Javaji Naga Darshan Vs ITO (ITAT Bangalore)
The Bangalore ITAT allowed the assessee’s claim for deduction under Section 54/54F, holding that substantive investment in construction of a residential house cannot be denied merely due to incomplete documentation.
The AO and CIT(A) had disallowed the claim of ₹33.18 lakh on the ground that the assessee failed to furnish complete documents such as approved plans, possession certificate, and full construction bills.
However, the Tribunal observed that:
- The assessee had produced a Joint Development Agreement (JDA),
- Sample construction bills, and
- Banking evidence showing investment exceeding ₹21 lakh,
which sufficiently established that capital gains were actually reinvested in construction.
The ITAT held that:
- JDA cannot be rejected merely because it is notarized or shows nil consideration, especially in family arrangements.
- Absence of some documents does not negate genuine investment.
- Section 54/54F being beneficial provisions must be interpreted liberally, and technical lapses cannot defeat substantive compliance.
Accordingly, the disallowance of ₹33.18 lakh was deleted in full.
On the issue of Chapter VI-A deductions (₹1.8 lakh), the Tribunal upheld CIT(A)’s direction to allow the claim after verification of documents, treating it as a matter of factual verification.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The present appeal filed, at the instance of the assessee, is directed against the order passed under section 250 of the Income Tax 1961 pertaining to A.Y. 2022-23 at National Faceless Appeal Centre-NFAC, Delhi.
