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Facts
The assessee claimed deduction under Section 54 of the Income Tax Act for Rs. 3,58,68,411/-. The Assessing Officer disallowed the claim. The assessee appealed to the CIT(A)-NFAC and then to the ITAT, Mumbai.
Held
The Tribunal held that the assessee failed to produce evidence of purchasing or constructing a residential house within the prescribed time limit as per Section 54. There was no legally binding agreement between the appellant and the builder, and the project was not started within the stipulated time.
Key Issues
Whether the assessee is entitled to deduction under Section 54 for the purchase or construction of a residential house, despite not providing sufficient evidence of compliance with the time limits and conditions.
Sections Cited
54, 54F, 45, 143(3)
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Income Tax Appellate Tribunal, MUMBAI “G” BENCH : MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI AMARJIT SINGH
ORDER PER SATBEER SINGH GODARA, J.M.
This assessee’s appeal, for assessment year 2013-2014, arises against National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2023-24/ 1060913571(1) dated 14.02.2024, in proceedings u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties. Case file perused.
Coming to the assessee’s sole substantive grievance canvassed in the instant appeal challenging correctness of both the lower authorities action disallowing his sec.54 deduction claim amounting to Rs.3,58,68,411/- in the course of assessment dated 15.12.2015; we note that the CIT(A)-NFAC’s detailed discussion to this effect reads as under :
3 ITA.No.1822/Mum./2024 4 ITA.No.1822/Mum./2024 5 ITA.No.1822/Mum./2024
Learned counsel vehemently argued during the course of hearing that both the learned lower authorities have wrongly rejected the assessee’s impugned sec.54 deduction claim despite the fact that he had placed on record the allotment letter to this effect which proves substantial compliance of all the relevant conditions therein at his behest. Learned counsel’s case accordingly is that the impugned sec.54 deduction disallowance is not sustainable in law once the assessee re-invests his capital gains as is the case before us.
Faced with this situation, we sought to know about the final completion status of the residential house in question vis-à-vis the project concerned. The reply received from assessee’s side is in “negative” only; on both counts. Meaning thereby, that the assessee
6 ITA.No.1822/Mum./2024 has not been able to prove the clinching conditions of having purchased a residential house by way of re-investment of capital gains before one year or after two years of the date of transfer of the capital asset or having constructed the same within three years from the said date; as the case may be. The assessee’s plea that he could not be penalized for the action of the real estate developer also fails to evoke our concurrence since sec.54 deduction is allowable only if a residential house is purchased or constructed in the foregoing terms and not otherwise. We thus uphold the learned CIT(A)-NFAC’s findings rejecting the assessee’s sec.54F deduction claim in very terms. Ordered accordingly.
This assessee’s appeal is dismissed in above terms.
Order pronounced in the open Court on 11.07.2024