Allauddin Noormohamed Kadiwala Vs ITO (ITAT Mumbai)
Conclusion: Exemption under section 54F was allowable even if balance amount for the purchase of a residential flat was paid by third party instead of assessee in the absence of any material which could dispute the fact that assessee purchased a flat within a period of one year, from surrender of tenancy/possessory rights, there was no merit in restricting the deduction claimed under section 54F.
Held: In the present case, assessee was a member of the society. A Joint Development Agreement was entered into with M/s. Delta Venture for the development of a land by a society, in which assessee was one of the members. As a consideration, assessee was entitled to receive a sum of ₹ 50,59,270/- from the developer on account of surrender of his tenancy/possessory rights. Assessee treated the said amount received from the developer as long-term capital gain, which stood affirmed by the Coordinate Bench of the Tribunal. Assessee entered into an agreement for sale with Mr. J for the purchase of immovable property for a total consideration of ₹ 51 lakh. Assessee claimed deduction under section 54F on the basis that the long-term capital gain earned from the transfer of tenancy/possessory rights was invested for the purchase of a residential flat. Assessee submitted that he paid a sum of ₹ 10 lakh through cheque and another sum of ₹ 15 lakh through cheque and further the balance amount of ₹ 26 lakh was paid by M/s. Delta Venture to Mr. J. Insofar as the payment of ₹ 25 lakh paid by assessee through cheque, the lower authorities accepted the contention of assessee since the payment was made within a period of one year from the date of transfer of the original asset (i.e., transfer of tenancy/possessory rights). However, as regards the payment of ₹ 26 lakh, which assessee claimed was paid by M/s. Delta Venture to Mr. J on behalf of the assessee, the lower authorities disagreed with the submission of the assessee and restricted the deduction claimed by assessee under section 54F to ₹ 25 lakh only and the remaining long-term capital gain of ₹ 25,59270/- was added to the total income of assessee. It was held that in the absence of any material which could dispute the fact that the assessee purchased a flat from Mr. Jaferali Jalal Momin, i.e., within a period of one year, from surrender of tenancy/possessory rights to M/s. Delta Venture, there was no merit in restricting the deduction claimed under section 54F to ₹ 25 lakh only. With duly supported by the documentary evidence, assessee was entitled to claim deduction even in respect of the balance long-term capital gain of ₹ 25,59,270/- under section 54F.
