Section 54F Exemption Allowed for Delayed Completion Beyond Assessee’s Control

Income Tax Appellate Tribunal (ITAT) Delhi heard the appeal of Satish Chandra Gupta for the assessment year 1990-91 against the order of the Commissioner of Income Tax (Appeals). The main dispute concerned the computation of chargeable capital gains from the sale of a residential property in Panchsheel Park, New Delhi, and the disallowance of share loss claims. The assessee contended that he had invested in another residential property and sought exemptions under Sections 54 and 54F of the Income-tax Act. However, the Assessing Officer (AO) rejected the claim related to the NOIDA property, citing non-completion of construction within the stipulated three-year period.

The tribunal considered various legal precedents, including CIT v. Venkatachalam (1979) and its Supreme Court affirmation in 1993. The assessee argued that delays in construction were due to external factors, such as disputes with the contractor. Additionally, he had deposited Rs. 10 lakhs in a specified account, with withdrawals made for construction, reinforcing his claim under Section 54. The ITAT acknowledged these points but upheld the AO’s decision that the exemption under Section 54F was inapplicable for the sale of a residential house, limiting the deduction to Rs. 8 lakhs for the Kailash Hills property.