Shri Khemchand Fagwani Vs ITO (ITAT Mumbai)
The assessee challenged the order dated 21/09/2010 of the first appellate authority concerning denial of exemption under section 54 of the Income-tax Act amounting to Rs.23,77,683/-. The assessee submitted that the sale proceeds had been invested in purchasing a residential flat at Thane and that the allotment letter and proof of payment had been furnished before the Assessing Officer and the first appellate authority.
The Revenue opposed the claim on the ground that the assessee had not produced an agreement relating to investment in the residential flat. The Tribunal noted, however, that an allotment letter dated 9/9/10 together with evidence of payment had been submitted before the authorities.
The Tribunal held that where the allotment letter and proof of payment were produced, it could not be said that the assessee had not invested in the purchase of the new property. It observed that section 54 concerns investment of capital gains arising from transfer of a long-term capital asset within the specified period and that the provision did not require the assessee to necessarily produce an agreement, particularly when the allotment letter and proof of payment or investment had been produced.
Relying on the judicial pronouncements cited in the order, the Tribunal held that what was material for attracting section 54 and section 54EC was investment of the sale consideration in acquiring the new property or in the specified bonds. The ground relating to denial of section 54 exemption was accordingly allowed.
