Venkatraman Jayashree Priyadharshini Vs ACIT (ITAT Chennai)
Assessee, an individual, declared LTCG of ₹1.37 crore on sale of property & claimed deduction u/s 54. AO, however, computed LTCG at ₹2.87 crore, disallowing large part of claimed exemption. CIT(A) granted partial relief, restricting taxable LTCG to ₹2.01 crore, allowing cost of new flat at ₹88.85 lakh.
Before Tribunal, Assessee contended that further costs incurred on making the new residential property habitable-such as interior works (wardrobes, modular kitchen, cupboards, painting, fittings, etc.) of ₹21 lakh supported by valuation report & builder-charged utility expenses of ₹2 lakh for water, sewerage & electricity connections-should also qualify for exemption u/s 54.
Tribunal noted that Bangalore ITAT in Sapna Hemanshu Shah v. DCIT [160 taxmann.com 1194] & Y. Manjula Reddy v. ITO [140 taxmann.com 441] had held that interior renovation & essential furnishing of a newly acquired flat are allowable for deduction u/s 54/54F. Following this, ITAT accepted Assessee’s claim. Accordingly, deduction was enhanced by ₹21 lakh (interiors) + ₹2 lakh (utilities). Taxable LTCG was recomputed at ₹1.75 crore, as against ₹2.87 crore by AO & ₹2.01 crore by CIT(A).
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order dated 26.03.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2015-16.
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