Section 54F exemption depends on timely investment in a residential house, not delayed registration or possession.

Section 54F is a beneficial provision to be construed liberally, and the decisive requirement is timely investment of capital gains in a residential house. Where the assessee paid the consideration for the new house within the prescribed period, delayed registration of the sale deed and later possession did not by themselves defeat the exemption claim. The Tribunal followed the jurisdictional High Court's view that completion of registration is not indispensable if the investment in the new residential property was otherwise made within time. The disallowance was therefore unsustainable and the exemption claim was accepted.

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Issues: Whether deduction under section 54F of the Income-tax Act, 1961 was allowable where the assessee had paid the consideration for a new residential house within time, but the registered sale deed and possession were completed later.

Analysis: Section 54F is a beneficial provision and has to be construed liberally to advance its object. The decisive requirement is that the capital gain should be invested in purchasing or constructing a residential house. Where the assessee has parted with the consideration for the new house within the stipulated time, mere non-execution of the registered deed or delayed completion of formalities does not, by itself, defeat the claim. On the facts found, the assessee had paid the purchase consideration for the new residential property and the delay in registration and possession did not alter the fact of investment in the house property. The Tribunal therefore followed the jurisdictional High Court's view that completion of registration is not indispensable for the benefit under section 54F.

Conclusion: Deduction under section 54F was allowable to the assessee and the disallowance was unsustainable.

Final Conclusion: The claim for exemption on investment in the new residential house was accepted on a liberal construction of the provision, and the addition/disallowance made on the ground of delayed registration and possession did not survive.

Ratio Decidendi: For claiming deduction under section 54F, timely investment of capital gains in a residential house is material, and delayed registration or completion of formal transfer formalities does not by itself disentitle the assessee when the investment has otherwise been made within the prescribed period.

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