ACIT Vs Subrata Mukharji (ITAT Mumbai)
The Revenue challenged the order of the CIT(A)-8, Mumbai, allowing the assessee’s claim of deduction under Section 54 of the Income Tax Act, 1961, and deleting an addition relating to annual letting value (ALV) of vacant properties. The assessment under Section 143(3) was completed on 28 April 2015. The assessee had sold a residential flat at Mahindra Heights, Tardeo, Mumbai, for Rs. 4,85,75,000 on 28 September 2011, resulting in long-term capital gain of Rs. 91,16,742. He claimed deduction of Rs. 71,00,000 under Section 54 on the basis of a provisional allotment letter dated 29 September 2012 for a residential property at Jaypee Greens, Noida, booked for Rs. 2,01,15,250 jointly with his wife. The AO rejected the deduction on the ground that there was no purchase agreement or possession letter and the property was still under construction. The CIT(A), relying on the decisions in Shri Hasmukh N. Gala vs ITO and Shri Khemchand Fagwani vs ITO, held that a provisional allotment letter was acceptable for claiming deduction under Section 54 and that completion of construction was not a precondition. The ITAT Mumbai agreed with the CIT(A), observing that the order was reasoned and did not require interference, and dismissed the Revenue’s ground.
