Surender Kumar Bhojwani Vs ITO (ITAT Hyderabad)
The case involved taxation of LTCG arising from a Joint Development Agreement (JDA), where the AO taxed ₹22.77 lakh as capital gains on transfer of land.
The assessee (NRI) contended:
- Consideration was not monetary but in the form of constructed residential units (bungalows)
- Such entitlement amounts to investment in residential house, eligible for exemption u/s 54F
Key controversy:
- Assessee had not claimed 54F deduction in return (even in 148 proceedings)
- CIT(A) rejected claim on:
- Non-claim in return
- Lack of evidence of investment
ITAT’s key rulings:
1. Claim can be raised in appellate stage:
- Even if not claimed in return, deduction can be allowed if material is on record
- Appellate authorities are duty-bound to consider such claim
2. 54F claim valid even in reassessment:
- Though reassessment is for revenue benefit,
- Assessee can claim deduction if relatable to escaped income (capital gains here)
3. JDA consideration qualifies as investment:
- Following Karnataka HC rulings (Rukminiamma, Sambandam Udaykumar):
- Flats/bungalows received under JDA = construction of residential house
- Qualifies for 54F exemption
4. Matter requires verification:
- Whether conditions of 54F are satisfied (timelines, etc.)
- AO to re-examine claim in light of legal position
Result:
- Order of CIT(A) set aside
- Matter restored to AO for fresh adjudication
- Appeal allowed for statistical purposes
Key takeaway:
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