DCIT Vs Kushal Singh (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) dated 23 January 2023, which had deleted an addition made under Section 54F of the Income Tax Act, 1961 for Assessment Year 2014–15. The assessment had been framed under Section 153A following which the Assessing Officer disallowed the assessee’s claim of deduction of ₹3,43,44,059 on long-term capital gains arising from the sale of a plot of land for ₹4.17 crore.
The assessee had invested ₹3,53,50,000, including tax deducted at source, towards the purchase of a residential house from two builder entities. The amount invested exceeded the capital gains earned. The Assessing Officer disallowed the deduction on the ground that the assessee failed to furnish possession-related documents such as a possession certificate and electricity bills to establish that possession of the new residential property had been taken within the prescribed time. Consequently, the entire capital gain was added to the assessee’s income.
Before the first appellate authority, the assessee contended that all statutory conditions for claiming deduction under Section 54F had been complied with, as the entire capital gain had been invested within the stipulated period. It was submitted that the delay in handing over possession was solely attributable to the builder and was beyond the assessee’s control. The project was subject to multiple litigations and a stay on construction by the High Court, and construction had remained incomplete since March 2013 due to these disputes. The assessee argued that Section 54F is a beneficial provision and that it was never the legislative intent to deny exemption in bona fide cases where the assessee had fulfilled all investment-related requirements.
