Reema Chawla Vs ACIT (ITAT Delhi)
Stay Application in SA No. 59/Del/2025 for Assessment Year 2022–23 arises from the assessee’s pending appeal in ITA No. 306/Del/2025. The assessee, a non-resident individual, sought stay of an outstanding income-tax and interest demand amounting to Rs. 42,60,429 until disposal of the appeal. The assessee filed a return declaring total income of Rs. 41,88,818 after claiming exemption under Section 54 of the Income Tax Act. The exemption claim related to the sale of her 50% share in a residential property in Panchsheel Park, New Delhi, for Rs. 6,00,00,000, which resulted in long-term capital gains of Rs. 1,65,14,103. She claimed exemption of Rs. 1,49,02,748 under Section 54 based on expenditure incurred on an under-construction residential unit at The Camellias, DLF Phase V, Gurugram. She stated that she incurred Rs. 1,11,46,000 during the year to make the unit habitable and that final possession was given on 01.04.2022. An additional Rs. 37,56,748 was also spent toward the cost of the residential unit.
The case was selected for scrutiny under Sections 143(3) and 143(2). The Assessing Officer denied the Section 54 exemption, holding that the purchase agreement dated 18.02.2016 fell outside the permissible period. The AO further held that the possession date, considered as 01.03.2021, did not fall within the three-year period for construction from the date of sale of the original house (05.07.2021). The AO also disallowed Rs. 37,56,748, stating that it was not spent on interior work during the relevant year. The assessee contended that these payments were made to the builder and that the bare-shell possession given on 01.03.2021 required further expenditure to make the unit habitable within the permitted period. The assessee pointed out that in the assessment year 2020–21, a similar claim regarding the same property had been disallowed, but the ITAT had granted relief in ITA No. 398/Del/2023. In that year, the ITAT had held that the expenditure incurred to make the residential unit habitable qualified for Section 54 deduction. That ITAT decision had been challenged by the Revenue before the Delhi High Court, but the appeal was dismissed on 11.03.2024, with the High Court holding that no substantial question of law arose.
