Sadhana Annasabeh Sonwane Vs ITO (ITAT Mumbai)
Money Paid, Flat Allotted, Rights Acquired – ITAT: 54F Cannot Be Denied Just for Late Registration- Substance Over Form: Investment Matters, Not Stamp Paper Date
In this case, Assessee sold a plot of land at Nashik on 18.02.2013 for ₹70 lakhs & claimed deduction u/s 54F by reinvesting the sale proceeds in a residential flat at Mumbai for a consideration of ₹76,65,000. While scrutinizing the return, AO noted that the registered agreement for purchase of the flat was executed on 21.06.2017. Since Section 54F(1) requires that the new residential house must be purchased within two years from the date of transfer of the original asset, i.e., by 17.02.2015, AO held that Assessee failed to comply with the statutory timeline. He therefore denied the deduction & added ₹64,36,629 to the total income. CIT(A), NFAC, simply endorsed AO’s view & confirmed the disallowance.
Before Tribunal, Assessee produced crucial documentary evidence which had been ignored by the lower authorities. Assessee had obtained an allotment letter from the builder (G.K. Relators) dated 11.06.2012, well before the sale of the Nashik land, wherein Flat No. 2102 on the 21st floor was specifically earmarked in her favour. To obtain this allotment, she paid ₹15 lakhs on 05.06.2012 by cheque, which was duly received by the builder & reflected in her bank statement. Thereafter, she paid ₹55 lakhs by cheque dated 29.07.2013, which was cleared on 02.08.2013, also supported by builder’s receipt & bank passbook. Thus, a total sum of ₹70 lakhs, being the entire consideration received from sale of the original asset, was invested in the new flat within the permissible period of Section 54F. Assessee explained that the registered agreement could not be executed earlier because the builder delayed the completion of construction & the obtaining of occupancy certificate. Once the project was completed, formal registration took place in 2017, but the financial investment & acquisition of rights in the property had already taken place much earlier.
