ACIT Vs Rahul Garg (ITAT Delhi)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (CIT(A)/NFAC) for Assessment Year 2023, challenging the deletion of the Assessing Officer’s disallowance of the assessee’s deduction under Section 54F amounting to ₹28,81,62,921. The assessment had been completed under Section 143(3) of the Income-tax Act, 1961.
The Assessing Officer had disallowed the deduction on the ground that the assessee purchased two adjacent residential properties—Plot No. F-9, Sector-44, Noida, registered on 13.12.2022, and Plot No. F-8, Sector-44, Noida, registered on 23.01.2023. According to the Assessing Officer, the second property was purchased within one year of the transfer of the original asset, attracting the restriction contained in proviso (a)(ii) to Section 54F(1). Consequently, the claim of deduction under Section 54F was denied.
Before the CIT(A), the assessee submitted that the two adjacent properties were intended to form one residential house. It was stated that both plots measured 450 sq. metres each, were purchased with the intention of creating a single residential property of approximately 900 sq. metres, and that initial payments for both properties were made simultaneously on 02.05.2022 and 06.05.2022. The assessee explained that the registries were executed on different dates due to transfer permissions being granted by the NOIDA Authority on different dates. It was further submitted that the NOIDA Authority amalgamated the two plots by letter dated 13.04.2023, prohibited their future de-amalgamation, and subsequently issued an occupancy certificate after inspection. The assessee also relied on an architect’s certificate confirming that the two properties had been interconnected and were being used as a single residential unit. In addition to investment in the two properties, the assessee had deposited ₹2,81,00,000 under the Capital Gains Account Scheme, 1988 and claimed a total deduction of ₹28,81,62,921 under Section 54F.
