Case Law Details
Pravin Ashumal Keshwani Vs DCIT (ITAT Ahmedabad)
Material Facts: The assessee sold a property on 19.07.2021 and had purchased a plot on 18.03.2021. After the sale, the assessee constructed a residential house on the plot and claimed deduction under Section 54F. The Assessing Officer denied the deduction on the ground that the plot had been purchased more than one year before the transfer of the capital asset.
Procedural History: The CIT(A) held that there was no bar on constructing a house on a plot purchased before one year from the transfer of the capital asset but sustained the disallowance on the ground that no completion certificate had been furnished to establish completion of construction within three years.
Tribunal’s Findings: The Tribunal noted that the assessee had produced ledger accounts, bills and invoices evidencing expenditure on construction. It observed that the Assessing Officer had not disputed that the residential house had been constructed within three years. The Tribunal further held that Section 54F does not require furnishing of a completion certificate. Where convincing evidence establishes construction of a residential house within the prescribed period, deduction under Section 54F cannot be denied on the technical ground of absence of a completion certificate.
Final Ruling: The Tribunal set aside the CIT(A)’s order, directed the Assessing Officer to grant deduction under Section 54F, and allowed the appeal.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 03.07.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2022-23.
2. The sole dispute involved in this appeal is relating to the denial of deduction by the AO u/s.54F of the Act on construction of a new residential house.
3. The brief facts of the case are that the assessee sold a property on 19.07.2021. The assessee had already purchased a plot for construction of a residential house on 18th March, 2021. After the sale of the property, the assessee started construction of a new residential house upon the said land. During the assessment proceedings, the AO show caused the assessee as to why not the capital gain tax be not levied on the income earned on sale of land by the assessee. The assessee, however, claimed that as per the provisions of Section 54F of the Act, if the assessee constructs a new house within three years from the sale of the property in question, the assessee will be eligible to claim deduction u/s.54F of the Act. The assessee furnished the requisite documents before the AO to show that the assessee has constructed a new house within three years from the sale of the property / capital asset. However, the AO noted that the plot in question, upon which, the house was constructed, was purchased before one year from the transfer of the capital asset. He, therefore, denied the deduction u/s 54F of the Act.
4. During the appellate proceedings before the Ld. CIT(A), though, the Ld. CIT(A) did not confirm the addition on the issue, observing that there was no embargo to construct a house on the already purchased a plot may be prior to one year from the transfer of capital asset, however, he confirmed the disallowance citing other reasons that the assessee had not furnished the completion certificate etc. before the AO from which it can be proved that the construction was completed within three years from the date of transfer of capital asset.
5. We have heard the rival contentions and gone through the record. The assessee, in this case, had produced before the AO the copy of the ledger and various bills and invoices showing that the assessee has spent considerable amount for the construction of the new house. The AO had not disputed that the assessee had not constructed the residential house on the plot in question within three years. It is only for the first time that the Ld. CIT(A) observed that the completion certificate etc. was not placed on the file. A perusal of the provision of Section 54F of the Act would reveal that there is no requirement for furnishing completion certificate. If the assessee, with the convincing evidence on the file, shows that he has constructed a new residential house within stipulated period, in our view, the deduction u/s 54F of the Act cannot be denied. We agree with the contention raised by Ms. Yashvi Mashruwala, Ld. AR of the assessee that the requisite evidences showing that the assessee had constructed a new house were duly furnished before the AO, which had not been disputed by the AO. The intention of the legislature for allowing deduction u/s 54F of the Act is to promote construction of residential houses and, therefore, the provisions of Section 54F of the Act being beneficial provisions, the requisite relief cannot be denied to the assesse on such technicalities of furnishing of completion certificate. In view of this, we do not find justification on the part of the lower authorities in denying the deduction to the assessee u/s 54F of the Act. The impugned order of the Ld. CIT(A) is set aside. The appeal of the assessee stands allowed. The AO is directed to grant the deduction u/s 54F of the Act to the assessee.
6. In the result, the appeal preferred by the assessee stands allowed.
This Order pronounced on 15/07/2026
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