Prakash Devidas Vs ACIT (ITAT Mumbai)
Assessee claimed exemption u/s 54 on LTCG of ₹62.31 lakh arising from sale of residential flat, which was denied by AO/NFAC on ground that new flat was “purchased” before prescribed period since agreement for under-construction property was executed in May 2012. Assessee contended that payments were construction-linked and possession of fully constructed flat was received on 07-01-2015, i.e., within two years from date of sale (28-10-2013).
ITAT observed that agreement dated 23-05-2012 related to an under-construction property where only booking amount was initially paid and substantial rights accrued only upon completion of construction, full payment and taking possession. Following Bombay HC decision in Beena K Jain, Tribunal held that relevant date for purpose of s.54 is date of possession of completed residential house and not mere booking/agreement date. Since possession was taken within statutory period, assessee satisfied conditions of s.54 and exemption was allowed. Appeal of assessee allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [`Ld.CIT(A)’], dated 16-09-2025, pertaining to Assessment Year (AY) 2014-15, wherein the assessee has taken the following grounds of appeal:
“1) That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in upholding the disallowance of exemption claimed u/ s. 54 of the Act on sale of residential flat at Rs. 62,31,962/- for A.Y. 2014-15.
2) That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has failed to consider that the appellant has duly followed the pre-requisite conditions stated u/ s. 54 of the Act and has taken possession of the new flat within 2 years i.e. on 07.01.2015.
3) That the impugned order being contrary to law, evidence and facts of the case may kindly be set aside, amended and modified in the light of the grounds of appeal enumerated above and the appellant be granted such relief as is called for on the facts and in the circumstances of the case of the appellant and in law.
4) That each of the grounds of appeal enumerated above is without prejudice to and independent of one another.
5) That the appellant craves leave to reserve to himself the right to add, to alter or amend any of the grounds of appeal before or at the end of the hearing and to produce such further evidence, documents and papers as may be necessary.”
2. Briefly, the facts of the case are that the assessee has filed his return of income declaring total income of Rs. 33,13,550/- and as a part of the same, has shown the Long Term Capital Gain of Rs. 62,31,962/- on sale of flat and exemption u/s. 54 of the Act on account of purchase of a new residential house was claimed, which was denied by the AO vide order dt. 29-12-2016 passed u/s. 143(3) of the Act. Against the said order, the assessee carried the matter in appeal before the Ld.CIT(A), who has since sustained the findings of the AO and against the said order and findings, the assessee is in appeal before us.
