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Facts
The assessee sold an immovable property and claimed a deduction under Section 54 for investment in a new house. The assessee contended that the capital gain was disclosed by her husband, and the investment was made by her husband for the construction of a new house where she had a share. However, the assessee failed to provide adequate documentary evidence to substantiate her claim for deduction.
Held
The Tribunal held that the assessee cannot escape income tax liability by claiming the capital gain was offered by her husband, as each assessee is a separate entity. The claim for deduction under Section 54 was unsubstantiated due to a lack of documentary evidence, including bills, payment proofs, and commencement/completion details of construction.
Key Issues
Whether the assessee can claim exemption under Section 54 when the capital gain was allegedly offered by the husband, and whether the claim is substantiated with documentary evidence.
Sections Cited
250, 148A(b), 148A(1)(d), 148, 54
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC’’ : NEW DELHI
Asstt. Year : 2015-16 URMILA DEVI, VS. ITO, WARD 2(2)(1), R-2/44, RAJ NAGAR, GHAZIABAD GHAZIABAD (PAN: AGCPD5389H) (Appellant) (Respondent) Appellant by : Shri Saif Ali, Adv. (Through VC) & Shri Pranav Menon, Adv. Respondent by : Shri Manoj Kumar, Sr. DR. Date of Hearing 03.09.2025 Date of Pronouncement 12.09.2025 ORDER This appeal by the assessee is emanating from the order of the NFAC, Delhi order dated 12.03.2025 relating to assessment year 2015-16 on the following grounds:-
1. That the order u/s. 250 passed by the CIT(A) is bad in law.
2. That the CIT(A) has grossly erred in passing order u/s. 250 with pre- conceived motion and without appreciating material on records.
3. That the CIT(A) has erred in confirming the disallowance of exemption amounting to RS. 2442775/- claimed u/s. 54 of the Act in respect of LTCG for investment on the construction of the house.
4. That the Ld. CIT(A) has erred in rejecting the report of the Valuer in support of the construction of the house for claim of exemption u/s. 54 of the Act.
5. That on the facts and circumstances of the case, Ld. CIT(A) has grossly erred in dismissing the appeal of the appellant.
2. Briefly stated, facts are that assessee sold immovable property amounting to Rs. 1,82,65,000/- during the financial year 2014-15 relevant to assessment year 2015-16, but did not file return of income. On the aforesaid information, a notice u/s. 148A(b) of the Act was issue on 22.3.2022 and in response thereto, the assessee furnished written submissions and after considering the same, the Jurisdictional AO found that the taxation on capital gain earned on sale of immovable property was not explained. The assessee in her written submission has contended that the LTCG of Rs. 8,08,142/- arising from the sale of said property has already been disclosed by her husband in his return of income for AY 2015-16 and hence, no LTCG is taxable in the hands of the assessee. However, no evidence or details have been furnished by the assessee. Therefore, AO noted that there was escapement of income of Rs. 1,82,65,000/- and order u/s. 148A(1)(d) of the Act was passed on 31.3.2022 being fit case for issue of notice u/s. 148 of the Act to the assessee on 31.03.2022, after obtaining necessary approval from the PCCIT, UP West & Uttarakhand issued notice u/s 148 of the Act to the assessee. Thereafter, necessary statutory notices were also issued to the assessee and in response to the same, the assessee furnished her reply, which was duly considered. AO in the absence of any documentary in support of claim of deduction u/s. 54 of the Act, added an amount of Rs. 24,42,775/- under the head Long Term Capital Gain for the year under consideration. In appeal, Ld. CIT(A) affirmed the action of the AO.
Against the aforesaid order of the Ld. First Appellate Authority, assessee is in appeal before this Tribunal.
At the time of hearing, Ld. AR has submitted that during the FY 2014-15 relevant to assessment year 2015-16, Shri Yogendera Singh, husband of Smt. Urmila Devi (assessee) made investment of Rs. 1,50,50,000/- on the construction of the house in which Urmila Devi (assessee)’s 1/3rd share comes to Rs. 50,16,667/- and her 1/3rd share in LTCG comes of Rs. 24,58,975/- (1/3rd of Rs. 73,76,927). After giving exemption u/s. 54 of the Act for the investment made on the 2 | P a g e construction of house, hence, there will be NIL Capital Gain in the hands of the assessee (Smt. Urmila Devi). It was submitted that if the property was held only in the name of husband of assessee and LTCG was invested in the name of wife or vice versa, the benefit of exemption u/s. 54 has to be allowed, as the property was sold in the name of three i.e. husband, wife and son and the construction of house is also made in the name of three husband, wife and son and LTCG arising from the sale of house is shown in the name of Sh. Yogendra Singh, husband of the assessee. To support his contention, he relied upon the decision of the Delhi Tribunal in the case of Pradeep Bansal vs. ACIT in ITA 1882/Del/2022 (AY 2019-20) vide order dated 25.8.2023 and the decision of the Hon’ble Punjab and Haryana High Court in the case of Shri Jaswant Rai vs. CWT, Patiala (1977) 107 ITR 477. Per contra, ld. DR relied upon the orders of the authorities below.
I have heard both the sides and perused the records. I note that the assessee has challenged the assessment of Rs. 24,42,775/- as income from LTCG of the assessee. The assessee has claimed that the entire capital gain was offered in the hands of her husband and has furnished income tax details of her husband, which has been reproduced in the order of the Ld. CIT(A). In this case, the assessee is claiming that her husband had offered capital gain of Rs. 808142/- after claiming deduction u/s 54 of the Act. It is not disputed that the appellant had 1/3rd share in the property sold at R-2/44A Raj Nagar, Ghaziabad. Hence, the appellant is liable to pay capital gain on sale of property in respect of her share. The assessee cannot escape her income tax liability on the ground that the capital gain was offered as income in the return of income filed by her husband. Under income tax law, the assessee is a different assessee from her husband and each assessee is duty bound to offer his/her income separately and this legal obligation cannot be escaped on the ground that income of one assessee was offered by his/her spouse unless such clubbing is allowed by law. The assessee has not brought anything on record to establish that capital gain earned by her can be clubbed with income of her husband. Hence, the contention of the assessee that capital gain was offered by her husband 3 | P a g e and she is not liable to pay any capital gain is not tenable, therefore, the same was rightly been rejected by the lower authorities. AO rightly held that the appellant is liable to pay tax on capital gain in respect of her share. The appellant claimed that her husband had constructed another house and eligible for claim of deduction u/s 54 of the Act. The appellant furnished report of a valuer in this regard. The AO issued notice u/s 133(6) to the valuer which remained un-complied. The appellant submitted that the valuer had expired on 25.09.2021 and hence, reply to notice u/s 133(6) was not given. It is noted that the appellant before the AO as well as during appellate proceedings has not furnished any supporting evidence in support of construction of new house other than report of the valuer. The report of the valuer has no evidence value unless it is supported by other documentary evidence. The appellant failed to furnish any document in support of construction carried out in the form of copy of bills for purchase of material, payments made to architect/contractor etc. and other documents to substantiate her claim of construction of a new house. Date of commencement and completion of construction with supporting evidence are not provided. Moreover, permission of competent authority was required for construction of a new house and no such permission was furnished by the appellant to prove that construction of a new house was actually done. The claim of the appellant is totally unsubstantiated with documentary evidence. In fact, no supporting evidence whatsoever has been furnished other than the report of the valuer in support of deduction u/s 54 claimed. Report of the valuer does not carry any evidence value and the same was so rejected. Therefore, it was observed that the appellant failed to prove that she had made investment in a new house within the period prescribed in section 54 and hence, she is not eligible for any deduction u/s 54 of the Act. The case laws quoted by the assessee are distinguished to the facts of the present case. Therefore, the order of the AO assessing LTCG at Rs. 24,42,775/- and not allowing claim of deduction u/s 54 was rightly confirmed by the Ld. CIT(A), which does not need any 4 | P a g e interference on my part, hence, I affirm the action of the Ld. CIT(A) and reject this ground of appeal
raised by the assessee.
6. In the result, the Assessee’s appeal is dismissed. Order pronounced in the Open Court on 12.09.2025.