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Facts
The assessee sold a property for Rs. 1.30 Crores and purchased another property for Rs. 1.04 Crores in his wife's name, incurring construction costs. The Assessing Officer treated the entire sale consideration as Long Term Capital Gain, disallowing exemption under Section 54. The CIT(A) confirmed this, citing the new property being in the wife's name and issues with construction expense evidence.
Held
The Tribunal held that the assessee is entitled to deduction under Section 54 as the source of investment for the new property (registered in his wife's name) was from the sale of the old property. The Tribunal also ruled that interest earned on a savings bank account is eligible for deduction under Section 80TTA of the Act.
Key Issues
Whether the assessee is eligible for deduction under Section 54 on the purchase of a new residential property in his wife's name using sale proceeds from the old property? Whether interest earned on a savings bank account is eligible for deduction under Section 80TTA?
Sections Cited
143(3), 139(1), 54, 80TTA
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Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI
Before: SHRI MAHAVIR SINGH
ORDER PER AMITABH SHUKLA, AM,
This appeal by the assessee is arising out of order of learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi [hereinafter referred to as ‘ld. CIT(A)] in appeal No.ITBA/NFAC/S/250/2024-25/10724700036(1) order dated 23.01.2025. The assessment was framed by the Income Tax Officer, Ward-2(3), Gurgaon, under section 143(3) of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) vide his order dated 09.12.2019, for the Assessment Year 2017-18.
The first issue in this appeal of the assessee is against the order of the ld. CIT(A) confirming the addition of Rs.1.30 crores by treating the entire sales consideration as income of the assessee. In this regard, the assessee has raised grounds of appeal no.2, which reproduced as under:-
“2. The Ld. CIT(A) has grossly erred on facts as well as in law by confirming additions of Rs.1,30,00,000/- by treating the entire sales consideration of property as income of the Appellant.” 3. Brief facts of the case are that the assessee is an individual and resident.
For the relevant Assessment Year 2017-18, the assessee filed his return of income under section 139(1) of the Act on 08.09.2017. The assessee during the course of Financial year 2016-17 relevant to Assessment Year 2017-18 sold a property located at Plot No.540, Pocket-A, Sector-22, Gurgaon, for a total consideration of Rs.1.30 Crores. The assessee also purchased one residential plot no.2073, Sector-57, Urban Estates, Gurgaon for a consideration of Rs.1,04,00,000/- and paid stamp duty of Rs.5,20,000/- in the name of his wife Smt. Sham Lata. The assessee also incurred the cost of construction of Rs.21,56,835/- for the construction of the above said residential house out of which a sum of Rs.10,10,906/- was incurred till the date of filing of return of income under section 139(1) of the Act on 08.09.2017. The balance amount of Rs.11,45,929/- was incurred till 31.01.2018. The assessee before the Assessing Officer filed a copy of sale deed, copy of purchase deed of Plot No.540, Pocket- A, Sector-22, Gurgaon and plot no.2073, Sector-57, Urban Estates, Gurgaon,
Page 2 of 7 respectively. The Assessing Officer while framing assessment noted that the assessee has sold residential plot no.504, Sector-22, Gurgaon, for a consideration of Rs.1,30,00,000/- but did not submit copy of purchase deed and also bills and vouchers of construction of above property. In the absence of supporting documentary evidences, the Assessing Officer treated the entire sale consideration of residential plot no.540 in Sector-22, Gurgaon, as Long Term Capital Gain in full at Rs.1.30 crores and added back to the return of income of the assessee. The ld. CIT(A) also confirmed the action of the AO by observing that the assessee has wrongly claimed exemption 54 of the Act in his ITR return as the subsequent property purchased was in the name of assessee’s wife and also the construction bills submitted by the assessee was of different address from the address of the property sold by assessee on which the assessee had claimed construction expenses. The ld. CIT(A) finally observed that no evidence was filed to support the claim of one room set on floor sold which was a primary/pre-requisite condition for availing deduction under section 54 of the Act. Therefore, the ld. CIT(A) also upheld the action of the AO disallowing Long Term Capital Gain under section 54 of the Act.
Aggrieved assessee is in appeal before the Tribunal.
We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has sold one residential property addressed as house no.540, Pocket-A, Sector-22, Grugaon for a total
Page 3 of 7 consideration of Rs.1.30 crores. This fact was proved by assessee by filing copy of occupation certificate issued by Estate Officer-1, HUDA, Gurgaon, which is dated 24.07.1998. The assessee also filed copy of invoices of water and sewerage charges paid to HUDA, Gurgaon on sample basis, which proves that the assessee is in occupation of this house property i.e. House No.540, Pocket- A, Sector-22, Gurgaon. When this fact was brought to the notice of ld. Sr. DR, she could not controvert the above fact situation. When the Bench specifically put a query to ld. Sr. DR, she could not answer on what basis the ld. Assessing Officer has observed that this a plot, whereas, facts reveals that the above property is a house property as it is being occupied by the assessee in view of occupation certificated issued by Estate Officer-1, Gurgaon, dated 24.07.1998 which enclosed in assessee’s paper book at page-120. We also note that the assessee has purchased one residential house vide plot no.2073, Sector-57, Urban Estates, Gurgaon for a consideration of Rs.1.04 crores on which stamp duty paid was Rs.5.20 lakhs which is in the name of the assessee’s wife Smt.
Sham Lata. This is evidenced by copy of purchase deed, which is attached in assessee’s paper book pages at 39 to 48. This shows that the assessee has purchased this property i.e. house property as against sale of his earlier house property within the stipulated period and the other conditions mentioned in section 54 also gets satisfied.
The other issue raised by the ld. CIT(A) that the property stands in the name of assessee’s wife, the assessee is not entitled to claim deduction under section 54 of the Act. We do not agree with the finding of ld. CIT(A) for the reason that new residential house property was registered in the name of assessee’s wife but the source of investment is out of sale of this very house i.e. house no.540, Pocket-A, Sector-22, Gurgaon. This issue stands covered by various decisions of Hon’ble Delhi High Court. Name a few are CIT vs Kamal Wahal [2013] 30 taxmann.com (Del HC), CIT vs Ravinder Kumar Arora [2012] 342 ITR 38 (Del HC). In term of the above, we are of the view that the assessee is entitle for claim of deduction under section 54 of the Act and accordingly, we direct the AO.
The next issue in this appeal is as regard to order of ld. CIT(A) confirming the action of the Assessing Officer in treated the interest on saving bank account as undisclosed income. For this, the assessee has raised following grounds no.4, which reads as under:-
“4. The Ld. AO has grossly erred in law in treating the interest on the savings bank received by the Appellant as its undisclosed income and not granting the deduction as per the provisions of section 80TTA of the Income Tax Act, 1961.” 8. We have heard rival contentions and gone through the facts of the case.
We noted that the Assessing Officer as well as ld. CIT(A) gone on wrong premises that the interest earned in his saving bank account is out of the deposits made on receiving the sale consideration of the above said plot as dealt Page 5 of 7 with in above issue no.1. We noted that whatever the nature of deposit but actually assessee has earned this interest income from saving bank account and hence this is eligible for claim of deduction under section 80TTA of the Act.
We direct the AO to allow this claim of deduction.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 02nd February, 2026.