ACIT Vs Rajat Bhandari (ITAT Delhi)
Revenue appealed against CIT(A)’s order allowing deduction of Rs.2,36,96,898 u/s 54F in favour of Assessee. AO had denied exemption on two grounds: (i) Assessee allegedly owned more than one residential property at the time of transfer of original asset, & (ii) the new asset was a “farmhouse”, which AO considered ineligible as a “residential house”. AO also made an addition of Rs.32,61,606 on account of credit-card expenses treated as personal.
CIT(A) examined all documents & held that AO proceeded merely on assumptions without any supporting material. Assessee had advanced money to Real Capital Sky Scrapers Pvt Ltd for a residential house, which was refunded when the builder failed to deliver. Loan to Lincoln Developers Pvt Ltd was unrelated to property purchase. Only one residential house was ultimately purchased—the Sainik Farms property. CIT(A) held that AO misunderstood “Sainik Farms” as a farm, ignoring that it is a residential locality. AO also failed to prove ownership of multiple houses.
Before Tribunal, Revenue could not demonstrate that Assessee owned more than one residential house. Tribunal held that a farmhouse can still be a residential house unless Revenue proves excessive land or agricultural usage—no such finding existed. No evidence suggested that the Sainik Farms property was not a residential house. Consequently, deduction u/s 54F was properly allowed.
