PANATTU URUMIS CHACKO,ERNAKULAM vs. THE INCOME TAX OFFICER, NON CORPORATE WARD 1(1), KOCHI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that despite a delay in obtaining the occupancy certificate due to floods, the assessee had made substantial investment in the property within the time limit. Therefore, the assessee is entitled to the deduction under Section 54.
What were the facts?
The assessee claimed deduction under Section 54 of the Income Tax Act for a new house. The AO denied this deduction because the construction was not completed within the stipulated three years, a view upheld by the CIT(A).
What were the issues?
Whether the assessee is eligible for deduction under Section 54 when construction completion is delayed due to unforeseen circumstances, despite substantial investment within the stipulated period.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Mrs. Seetha Subramanian v. ACIT20 citing59 ITD 94 · 1996 · ITAT
Income Tax Appellate Tribunal, COCHIN BENCH : BY VIRTUAL HEARING
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Panattu Urumise Chacko, Vs. The Income Tax Officer, Non Corp Ward-1(1), 34/1552, Panattu House, Edappally, Kochi. Ernakulam – 682 024. PAN – ACEPC 5419 M APPELLANT RESPONDENT Assessee by : Shri Terry V James, Advocate Revenue by : Smt. GirIy Albert, Sr. DR Date of Hearing : 19.09.2024 Date of Pronouncement : 15.10.2024 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 22/09/2023 in DIN No. ITBA/NFAC/S /250/2023-24/1056428966(1) for the assessment year 2017-18.
In the present case, the deduction claimed by the assessee u/s 54 of the Act was denied by the AO on the reasoning that the new house S.A No.217/Coch/2023 Page 2 of 4 was not constructed within 3 years. The view taken by the AO was subsequently confirmed by the ld. CIT(A).
Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us.
The ld. AR before us fairly admitted there was a delay in obtaining the occupancy certificate from the competent authority, which was due to floods in the month of August 2018 and September 2019. As such, due to floods, there was severe scarcity of materials and labour to finish the work within the time. Nevertheless, the assessee is made substantial investment by buying the piece of land and doing construction activity on such land. Therefore, the benefit of deduction u/s 54 of the Act cannot be denied.
On the other hand, the ld. DR vehemently supported the orders of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the deduction claimed by the assessee under section 54 of the Act has been denied by the authorities below, as the assessee failed to complete the construction within the statutory time limit. As such, there was a delay in obtaining the occupancy certificate from the competent authority, which was obtained on 11/12/2019. Therefore, deduction was denied. However, it is undisputed fact that the assessee has made substantial investment in the property within the period of 3 years. Therefore, we are of the view that the assessee cannot be denied the benefit of deduction u/s 54 of the Act. In holding .
S.A No.217/Coch/2023 Page 3 of 4 so, we draw support and guidance from the judgment of Hon’ble Madras High Court in the case of CIT Vs. Sardarmal Kothari 30 ITR 286, wherein it was held as under:-
The assessees had claimed exemption of capital gain tax under section 54F. The Assessing Officer rejected the same on the ground that the construction was not completed when he made a personal visit. The Commissioner (Appeals) and Tribunal allowed the assessees' claim. Held that it was not in dispute that the assessees had purchased the lands by investing the capital gain and they had also constructed residential houses. In order to establish the same, the assessees submitted before the Commissioner (Appeals) material evidence, viz., invitation card printed for the house warming ceremony to be held on 12-7-2003. The assessees had also produced the completion certificates from the municipal authority. On the basis of the above documents, the Commissioner (Appeals) concluded that the requirement of the statutory provision had been complied with by the assessees and that was reconfirmed by the Tribunal in the orders impugned. The Tribunal had also taken note of its own earlier order in the case of Mrs. Seetha Subramanian v. Asstt. CIT [1996] 56 TTJ (Mad.) 417/59 ITD 94 (Mad.), wherein the Tribunal has held that, in order to get the benefit under section 54F, the assessee need not complete the construction of the house and occupy the same. It is enough if the assessee establishes that the assessee had invested the entire net consideration within the stipulated period. Therefore, the Tribunal was justified in allowing the assessee's claim.
6.1 It is an admitted fact that the provisions of deduction u/s 54 of the were brought out in the statute considering the scarcity of the house in India, thus we are of the view that liberal approach should be adopted. Furthermore, we also note that the assessee has made substantial investment in the new property, therefore, we are of the view that the assessee cannot be denied the benefit of deduction u/s 54 of the Act. Accordingly, we set aside the finding of the ld. CIT(A) and direct the AO to delete the addition made by him.
In the result, the appeal filed by the assessee is hereby allowed.
S.A No.217/Coch/2023 Page 4 of 4 S.A. No. 217/Coch/2023
Since the issue involved in the appeal of the assessee has been disposed of, as discussed above, the stay petition filed by the assessee is dismissed as infructuous.
In the combined result, the appeal filed by the assessee is allowed and stay petition filed by the assessee is dismissed as infructuous.
Order pronounced in court on 15th day of October, 2024
More judgments on Section 54
- Renu Arun Talwar, Mumbai vs Circle 17(1), MumbaiITA 204/MUM/2026[2012-13]Status: Disposed16 Oct 2026AY 2012-13
- Income Tax Officer, Ward-3(3)(2), Ahmedabad vs Manan Arati Patel, AhmedabadITA 923/AHD/2026[2022-23]Status: Disposed6 Oct 2026AY 2022-23
- Rohitbhai Jivrambhai Patel, Vadodara vs Income-Tax Officer, Ward 3(1)(2), VadodaraITA 679/AHD/2026[2018-19]Status: Disposed30 Sept 2026AY 2018-19
- Rohitbhai Jivrambhai Patel, Vadodara vs Income-Tax Officer, Ward 3(1)(2), VadodaraITA 679/AHD/2026[2018-19]Status: Disposed30 Sept 2026AY 2018-19
- Dy. Commissioner of Income… vs Thomas Myladiyil Augustine, AhmedabadITA 1131/AHD/2026[2022-23]Status: Disposed30 Sept 2026AY 2022-23
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