Nikhil Ravindra Manjrekar Vs CIT (Appeals) (ITAT Mumbai)
ITAT Mumbai Grants Section 54 Relief – Mode of Payment Already Evident from Deed & Bank Records-Substance Over Form – ITAT Allows 54 Exemption Despite Technical Objection
ITAT Mumbai allowed assessee’s appeal & directed deletion of disallowance of exemption u/s 54. Tribunal held that once purchase deed & bank records proved reinvestment in residential property, denial of exemption for “non-disclosure of mode of payment” was unjustified.
Assessee, an individual, had sold a flat on 08.04.2015 for Rs.2.27 crore (purchased on 04.09.2010 for Rs.1.17 crore) & declared LTCG of Rs.45.70 lakh after indexation. He claimed exemption u/s 54 on reinvestment of Rs.3.55 crore in a new residential flat Mumbai, vide agreement dated 30.05.2015. AO disallowed exemption ex parte as notices were not complied with. CIT(A) also rejected claim stating that assessee failed to disclose mode of payment.
On appeal, Tribunal noted that the registered purchase deed itself contained cheque payment details & contemporaneous receipts, corroborated by assessee’s bank statements. It held that substantive compliance was manifest, & denial of relief on technical ground was contrary to legislative intent of section 54. Revenue had never doubted source of investment, hence exemption could not be denied. Accordingly, ITAT allowed claim of exemption u/s 54 for Rs.45,70,363 & deleted disallowance
