual construction of the new residential house was not completed within the mandatory period of three years from the date of transfer of the original asset? 3. Whether the CIT(A) erred in overlooking the proviso to Section 54F, which restricts the deduction if the assessee owns more than one residential house (other than the new asset) on the date of transfer of the original asset? Assessee's Contentions: The assessee argued that the allotment letter clearly stated the expected completion/possession date of May 2025, which was within the three-year period. The MAHARERA website date was not relevant as it was for abundant precaution. Section 54F requires investment in construction, not necessarily completion within three years. The essence is whether the capital gain was invested. Failure to invest within three years makes the unutilized amount taxable, implying invested amounts are exempt. The AO erred in denying exemption in anticipation of non-completion. The AO also erred in not accepting the deposit in CGAS before the due date. Revenue's Contentions: The Revenue contended that the CIT(A) erred in allowing the deduction as the unutilized sale consideration was not deposited in CGAS before the due date and the construction was not completed within three years. The Revenue also argued that the proviso to Section 54F was overlooked.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 54F,Section 54F(4),Section 45

AI-generated summary — verify with the full judgment below

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR

For Respondent: Shri Rajesh Sakhardande,(Sr.DR)
Hearing: 27.08.2026Pronounced: 23.09.2026

PER PRABHASH SHANKAR [A.M.] :- The instant appeal arising from the appellate order dated 23.02.2026 is preferred by the Revenue against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961

P a g e | 2 A.Y. 2023-24 Sahil Rajesh Vora [hereinafter referred to as “Act”] dated 24.03.2025for the Assessment Year [A.Y.] 2023-24. 2. The grounds of appeal are as under: 1. i. Whether the CIT (A) e

The order continues below.

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