Chanda Runwal Vs ACIT (ITAT Mumbai)
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) passed under Section 250 of the Income-tax Act, 1961 for Assessment Year 2018-19. The appeal challenged the denial of exemption under Section 54F and the disallowance of indexed cost of improvement.
The assessee sold a residential property at Deonar on 13.12.2017 for a consideration of ₹5,56,00,000 and earned long-term capital gains of ₹3,30,86,396, claiming exemption under Section 54 for purchase of residential property bearing No. T-6/1402 at Runwal Greens. The assessee also sold office premises at Santacruz on 07.07.2017 for ₹4,50,00,000, computed indexed cost of acquisition of ₹1,47,82,609, and earned long-term capital gains of ₹2,99,47,240. Out of these gains, exemption of ₹2,67,36,488 was claimed under Section 54F in respect of residential property bearing No. T-6/1502 at Runwal Greens.
The Assessing Officer allowed the exemption claimed under Section 54 in respect of Flat No. T-6/1402 but denied the exemption under Section 54F. According to the Assessing Officer, since the assessee had purchased another residential house, namely Flat No. T-6/1402, within one year after the transfer of the original asset sold on 07.07.2017, clause (a)(ii) of the proviso to Section 54F(1) was attracted, rendering the assessee ineligible for the exemption claimed under Section 54F. The Assessing Officer also disallowed the indexed cost of improvement of ₹50,81,123 on the ground that the assessee had not produced documentary evidence supporting expenditure incurred on additions and alterations to the property. The Commissioner (Appeals) affirmed both disallowances.
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