Case Law Details
Mukesh Harilal Mehta Vs ITO 16(3)(1) (ITAT Mumbai)
ITAT Mumbai held that denial of exemption under section 54 of the Income Tax Act unjustified as appellant cannot be penalized for the mistake committed by the developer/seller in allocating the flat. Thus, exemption u/s. 54 granted as all the conditions satisfied.
Facts- During the course of assessment proceedings, the Appellant was asked to provide the details of purchase/sale of property, and exemption claimed u/s. 54 of the Act.
Appellant responded it received sale consideration of INR 14,40,00,000/- as his share from sale of property. The sale transaction resulted in capital gains income of INR 11,27,41,786/. However, since the Appellant had paid INR 12,00,00,000/- towards purchase of a residential flat, being payment towards the cost of purchase including, stamp duty, pre-possession charge, service tax etc., the Appellant was entitled to claim deduction u/s. 54 of the Act in respect of the same.
However, AO rejected the submission and brought to tax capital gains income of INR 11,27,41,786/-. AO noted that there was no registered sale deed evidencing purchase of new flat/asset. Further, the details of new flat/asset purchased mentioned in the possession letter were different from the flat/asset towards the purchase of which the payment of INR 12,00,00,000/- was said to have been made by the Appellant.
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