VETRIVEL SANTHI,CHENNAI V. COMMISSIONER OF INCOME TAX APPEALS NFAC, DELHI

ITA 2769/CHNY/2024

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The case involves Vetrivel Santhi, the appellant, who contested the denial of a deduction under section 54F of the Income Tax Act, 1961, by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals). The appellant had sold a property and claimed to have invested the proceeds in a new property, thus claiming exemption from capital gains tax. However, the AO disallowed the claim due to lack of documentary evidence to substantiate the completion and possession of the new property within the required timeframe. The CIT(A) partly accepted the appellant's contentions but upheld the AO's decision on the deduction claim. The Tribunal, after considering additional evidence presented by the appellant, decided to remand the case for further verification of the documents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107985 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: PADMA
• Keywords: Set aside; Capital Gains
• Section: 147; 148; 54; 54F

Judgement Text

"आयकरअपीलीयअिधकरण, ‘सी’\rा यपीठ,चे\u0012ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ीएबीटी. वक , \u000bाियकसद\u0011 एवं एवं एवं एवं \u0015ीजगदीश, लेखासद\u001bक ेसम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.2769/Chny/2024 िनधा \u001eरणवष\u001e/Assessment Year: 2018-19 Vetrivel Santhi, Newry Creation, No.67, New Avadi Road, Kilpauk – 600 010. v. The ITO, Non Corporate Ward-10(3), Chennai. [PAN:EBWPS5761P] (अपीला थ\"/Appellant) (#$थ\"/Respondent) अपीला थ\"कीओरसे/ Appellant by : Ms. Padma, CA #$थ\"कीओरसे /Respondent by : Ms. R. Anitha, Addl. CIT सुनवा ईकीता रीख/Date of Hearing : 09.01.2025 घोषणा कीता रीख /Date of Pronouncement : 31.01.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short \"the Ld.CIT(A)”), Delhi, dated 13.09.2024 for the Assessment Year (hereinafter in short \"AY”) 2018-19 (wrongly entered in NFAC order as AY 2023-24). 2. The only issue is against the action of the Ld.CIT(A) confirming the action of the AO denying the deduction claimed by the assessee u/s. 54F of the Income Tax Act, 1961 (hereinafter in short “the Act”) 3. The brief facts are that the any return for AY 2018- the Act by issuance of notice u/s. 148 of the Act dated 25.03.2022 note that the assessee had sold immovable property for more than an amount of Rs.1 crore. Pursuant to the notice u/s. 148 of the Act, the assessee filed return of income (hereinafter in short “RoI\") declaring total income of Rs.8,660 gain on sale of property (nil) after exemption) she is a house wife and the property which was sold was originally purchased by her husband during the year 2013 and was sold on 06.12.2017 for a consideration of Rs.1.35 crores and since assessee has invested in new property there was no capital gain the view that assessee didn’t file a copy of the substantiate her claim on Long Term Capital Gains (LTCG) and also the relevant documents to claim deduction AO was pleased to disallow the claim of LTCG and instead treated the amount received (as s andaddedRs.1.35 crores. ITA No.2769/Chny/2024 :: 2 :: The only issue is against the action of the Ld.CIT(A) confirming the action of the AO denying the deduction claimed by the assessee u/s. 54F of the Income Tax Act, 1961 (hereinafter in short “the Act”) brief facts are that the assessee is an individual, who didn’t file -19; and the assessment was reopened u/s. 147 of the Act by issuance of notice u/s. 148 of the Act dated 25.03.2022 note that the assessee had sold immovable property for more than an amount of Rs.1 crore. Pursuant to the notice u/s. 148 of the Act, the assessee filed return of income (hereinafter in short “RoI\") declaring total income of Rs.8,660/- (savings bank interest and capital gain on sale of property (nil) after exemption). According to the assessee she is a house wife and the property which was sold was originally purchased by her husband during the year 2013 and was sold on r a consideration of Rs.1.35 crores and since assessee has invested in new property, she claimed deduction u/s. 54F of the Act and there was no capital gain left for bringing to tax. However, the AO was of the view that assessee didn’t file a copy of the relevant documents to substantiate her claim on Long Term Capital Gains (LTCG) and also the claim deduction u/s. 54 of the Act. disallow the claim of LTCG and instead treated the as sale consideration) as short term capital gain Rs.1.35 crores. /Chny/2024(AY 2018-19) VetrivelSanthi The only issue is against the action of the Ld.CIT(A) confirming the action of the AO denying the deduction claimed by the assessee u/s. 54F of the Income Tax Act, 1961 (hereinafter in short “the Act”). assessee is an individual, who didn’t file and the assessment was reopened u/s. 147 of the Act by issuance of notice u/s. 148 of the Act dated 25.03.2022, taking note that the assessee had sold immovable property for more than an amount of Rs.1 crore. Pursuant to the notice u/s. 148 of the Act, the on 29.11.2022 (savings bank interest and capital . According to the assessee she is a house wife and the property which was sold was originally purchased by her husband during the year 2013 and was sold on r a consideration of Rs.1.35 crores and since assessee has she claimed deduction u/s. 54F of the Act and for bringing to tax. However, the AO was of relevant documents to substantiate her claim on Long Term Capital Gains (LTCG) and also the u/s. 54 of the Act. Therefore, the disallow the claim of LTCG and instead treated the as short term capital gain 4. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A)/NFAC, who partly allowed the appeal by first of all accepting the assessee’s contention that the for a consideration of Rs.85,60,000/ Apartment, located at 59 Ormes Road, Kilpauk, Chennai), which flat was sold on 06.12.2017 at Rs.1.35 crores; and since held by assessee for more than three accepted that the said transaction computed the LTCG at Rs.33,98,667/ 5. Thereafter, the Ld.CIT(A) adjudicated the claim of the assessee for deduction u/s. 54F of notice that she has entered into a builder agreement with M/s. Newry Property Pvt Ltd on 07.12.2017 for the construction of a residential flat. According to the Ld.CIT(A) regarding completion of the construction, possession of the flat within the statutory period of three years from the date of transfer i.e. on or before 05.12.2020 for claiming the deduction u/s. 54F of the Act. However, according to the Ld.CIT(A) documentary evidence to substantiate the completion and possession of the flat. However, the Ld.CIT(A) noted that assessee had filed a letter from the builder dated 04.04.2018 conveying the apartment number 402, fourth floor ITA No.2769/Chny/2024 :: 3 :: Aggrieved, the assessee preferred an appeal before the who partly allowed the appeal by first of all accepting the assessee’s contention that the assessee had purchased on 02.06.2014 for a consideration of Rs.85,60,000/- the flat/property (flat no. 8D, Prince Apartment, located at 59 Ormes Road, Kilpauk, Chennai), which flat was sold on 06.12.2017 at Rs.1.35 crores; and since the proper r more than three years before its sale said transaction qualifies for LTCG and thereafter Rs.33,98,667/-. Thereafter, the Ld.CIT(A) adjudicated the claim of the assessee for deduction u/s. 54F of the Act and noted that assessee brought to his entered into a builder agreement with M/s. Newry Property Pvt Ltd on 07.12.2017 for the construction of a residential flat. According to the Ld.CIT(A), he asked the assessee to produce pro regarding completion of the construction, possession of the flat within the statutory period of three years from the date of transfer i.e. on or before 05.12.2020 for claiming the deduction u/s. 54F of the Act. However, according to the Ld.CIT(A) the assessee failed to furnish relevant documentary evidence to substantiate the completion and possession of However, the Ld.CIT(A) noted that assessee had filed a letter from the builder dated 04.04.2018 conveying the information number 402, fourth floor was ready for possession. /Chny/2024(AY 2018-19) VetrivelSanthi Aggrieved, the assessee preferred an appeal before the who partly allowed the appeal by first of all accepting sed on 02.06.2014 the flat/property (flat no. 8D, Prince Apartment, located at 59 Ormes Road, Kilpauk, Chennai), which flat was the property/flat was years before its sale, the Ld CIT(A) LTCG and thereafter Thereafter, the Ld.CIT(A) adjudicated the claim of the assessee for the Act and noted that assessee brought to his entered into a builder agreement with M/s. Newry Property Pvt Ltd on 07.12.2017 for the construction of a residential flat. he asked the assessee to produce proof regarding completion of the construction, possession of the flat within the statutory period of three years from the date of transfer i.e. on or before 05.12.2020 for claiming the deduction u/s. 54F of the Act. However, ssessee failed to furnish relevant documentary evidence to substantiate the completion and possession of However, the Ld.CIT(A) noted that assessee had filed a letter information that the was ready for possession. However, the Ld.CIT(A) was of the view that no completion certificate or final registration deed was property was indeed constructed and handed over to assess three years period as stipulated u/s. 54F of the Act. Thus, based on the evidences presented before him, take possession or complete the c within three years period afte expired on 05.12.2020. the conditions u/s. 54F of the Act, of the Act, disqualifies the assessee from availing the exemption further noted that the a capital gain account scheme as required under provisions of section 54F(2) of the Act. Considering t assessee failed to comply with the requirement u/s. 54F of the Act, which according to him, disentitles her from claiming deduction u/s. 54F of the Act and the Ld.CIT(A) refer High Court and Delhi Hig Act. 6. Aggrieved by the action of the Ld.CIT(A), the assessee has preferred this appeal before us and before the authorities below, Tax General Revision of 2018 ITA No.2769/Chny/2024 :: 4 :: he Ld.CIT(A) was of the view that no completion certificate or final deed was furnished to substantiate the claim that the eed constructed and handed over to assess stipulated u/s. 54F of the Act. Thus, based on the before him, he was of the view that assessee didn’t take possession or complete the construction of the new property/flat within three years period after the sale of the original property which expired on 05.12.2020. According to Ld.CIT(A) such non the conditions u/s. 54F of the Act, within the time line specified disqualifies the assessee from availing the exemption the assessee didn’t deposit the capital gain amount in capital gain account scheme as required under provisions of section Considering the aforesaid, the Ld.CIT assessee failed to comply with the requirement u/s. 54F of the Act, which disentitles her from claiming deduction u/s. 54F of the the Ld.CIT(A) referred to few decisions of the Hon’ble Bombay High Court and Delhi High Court to deny the deduction u/s. 54F of the Aggrieved by the action of the Ld.CIT(A), the assessee has preferred this appeal before us and in addition to the evidences before the authorities below, the Ld AR has filed a copy of the Proper Tax General Revision of 2018-19 along with the sale deed of undivided /Chny/2024(AY 2018-19) VetrivelSanthi he Ld.CIT(A) was of the view that no completion certificate or final to substantiate the claim that the eed constructed and handed over to assessee within stipulated u/s. 54F of the Act. Thus, based on the he was of the view that assessee didn’t onstruction of the new property/flat r the sale of the original property which non-compliance of specified u/s. 54F disqualifies the assessee from availing the exemption and ssessee didn’t deposit the capital gain amount in capital gain account scheme as required under provisions of section Ld.CIT(A) held that assessee failed to comply with the requirement u/s. 54F of the Act, which disentitles her from claiming deduction u/s. 54F of the to few decisions of the Hon’ble Bombay h Court to deny the deduction u/s. 54F of the Aggrieved by the action of the Ld.CIT(A), the assessee has to the evidences filed a copy of the Property 19 along with the sale deed of undivided share of the schedule property given therein at New Avadi Road, Kilpauk, Chennai, for a consideration of Rs. to prove the fact of completion of flat, the assessee has filed a copy of the letter dated 04.04.2018 issued by the builder M/s. Newry Properties Pvt Ltd. From the contents of which it is discerned that apartment no. 402, 4 location at Avadi Road, Kilpauk, Chennai, is ready for possession and asking the assessee to release the balance amount of Rs.74,45,763/ According to the assessee the sale deed of the UDS sales, the property tax general revision assessee has complied with the condition stipulated u/s. 54F of the Act (completion and possession of the flat in question). But, we find that this evidences especially the property tax general revision was not before authorities below; and the assessee has not filed any paper book along with the certificate of authen ends of justice for on both u/s. 54F of the Act is set aside back to the purpose of verification of the whether the assessee has substantiated her claim for deduction u/s. 54 of the Act by adducing evidence regarding completion of the construction and possession of the flat within the statutory period of three years from the date of transfer i.e. on or before 05.12.2020 in order to claim the ITA No.2769/Chny/2024 :: 5 :: the schedule property given therein at New Avadi Road, Kilpauk, Chennai, for a consideration of Rs.76,83,516/-. It is noted that in order prove the fact of completion of the construction and possession of the flat, the assessee has filed a copy of the letter dated 04.04.2018 issued by the builder M/s. Newry Properties Pvt Ltd. From the contents of which that apartment no. 402, 4th Floor measuring 1754 sq.f location at Avadi Road, Kilpauk, Chennai, is ready for possession and asking the assessee to release the balance amount of Rs.74,45,763/ According to the assessee the sale deed of the UDS sales, the property tax general revision -2018-19 dated 24.09.2018 would prove that assessee has complied with the condition stipulated u/s. 54F of the Act (completion and possession of the flat in question). But, we find that this evidences especially the property tax general revision was not before and the assessee has not filed any paper book along with the certificate of authenticityof the documents filed before us; so for both sides, the issue regarding deduction claimed set aside back to the file of the JAO for the limited purpose of verification of the relevant documents and examine as to the assessee has substantiated her claim for deduction u/s. 54 of the Act by adducing evidence regarding completion of the construction on of the flat within the statutory period of three years from the date of transfer i.e. on or before 05.12.2020 in order to claim the /Chny/2024(AY 2018-19) VetrivelSanthi the schedule property given therein at New Avadi Road, Kilpauk, It is noted that in order the construction and possession of the flat, the assessee has filed a copy of the letter dated 04.04.2018 issued by the builder M/s. Newry Properties Pvt Ltd. From the contents of which Floor measuring 1754 sq.ft. location at Avadi Road, Kilpauk, Chennai, is ready for possession and asking the assessee to release the balance amount of Rs.74,45,763/-. According to the assessee the sale deed of the UDS sales, the property 2018 would prove that assessee has complied with the condition stipulated u/s. 54F of the Act (completion and possession of the flat in question). But, we find that this evidences especially the property tax general revision was not before the and the assessee has not filed any paper book along of the documents filed before us; so for the issue regarding deduction claimed file of the JAO for the limited and examine as to the assessee has substantiated her claim for deduction u/s. 54 of the Act by adducing evidence regarding completion of the construction on of the flat within the statutory period of three years from the date of transfer i.e. on or before 05.12.2020 in order to claim the exemption u/s. 54F of the Act true, then deduction u/s. 54F of the Act should to law after hearing the assessee and the assessee is directed to file all the relevant documents before the JAO and the JAO to pass orders in accordance to law. 7. In the result, appeal filed by the assessee is allowed for statis purposes. Order pronounced on the Sd/- (जगदीश) (JAGADISH) लेखा सद\u001b/ACCOUNTANT MEMBER चे\u0012ई/Chennai, िदना ंक/Dated: 31st January JPV, Sr.PS आदेशकी#ितिलिपअ*ेिषत/Copy to 1. अपीला थ\"/Appellant 2. #$थ\"/Respondent 3. आयकरआयु+/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभा गीय#ितिनिध/DR 5. गा ड\u001eफा ईल/GF ITA No.2769/Chny/2024 :: 6 :: exemption u/s. 54F of the Act and if the aforesaid facts are found to be then deduction u/s. 54F of the Act should be allowed in to law after hearing the assessee and the assessee is directed to file all the relevant documents before the JAO and the JAO to pass orders in In the result, appeal filed by the assessee is allowed for statis Order pronounced on the 31st day of January, 2025, in Chennai. Sd/ /ACCOUNTANT MEMBER (एबीटी. (ABY T. VARKEY \rाियकसद\u001b/JUDICIAL MEMBER , 2025. Copy to: , Chennai / Madurai / Salem / Coimbatore. /Chny/2024(AY 2018-19) VetrivelSanthi are found to be be allowed in accordance to law after hearing the assessee and the assessee is directed to file all the relevant documents before the JAO and the JAO to pass orders in In the result, appeal filed by the assessee is allowed for statistical , in Chennai. Sd/- . वक ) ABY T. VARKEY) /JUDICIAL MEMBER , Chennai / Madurai / Salem / Coimbatore. "