SAROJ GOENKA,KOLKATA vs. I.T.O., WARD - 30(1), KOLKATA

ITA 2129/KOL/2025Status: DisposedITAT Kolkata12 January 2026AY 2021-202225 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to the exemption under Section 54F. Regarding the ownership of other properties, the Tribunal accepted the assessee's submission that 110, Southern Avenue was jointly held, and 13, BT Road was industrial land, thus not violating the proviso to Section 54F. On the issue of construction commencement and utilization of sale proceeds, the Tribunal, following various High Court judgments including CIT v. Smt. Beena K. Jain and the principles laid down in Section 54, held that there is no stipulation in Section 54F requiring direct utilization of capital gains for purchase/construction, nor a specific commencement date for construction, as long as the property is completed within three years of the sale. The Tribunal also dismissed the revenue's contention of a colourable device, noting that the shares were gifted by the husband's brother, not the spouse, and that the husband's brother had also claimed Section 54F exemption. The Tribunal found the acquisition and construction in female family members' names to be culturally influenced and noted a similar exemption was allowed to another family member, Smt. Rashmi Goenka, on identical facts. Therefore, the addition made by the AO was directed to be deleted.

What were the facts?

The assessee, Saroj Goenka, filed her return of income for Assessment Year 2021-22, declaring a total income of Rs. 1,87,69,130/-. Her case was selected for scrutiny due to a large deduction claimed under Section 54F of the Income Tax Act. The assessee sold 36,00,000 shares of Emami Ltd. on July 13, 2020, for Rs. 33,77,64,511/-, resulting in a long-term capital gain of Rs. 26,77,72,881/-. She claimed exemption under Section 54F, stating she had spent Rs. 53,86,80,198/- by March 31, 2021, on constructing a new residential property at 1 Queens Park, which received its completion certificate on June 9, 2022. The Assessing Officer (AO) denied the exemption, citing that the assessee owned two other residential properties (110, Southern Avenue and 13, BT Road), that construction began more than five years prior to the sale, and that construction costs were not directly met from sale proceeds. The NFAC upheld the AO's order.

What were the issues?

1. Whether the assessee is eligible for exemption under Section 54F of the Income Tax Act, 1961, when she already owned two residential properties, thus violating the proviso to Section 54F(1)(i)? - Assessee's contention: The property at 110, Southern Avenue was jointly held, not exclusively owned, and the property at 13, BT Road was industrial land where a tenant constructed a factory, thus not being residential properties owned by her. - Revenue's contention: The assessee owned two residential properties, making her ineligible for the exemption. 2. Whether the assessee is eligible for exemption under Section 54F when construction of the new residential property commenced more than one year prior to the sale of the capital asset and the sale proceeds were not directly utilized for construction? - Assessee's contention: Section 54F does not stipulate a specific commencement date for construction; only completion within three years of the sale is required, which was met. Reliance was placed on CIT v. Smt. Beena K. Jain and other High Court and ITAT decisions. It was also argued that there is no condition in Section 54/54F that sale proceeds must be directly utilized, citing CIT v. Anandraj and other precedents. - Revenue's contention: Construction commenced too early, and sale proceeds were not directly used for construction. 3. Whether the transaction of selling Emami Ltd. shares was a colourable device to avail Section 54F exemption, given that the shares were acquired by gift from the assessee's spouse, and clubbing provisions under Section 64 might apply? - Assessee's contention: The shares were gifted by the assessee's husband's brother, not her spouse, thus Section 64 is inapplicable. The husband's brother also claimed Section 54F exemption on the same property. The acquisition and construction in female family members' names were culturally auspicious. A similar exemption was allowed to Smt. Rashmi Goenka for the same property. - Revenue's contention: The gift of shares from the spouse was a colourable device to avoid tax, as the spouse would have been ineligible for Section 54F exemption.

Which sections of the Income-tax Act were involved?

Section 54F,Section 250,Section 143(2),Section 142(1),Section 64,Section 54,Section 53

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Rajesh Kumar, Accountant Member:

This is an appeal preferred by the assessee against the order of the NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 18.08.2025 passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’)for the AY 2021-22. 2. The only effective issue raised in the grounds of appeal is against the order of the Ld. CIT(A) wrongly upholding the order of AO wherein the AO has denied the benefit of exemption cl

The order continues below.

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