Margi Joy Desai Vs ACIT (ITAT Mumbai)
The ITAT Mumbai allowed the assessee’s appeal against the CIT(A)/National Faceless Appeal Centre order dated 21.03.2024 for AY 2013-14 concerning denial of deduction under Section 54 of the Income Tax Act, 1961. The assessee, an individual and doctor, filed the return declaring total income of Rs.20,34,549/- and claimed Section 54 deduction of Rs.1,22,15,699/- against long-term capital gains arising from sale of a residential house on 15.03.2013 for Rs.2,15,00,000/-. The assessee had booked flat No. B-3703 at Lodha Marquis through an allotment letter dated 28.03.2013 and registered the agreement for sale on 13.05.2013 for Rs.5,55,52,959/-. He paid Rs.2,42,95,657/- towards the new flat before filing the return and Rs.4,10,59,019/- before expiry of three years from the transfer.
The Assessing Officer denied the Section 54 deduction on the ground that construction of the new flat was not completed within three years from the date of transfer and that the assessee was aware from the agreement that completion would take longer. The AO relied on Mrs. Hilla J.B. Wadia (216 ITR 376) and Kishore H. Galaiya Vs. ITO (137 ITD 229). The CIT(A) upheld the disallowance, observing that the date of possession represented the actual date of purchase for Section 54 purposes and that the assessee knew possession would not be obtained within three years.
