Chandi Ram Sahajwani Vs ITO (ITAT Delhi)
The appeal concerned the denial of deduction under Section 54F of the Income Tax Act for Assessment Year 2012-13. The assessee sold an immovable property for Rs. 1,01,00,000 and, in response to a notice issued under Section 148, declared long-term capital gains (LTCG) of Rs. 51,73,052. He claimed exemption under Section 54F on the ground that he had purchased a residential house in Noida for Rs. 47,02,000 on 11.05.2012 and a commercial office space for Rs. 13,33,475 on 01.02.2012.
The Assessing Officer found that the residential property in Noida was not purchased in the assessee’s name but in the name of another individual, with the assessee shown only as a nominee. No sale deed or ownership documents were produced, nor were bank statements or supporting evidence filed at the assessment stage. Due to lack of proof of ownership, the Assessing Officer completed the assessment under Sections 143(3)/147 by disallowing the Section 54F claim and adding the LTCG of Rs. 51,73,052 to the total income.
In appeal, the CIT(A) upheld the disallowance. The appellate authority noted that Section 54F requires reinvestment of capital gains into a residential house purchased or constructed within the prescribed timeframes. It also emphasized that a registered sale deed is necessary to transfer ownership of immovable property, and mere agreements or possession do not confer legal title. As the assessee did not produce a sale deed, ownership proof, or details of other houses held, the conditions of Section 54F were not met.
