Rachna Jain Vs The ITO (ITAT, Jaipur Bench)
No CGAS Deposit, Yet Section 54F Survives — Investment in New House Within Two Years Is the Substance; Capital Gains Account Is Only the Route When Money Remains Uninvested
Summary: The Jaipur ITAT delivered an important ruling on the recurring controversy surrounding section 54F & non-deposit of unutilised sale consideration in the Capital Gains Accounts Scheme (CGAS). Following the Karnataka HC decision in CIT v. K. Ramachandra Rao, the Tribunal held that where the assessee ultimately purchases the new residential property within the two-year period prescribed u/s 54F(1), exemption cannot be denied merely because the unutilised consideration was not deposited in CGAS before the due date u/s 139(1). The Tribunal treated compliance with section 54F(4) as procedural in such circumstances & allowed the assessee’s claim.
Facts — ₹68 Lakh Plot Sold & ₹66.33 Lakh Invested in New Flat
The assessee sold a plot situated at Gur Ki Mandi, Rajpur Chhawni, Delhi in September 2014 for ₹68 lakh. The plot had been purchased on 16.02.2000 for ₹42,000. After claiming indexed cost of ₹1,10,560, LTCG was computed at ₹66,89,440.
The assessee thereafter invested in a residential flat at ATS-1, Hamlet, Noida. The total cost of the flat was ₹1.15 crore & it was jointly held with her husband. Based upon their respective contributions, the assessee’s investment was determined at ₹66,32,875, for which she claimed deduction u/s 54F. Consequently, only ₹52,967 was offered as net LTCG.
AO — No CGAS Deposit Before 30.07.2015
The AO denied exemption primarily on two grounds.
First, the assessee had not deposited the unutilised consideration in CGAS before 30.07.2015, being the due date for filing the return. The new property was purchased only on 22.01.2016 & the AO therefore considered section 54F(4) to have been violated.
Secondly, the AO questioned the payments because they had been made to the builders rather than the persons with whom the assessee allegedly had an agreement for purchase of the flat.
CIT(A) Adds More Reasons for Denying Section 54F
The CIT(A) upheld the denial on several grounds. According to him, the new property was purchased beyond the permissible period; the property was jointly purchased with the assessee’s husband; the assessee had not established complete linkage of her investment; CGAS requirements had not been complied with; & contemporaneous documentary evidence regarding timely utilisation was absent.
The CIT(A) particularly proceeded on the footing that the new property ought to have been purchased within one year from the transfer of the original asset.
The ITAT found this interpretation fundamentally incorrect.
ITAT Corrects the Clock — It Is Two Years After Sale, Not One
The Tribunal reproduced section 54F & pointed out that the statutory condition is quite clear.
For purchase of the new residential house, section 54F permits investment within one year before or two years after transfer of the original asset. For construction, the permissible period is three years after the transfer.
The CIT(A) had incorrectly applied the one-year period, overlooking that one year applies to a purchase before transfer.
Since the original property was sold in September 2014 & the new flat was purchased in January 2016, the purchase was clearly within two years after the sale. The CIT(A)’s finding that the investment was beyond the statutory period was therefore contrary to the express language of section 54F.
The Real Issue — Is CGAS Deposit Fatal Even When House Is Purchased Within Two Years?
This was the most significant part of the decision.
The ITAT acknowledged that section 54F(4) provides for deposit of the amount not utilised for purchase/construction before filing the return in the prescribed Capital Gains Accounts Scheme.
However, the Tribunal observed that Courts have interpreted section 54F(4) as procedural in nature where the substantive requirement of section 54F(1) has ultimately been fulfilled.
Thus, where the assessee purchases a residential property within two years or constructs one within three years, exemption cannot be denied merely because the money was not parked in CGAS in the meantime.
Karnataka HC in K. Ramachandra Rao Comes to the Rescue
The Jaipur ITAT specifically followed the Karnataka HC ruling in CIT v. K. Ramachandra Rao [2015] 56 taxmann.com 163 (Karnataka).
The Karnataka HC had considered the precise question whether an assessee who invests the entire sale consideration in construction of a residential house within the prescribed period can be denied section 54F merely because the amount was not deposited in CGAS before the due date u/s 139(1).
The HC held that where the intention is not to retain the cash but to invest it in purchase/construction & such investment is actually made within the period stipulated u/s 54F(1), section 54F(4) does not operate to deny the exemption merely because CGAS was not used.
Substance Satisfied — Non-Deposit in CGAS Did Not Defeat Exemption
Applying K. Ramachandra Rao, the Tribunal noted that the assessee sold the original asset in September 2014 & purchased the new flat on 22.01.2016.
The new residential property was therefore purchased well within the two-year period contemplated by section 54F(1).
Consequently, the ITAT categorically held that non-deposit of the unutilised capital gain in CGAS as prescribed u/s 54F(4) would not debar the assessee from claiming exemption, since the substantive condition of investment in the new asset within the prescribed period had been fulfilled.
This is the most useful proposition emerging from the ruling.
Joint Ownership With Husband Was Also No Bar
The CIT(A)’s objection regarding joint ownership was also rejected on facts.
The AO himself had recorded from the sale deed that against the total cost of ₹1.15 crore, the assessee had personally contributed ₹66,32,875. More importantly, the assessee had claimed exemption only to the extent of her own investment.
Thus, there was no question of her claiming section 54F deduction in respect of her husband’s contribution.
The Tribunal therefore held that the CIT(A)’s finding that the assessee’s share was unspecified or unsupported by evidence was factually incorrect.
Documentary Evidence Was Already on Record
The CIT(A)’s further observation that documentary evidence of timely investment had not been furnished was also found incorrect.
The AO himself had noted the registered sale deed & recorded that the transaction for purchase of the new asset from the builder was dated 20.01.2016. Thus, the record itself established that the purchase was within the prescribed two-year period.
Decision — Section 54F Exemption Allowed
The Jaipur ITAT ultimately held that every basis adopted by the Revenue authorities for denying section 54F was either factually incorrect or legally unsustainable.
The assessee had sufficiently demonstrated compliance with section 54F. The CIT(A)’s order was therefore set aside & the denial of exemption/deduction u/s 54F was deleted. The assessee’s appeal was allowed.
Author’s Comment
This is a particularly useful ruling because it directly addresses the common situation where an assessee misses the CGAS deadline but actually purchases the residential house within two years.
The ruling draws a clear distinction between the substantive condition u/s 54F(1) & the procedural mechanism u/s 54F(4). On the authority of the Karnataka HC in K. Ramachandra Rao, Jaipur ITAT has held that once the consideration is actually invested in the residential house within the statutory period, failure to temporarily park the money in CGAS should not extinguish the exemption.
A word of caution, however, is necessary. This proposition has not been uniformly accepted across all jurisdictions, & the safer compliance position continues to be to deposit the unutilised amount in CGAS within the statutory timeline. But wherever that deadline has already been missed & the investment has nevertheless been completed within the two/three-year window, Rachna Jain read with K. Ramachandra Rao provides strong authority for defending the section 54F claim.
In short, CGAS is meant to preserve the exemption until the house is bought — it should not become the reason to destroy the exemption after the house has actually been bought within time.
Cases Discussed
- CIT v. K. Ramchandra Rao [2015] 56 taxmann.com 163 (Karnataka)
- CIT v. T.N. Aravinda Reddy (1979) 120 ITR 46 (SC)
- CIT v. Kamal Wahal (2013) 351 ITR 4 (Del)
- Ravi Varma v. CIT (2018) 404 ITR 214 (Ker.)
- CIT v. Kalpana Hansraj (2018) 407 ITR 529 (Bom.)
- CIT v. Ravinder Kumar Arora (2012) 342 ITR 38 (Del)
- CIT v. Rajesh Kumar Jalan (2006) 286 ITR 274 (Gau)
- CIT v. Ms. Jagriti Aggarwal (2011) 339 ITR 610 (P&H)
- CIT v. D. Ananda Basappa (2009) 309 ITR 329 (Kar.)
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, JAIPUR
The present appeal has been filed by the assessee against the order passed by the Office of the Commissioner of Income Tax (Appeals), ADDL/JCIT(A), Panaji (hereinafter referred to as “Ld. CIT(A)”), dated 16.10.2025 under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
2. We have noted that the assessee has filed 14 grounds of appeal before us all of which are argumentative. Learned counsel for the assessee admitted before us that the solitary issue raised in the above grounds pertained to denial of grant of exemption/deduction under Section 54F of the Act against the capital gains earned by the assessee. He contended that the solitary arguments, therefore, before us were confined to this issue.
3. Proceeding to adjudicate the appeal therefore, we have noted from the facts on record that the assessee filed her return of income for the impugned year declaring income of Rs. 52,967/- .The assessee had sold a plot measuring 105 Sq. Feet situated at Gur Ki Mandi Rajpur Chhawni, Delhi in the month of September, 2014 for Rs. 68,00,000/-. This Plot was purchased on 16.02.2000 for Rs. 42,000/-. The indexed cost of acquisition had been claimed at Rs. 1,10,560/- and after reducing the same from the consideration received on sale of the plot the capital gain was arrived and shown at Rs. 66,89,440/-. The assessee further claimed deduction under Section 54F of the Act from the said capital again on account of investment in a new house property i.e. flat No. 07071, Tower-7, Sector-104, ATS-1, Hemlet, Noida. The total investment in this flat was of Rs. 1,15,00,000/- and the ownership ratio of the flat was determined on the basis of payment made by Smt. Rachna Jain , the assessee before us, and Shri Anurag Jain, husband of the assessee. The assessee had made payment of Rs. 66,32,875/- towards the purchase of this flat and accordingly claimed deduction under section 54F of the Act for Rs. 66,32,875/-. After claiming deduction under section 54F of the Act ,the net long term capital gain of Rs. 52,967/- was returned to tax by the assessee. All the aforestated facts are noted in para 3 of the assessment order. The AO denied the claim of deduction u/s 54F of the Act for two reasons-
(1) He found the assessee to have violated the provisions of section 54F(4) of the Act which required the assessee to invest the capital gain not utilized for purchase of a new residential house within the prescribed time ,in the Capital Gain Accounts Scheme in Bank ,before the due date of filing of return of income for the impugned year, A.Y. 2015-16 i.e. 30.07.2015, .The AO noted the assessee to have purchased the new property on 22-01-16 while the due date of filing return for the impugned year A.Y 2015-16, by which the assessee ought to have made the investment in the new property , was 30-07-15 .He further noted the assessee to have acquired the property through a registered sale deed dated08.12.2017.
(2) He found the payments made for the purchase of flat to have been made to the builders and not to Shri Vinod Sethi and Smt. Renu Sethi, with whom the assessee was allegedly found to have entered into an agreement of sale forpurchase of the said flat.
4. The Ld. CIT(A) confirmed the denial of claim of deduction/ exemption u/s 54F of the Act finding the assessee to have violated the following conditions which were mandatorily required to be fulfilled for claiming the said deduction/ exemption:
1. that the new property was purchased beyond one year from the date of transfer of the original asset. His findings in this regard are contained at page 43 &44 para 7.1 of the order as under:-
“7.1 Ground no.01 raised by the appellant is that the learned Assessing Officer erred in disallowing the deduction claimed u/s 54F and making addition to the income of the assessee under the head ‘Long-Term Capital Gains’ which is adjudicated on the basis of facts of the case, merit and impugned assessment order as under:
Upon careful perusal of impugned assessment order and information available or record it is seen that the appellant contended that:
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- The investment in the new residential property was made out of the sale proceeds of the original asset.
- She had entered into an agreement to sell the flat with the builder and paid substantial consideration within the prescribed time period.
- Hence, the conditions prescribed u/s 54F were fulfilled and deduction should not have been denied merely because the registered sale deed was executed on 22.01.2016, i.e., slightly beyond the six-month window.
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1. Scope of Section 54F
Section 54F allows exemption if the net consideration from sale of a long-term capital asset (other than a residential house) is invested in the purchase or construction of a residential house within one year before or two/three years after the date of transfer. The conditions are cumulative and mandatory.
In the present case, the transfer took place in September 2014, and the registered sale deed for the new property was executed only on 22.01.2016-clearly beyond one year from the date of transfer.
Moreover, the property was jointly purchased in the name of the assessee and her husband, and the assessee’s share in the consideration was only Rs.66,32,875/-while the sale consideration received was Rs.68,00,000/-. Thus, the claim of full exemption under section 54F is not substantiated.
1. Requirement of Purchase or Construction within Time Limit
The Hon’ble Supreme Court in CIT v. T.N. Aravinda Reddy (1979) 120 ITR 46 (SC) and CIT v. Kamal Wahal (2013) 351 ITR 4 (Del) has held that beneficial provisions must be interpreted liberally, but the basic statutory conditions must be strictly satisfied.
Further, in Ravi Varma v. CIT (2018) 404 ITR 214 (Ker.) and CIT v. Kalpana Hansraj (2018) 407 ITR 529 (Bom.), it was held that the date of registered purchase or possession is crucial to determine eligibility under section 54F.
In the instant case, there is no evidence that possession or legal ownership was transferred within one year of the sale of the original asset. The payment through an agreement to sell without registration does not amount to purchase under section 54F. Accordingly, the Assessing Officer rightly denied the deduction.”
2. that the assessee had purchased property jointly with her husband and was therefore, entitled only to deduction proportionate to investment made in the property and since the assessee failed to furnish complete payment proofs and linkage between the sale proceeds and investment, she was not entitled to claim exemption under Section 54F of the Act. Relevant findings of the Ld. CIT(A) in this regard are as under:-
“1. Joint Ownership and Proportionate Investment
The appellant has jointly purchased the house property with her husband. In similar facts, courts have consistently held that exemption u/s 54F can only be allowed proportionately to the share of the investment made by the assessee.
Reference may be made to CIT v. Ravinder Kumar Arora (2012) 342 ITR 38 (Del), where it was held that when the property is purchased jointly, only the share invested by the assessee qualifies for exemption. Here, even if the claim were otherwise allowable, the proportionate deduction would have been limited to Rs.66,32,875/-. The appellant failed to furnish complete payment proofs and linkage between sale proceeds and investment.”
5. On account of not having deposited the unutilized portion of the sale proceeds upto the date of filing of return income, in the capital gain accounts scheme. The finding of the Ld. CIT(A) are as under:-
“1. Non-Utilisation of Capital Gain Account Scheme
Further, the appellant has not demonstrated that any unutilised portion of the sale proceeds was deposited in the Capital Gains Account Scheme (CGAS) before the due date of filing return u/s 139(1). As per CIT v. Rajesh Kumar Jalan (2006) 286 ITR 274 (Gau) and CIT v. Ms. Jagriti Aggarwal (2011) 339 ITR 610 (P&H), utilisation or deposit is mandatory to claim exemption. Failure to comply disentitles the assessee from the benefit.
Since the appellant has not complied with this procedural requirement, the AO’s denial of exemption stands justified.”
6. On account of the assessee having not produced contemporaneous evidence of utilization of capital again within stipulated period. The finding of the Ld. CIT(A) in this regard are as under:-
“1. Absence of Contemporaneous Evidence
The appellant failed to produce any contemporaneous evidence such as bank statements reflecting payment dates, builder receipts, possession letter, or proof of utilisation of capital gains within the stipulated period. Mere filing of an unregistered agreement without corroborative evidence cannot be treated as sufficient compliance, as held in CIT v. Ananda Basappa (2009) 309 ITR 329 (Kar).”
7. Ld. CIT(A) summarized the reasons for upholding the order of the AO denying grant of exemption/deduction under Section 54F of the Act as under:-
“Considering the above facts and judicial precedents, it is clear that:
1. The purchase of the new residential house was beyond the stipulated period prescribed u/s 54F.
2. The Investment was joint, and ownership was not exclusively of the appellant.
3. The Capital Gains Account Sche4eme was not complied with.
4. Documentary evidence of timely investment was not furnished.
Therefore, the Assessing Officer’s action in disallowing the claim of deduction /s 54F and assessing the resultant long-term capital gain is upheld. Accordingly. sole ground no.01 raised by the appellant being devoid of merit is dismissed herewith.”
8. We have gone through the orders of the authorities below and have heard both the parties. We do not find any merit in the order passed by the Ld. CIT(A) denying the assessee its claim of deduction under Section 54F of the Act. All the reasons/basis with the Ld. CIT(A) for the denial of grant of exemption we find are either incorrect on facts or not in accordance with law.
9. The law in this regard as contained in Section 54F is reproduced hereunder:-
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“[Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.
54F. (1) 73[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or 74[two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset); the capital gam shall be dealt with in accordance with the following provisions of this section, that is to say,—
(a) if the cost of the new assets is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45;
(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45 :
Provided that nothing contained in this sub-section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head “Income from house property”, other than the new asset.
Explanation : For the purposes of this section,—
75 [* * *]
76 [***] “net consideration”, in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.
(2) Where the assessee purchases, within the period of 77[two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head “Income from house property”, other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head “Capital gains” relating to long-term capital assets of the previous year in which such residential house is purchased or constructed.
(3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head “Capital gains” relating to long-term capital assets of the previous year in which such new asset is transferred.]”
78 [(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,—
(i) the amount by which—
(a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds
(b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid.
Explanation : Where any amount becomes chargeable under section 45 in accordance with sub-section (2) or sub-section (3) or the proviso to this sub-section, then, for the purposes of the deductions to be made under clause (b) of sub-section (1) of section 48, the initial deduction of ten thousand rupees under sub-section (2) of that section shall not be admissible.]”
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10. As is evident from perusal of the above, the primary condition for claiming exemption as per Section 54F(1) of the Act is the investment in a new property should have been made by way of purchase within two years of sale of the original asset or by way of construction of a new asset within 3 years from the date of the sale of the original asset.
11. The finding of the Ld. CIT(A), therefore, that the purchase of a new residential house is beyond the stipulated period prescribed under section 54F of the Act is incorrect on fact. Ld. CIT(A) , we have noted, has held so noting that the period prescribed in law for acquiring the new asset is one year from the date of transfer. This reading of law is clearly incorrect since Section 54F clearly prescribes two/three years for purchase / construction of a new house after the date of transfer. The period of one year prescribed in law is in relation to purchase or construction of a residential house “ within one year before the date of transfer”. Ld. CIT(A) therefore, we hold has wrongly interpreted the condition prescribed in Section 54F of the Act for investment in a new asset to hold the assessee to have made investment in the new asset beyond the period prescribed under Section 54F of the Act.
12. Taking up the next reason for denial of exemption u/s 54F of the Act for not having invested the unutilized capital gain in the Capital Gains account scheme, Undoubtedly sub-section (4) of section 54F of the Act requires that the amount so not invested in a new asset till the date of filing of return of income for the year in which the exemption is claimed, is required to be deposited in a capital gain accounts scheme to be utilized for the purpose of purchase or construction of a new asset within the time period specified in section. However Courts have interpreted the provisions of Section 54F(4) of the Act to be procedural in nature and where the assessee is found to have complied with the substantive condition of having invested in a new property by way of purchase within two years or constructing new property within 3 years, the assessee, it has been held, cannot be denied the benefit of deduction under Section 54F of the Act on account of having violated the provisions of Section 54F(4) of the Act. The Hon’ble Karnataka High Court has laid down this proposition in the case of CIT Vs. K. Ramchandra Rao [2015] 56 taxmann.com 163 (Karnataka) dated 14th July, 2014. The question of law framed by the Hon’ble High Court is as under:-
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2) When the assessee invests the entire sale consideration in construction of a residential house within three years from the date of transfer can he be denied exemption under Section 54F on the ground that he did not deposit the said amount in capital gains account scheme before the due date prescribed under Section 139(1) of the IT Act?
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12.1. Answering the same, the Hon’ble High Court held as under:-
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4. Re.Question No.2 :
As is clear from Sub Section (4) in the event of the assessee not investing the capital gains either in purchasing the residential house or in constructing a residential house within the period stipulated in Section 54F(1), if the assessee wants the benefit of Section 54F, then he should deposit the said capital gains in an account which is duly notified by the Central Government. In other words if he want of claim exemption from payment of income tax by retaining the cash, then the said amount is to be invested in the said account. If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, then Section 54F(4) is not at all attracted and therefore the contention that the assessee has not deposited the amount in the Bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct.
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13. In the facts of the present case as noted by the AO, the assessee had sold his original property in the month of September 2014 ,which fact is noted in para 3 of the assessment order and had purchased a new flat on 22.01.2016 which fact is noted at page 3 of his order. Clearly the assessee has purchased a new property within 2 years of the sale of the original asset and therefore, as per law in this regard as laid down by the Hon’ble High Court of Karnataka in the case of K. Ramchandra Rao (Supra) the assessee is entitled to claim the benefit of exemption/deduction under Section 54F of the Act of the investment made in a new asset. Non deposit of the unutilized of capital again in the capital gain accounts scheme as prescribed under Section 54F(4) of the Act will not debar the assessee from claiming deduction/exemption, since the assessee has fulfilled the substantive condition of Section54F of the Act of having invested in a new asset within the prescribed period. The denial of grant of exemption/deduction by the Ld. CIT(A) for the reason that the assessee did not invest unutilized portion in the capital again accounts scheme is, we hold, not in accordance with law.
14. Ld. CIT(A)s’ denial of grant of exemption/deduction on account of the investment being joint and not exclusively of the assessee and the assessee having not furnished proof of its share of investment in the new property purchased, we find is an incorrect finding of fact. The AO in his order passed at para 3 has categorically noted the fact from the sale deed, that out of the total investment in the new flat of Rs. 1,15,00,000/-, the assessee had made payment of Rs. 66,32,875/-. Moreover, we find that it was not the case of the AO that the assessee’s claim of deduction under Section 54F of the Act was not in proportion to her share in the investment of a new property. In fact, he has categorically recorded at para 3 of his order, that the assessee’s claim of deduction u/s 54F of the Act is in proportion to her investment in the new property purchased. Therefore, Ld. CIT(A)s finding of the assessee’s share of investment in the new property being not specified and corroborated with evidence, we hold is incorrect and the denial of grant of deduction under Section 54F of the Act for this reason is also found to be incorrect.
15. Ld. CIT(A) has also denied deduction for the reason that documentary evidence of timely investment was not furnished. This we find is again an incorrect finding of fact. The AO has noted from the documents filed before him, being the copy of registered sale deed, that the date of transaction of purchase of a new asset from the builder was 20.01.2016. This fact is noted in page 2 of the AO order.
16. In view of the above, we hold that the basis with the Revenue authorities for denying the claim of deduction under Section 54F of the Act was not justified either on facts or in law. The assessee, we hold had sufficiently demonstrated her claim of deduction under Section 54F of the Act to be in accordance with law. The order of the Ld. CIT(A), therefore, denying the claim of exemption/deduction under Section 54F of the Act to the assessee, is set aside. The denial of grant of exemption/deduction under Section 54F of the Act is deleted.
17. In effect, the appeal of the assessee is allowed.
Order pronounced in the open court on 24.08.2026.
