VARUN SUNOY SARASWAT,,PUNE vs. INCOME-TAX OFFICER, WARD - 1(1),, JALGAON

The assessee has raised the following grounds of appeal:- On facts and in law,

The only issue raised in the present appeal is against denial of deduction claimed under section 54F of the Act.

Briefly, in the facts of the case, the assessee during the year under consideration had declared income from long term capital gains on sale of plot, at Nil after claiming the deduction under section 54F of the Act. There is no dispute about the sale of immovable property in the hands of assessee. The long term capital gains after deducting indexed cost of acquisition worked out to ₹ 18,70,490/-. The assessee claims to have invested in the construction of bungalow at Mulshi, Pune which was purchased by his mother Mrs. Madhuri Sunpy Saraswat on 10.10.2008. The said plot of land was gifted by the mother to her two sons i.e. assessee and his brother. The Assessing Officer noted that the gift deed was executed on 25.03.2011 on ₹ 100 stamp paper, which was

The CIT(A) upheld the order of Assessing Officer, against which the assessee is in appeal.

The learned Authorized Representative for the assessee pointed out that plan for construction was approved by the Grampanchayat in the name of assessee and his brother. Further, the assessee had entered into construction agreement with M/s. Nirmitee Construction and also the payments were made to the said builder and even the completion certificate was given in the name of assessee and his brother and hence, deduction claimed under section 54F of the Act could not be denied. He further pointed out that in the facts of the case before the Hon’ble Bombay High Court in Prakash Vs. ITO (2008) 173 Taxman 311 (Bom), the denial of deduction under section 54F of the Act was on account of the fact that bungalow was constructed in the name of adopted son. The learned Authorized Representative for the assessee in this regard placed reliance on the decision of Mumbai Bench of Tribunal in Chandrakant S. Choksi HUF Vs. ACIT (2015) 53 taxmann.com 312 (Mumbai – Trib.), wherein the assessee had purchased share in property without any right in the land, on which the said property was constructed and the same was transferred to the

The learned Departmental Representative for the Revenue on the other hand, stated that the gift deed was not a registered document. So, the land was not in the name of assessee, whereas section 17 of the Registration Act demands that an instrument of gift of immovable property needs to be registered. In this regard, he placed reliance on the ratio laid down by the Pune Bench of Tribunal in ITO Vs. Shri Kantilal C. Kankaria in ITA No.461/PN/2011, relating to assessment year 2003-04, order dated 25.07.2012.

On perusal of record and after hearing both the learned Authorized Representatives, the issue which needs to be adjudicated is the claim of deduction under section 54F of the Act. The assessee had sold an immovable property and had claimed that the sale proceeds from the said property have been invested in construction of bungalow on a plot of land which was gifted by his mother to him and his brother. Both the brothers had entered into construction agreement with a builder and had constructed the said property. The authorities below have denied the deduction under section 54F of the Act since the gift deed was not a registered document.

The question which arises is whether the assessee can claim the aforesaid deduction under section 54F of the Act against cost of construction of bungalow, where the plot of land was in the name of mother. The perusal of documents filed by the assessee reflect that the Grampanchayat had issued permission for construction of the said plot of land in the name of assessee and

In the facts before the Pune Bench of Tribunal in ITO Vs. Shri Kantilal C. Kankaria (supra), the assessee had failed to produce any evidence to show that it had title in the said property, hence denial of deduction under section 54F of the Act. Similarly, in the facts before the Hon’ble Bombay High Court in Prakash Vs. ITO (supra), the assessee had failed to demonstrate that he had title or ownership in the property of adopted son and hence, denial. The facts of the present case are at variance and accordingly, the assessee is held to be

In the result, the appeal of assessee is allowed.