ITO Vs Anju Madhan (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal (ITAT), Delhi, concerned the allowability of exemption under Section 54 of the Income-tax Act, 1961, where the assessee claimed exemption on long-term capital gains arising from the sale of a property. The Assessing Officer had disallowed the exemption on two primary grounds: that the agreement to purchase the new property was not registered and that the vendor did not have a clear title over the property.
The assessee had sold a property for ₹8.40 crore and claimed exemption under Section 54 on capital gains amounting to ₹6,68,29,816 by purchasing another property through an agreement to sell dated 06.06.2015. The Assessing Officer rejected the claim, holding that the absence of a registered sale deed and doubts regarding the vendor’s title disentitled the assessee from claiming exemption. The Commissioner of Income Tax (Appeals) allowed the exemption after examining the factual and legal position.
Before the Tribunal, the Revenue contended that the exemption was wrongly allowed and further raised an additional ground alleging violation of Rule 46A for admitting additional evidence without a remand report. The Tribunal admitted the additional ground but examined the merits of the case.
On facts, it was observed that the assessee had paid substantial consideration for the new property and had taken possession. The Tribunal noted that the same transaction was accepted in the assessment of the vendor. It further found that the agreement to sell and related documents were already part of the record before the Assessing Officer, and therefore, there was no violation of Rule 46A.
