ITAT partially allows appeal, sets aside issues for reassessment. Deduction denied, interest taxability and verification required.

The ITAT allowed the appeal in part, setting aside the issues for fresh consideration by the assessing officer. The deduction claim under section 54F was denied due to incomplete construction verification, interest paid to M/s. Amogh Realtors was not taxable as no buyback occurred, and interest receivable from Golden Gate Properties Pvt. Limited required verification based on the accounting system to avoid double taxation.

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Issues Involved:
1. Rejection of claim under section 54F of the Income-tax Act.
2. Taxation of interest paid to M/s. Amogh Realtors.
3. Taxation of interest receivable from Golden Gate Properties Pvt. Limited.

Issue 1: Rejection of claim under section 54F of the Income-tax Act:
The assessee claimed a deduction under section 54F of the Income-tax Act, which was denied by the assessing officer due to the non-possession of residential premises and non-execution of a sale deed by the due date of filing the return of income. The CIT (A) upheld this decision. The assessee contended that the consideration from the sale of the property was invested in the construction of a new property. The ITAT held that the completion of construction needed verification and set aside the issue to the assessing officer for fresh consideration.

Issue 2: Taxation of interest paid to M/s. Amogh Realtors:
The assessee paid Rs. 2 crores to M/s. Amogh Realtors for land purchase with a buyback agreement. The assessing officer calculated the profit on the investment and added it to the income. The CIT (A) directed the taxation of interest at 2% per month on the advanced amount. However, the ITAT noted that the buyback had not occurred, and the assessee was free to sell the property after the specified period. Therefore, the income did not accrue to the assessee, and no taxation was warranted on a notional basis.

Issue 3: Taxation of interest receivable from Golden Gate Properties Pvt. Limited:
The assessee advanced Rs. 3 crores to Golden Gate Properties Pvt. Limited at 2% per month. The assessing officer taxed the interest receivable, including Rs. 21 lakhs for the subsequent year. The ITAT directed the assessing officer to verify if the assessee followed a cash system of accounting and offered the income for the subsequent year. If so, the Rs. 21 lakhs should not be taxed for the current assessment year to avoid double taxation.

In conclusion, the ITAT allowed the appeal in part, setting aside the issues for fresh consideration by the assessing officer.

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