Narayan Swaroop Garg Vs DCIT / ACIT (ITAT Jaipur)
The appeal before the ITAT Jaipur concerned whether the assessee was entitled to a deduction of ₹1.73 crore under Section 54F of the Income Tax Act, 1961.
The assessee had sold a property and claimed deduction under Section 54F on the ground that the capital gains were invested in the purchase of a residential plot and the construction of a residential house. The Assessing Officer denied the claim, holding that the construction was not completed within three years from the date of sale of the original property. Field inquiries and photographs were relied upon to support this conclusion.
The assessee contended that out of the total deduction claimed, ₹1.41 crore had been spent on purchasing the residential plot, while the remaining amount was invested in construction. It was submitted that although there was some delay in completing construction, the house had become habitable within the prescribed period. The assessee had started residing in the property and had obtained electricity and water connections.
The Tribunal observed that Section 54F is a beneficial provision intended to promote construction of residential houses and therefore requires liberal interpretation. It noted that the assessee had purchased the residential plot and substantially constructed the house thereon. The photographs on record showed substantial construction, and any delay in completion was attributed to unavoidable circumstances, including procedural delays in obtaining approvals.
