Case Law Details
Anil Kirthisimhan Wijeyanayake Vs ACIT (ITAT Chennai)
In a pivotal case between Anil Kirthisimhan Wijeyanayake and ACIT, ITAT Chennai ruled that delays in handing over the possession of a flat by the developer do not undermine an assessee’s claim for capital gain deductions under Section 54 and 54F of the I.T. Act, 1961.
The issue at the heart of the matter was the timing of the flat possession against the three-year rule for exemption claims under Section 54. The assessee, along with Mr. Sunil Wijeyanayake, had entered into a Joint Development Agreement with M/s Foundation One Infrastructure (P) Ltd., receiving seven flats as consideration for transferring 50% undivided share in their land. The AO initially disputed the assessee’s valuation and denied the exemption as the flats were handed over beyond the stipulated three years. The Ld. CIT(A) upheld this decision.
Upon appeal, ITAT Chennai ruled in favor of the assessee, stating that the delay in possession was beyond the assessee’s control and would not invalidate the claim. It held that the assessee had made a deemed investment in the flats upon entering the agreement, thereby meeting the criteria for exemption under Section 54F.
Conclusion: This landmark judgment by ITAT Chennai sheds light on the complexities surrounding real estate transactions and capital gains tax calculations. By ruling in favor of the assessee, ITAT Chennai underscores the essence of such agreements beyond strict timelines and provides assessees with a measure of relief from the unpredictability of real estate transactions. The ruling sets a precedent that factors beyond the assessee’s control, such as delays from the developer’s end, should not prejudice the assessee’s legitimate claims under the IT Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
