Exemption u/s 54F available even if transaction not complete

Smt.Chandrakala Shashidhar Vs ITO (ITAT Bangalore)

Held that assessee would be entitled to the benefit u/s 54F of the I.T.Act once it is demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in construction of a residential house even though the transactions are not complete in all respects.

Facts- The assessee is an individual. She had filed ROI on 29.08.2015 declaring a sum of Rs.11,11,950. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act. During the course of assessment proceedings, the A.O. noticed that the assessee had sold plots measuring 71,685 sq.ft. for a sale consideration of Rs.1,19,04,500 and invested the same in a villa project in Bangalore by the name Napa Valley. The assessee in the ROI had claimed exemption of Rs.1,16,34,752 u/s 54F.

The A.O. issued notice dated 07.11.2016 asking the assessee to show cause as to why exemption u/s 54F of the I.T.Act should not be disallowed and brought to tax as the sale consideration of plots was not deposited in capital gains scheme on or before the due date of filing of the return u/s 139(1) of the I.T.Act. AO vide order dated 20.12.2016, passed u/s 143(3) of the I.T.Act restricted the exemption u/s 54F of the I.T.Act to the extent of Rs.24,44,124.

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