Appeal granted on deduction u/s 54F, income enhancement reversed, expenses allowed.

The Tribunal allowed the appeal, overturning the CIT(A)'s decision to disallow deduction u/s 54F, citing that payments were made within the prescribed period and completion of construction within 3 years is not mandatory. The Tribunal also reversed the enhancement of income and disallowance of expenses, noting factual inaccuracies and the availability of evidence. The appeal was granted on 12/05/2023.

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Issues involved: Appeal against order of CIT(A) regarding deduction u/s 54F, enhancement of income, disallowance of expenses, and disallowance of deduction u/s 54F.

Deduction u/s 54F:
The assessee sold a plot of land and invested in a residential house for which deduction u/s 54F was claimed. The AO disallowed indexed cost of acquisition and expenses. CIT(A) enhanced income and disallowed entire deduction u/s 54F due to non-completion of construction within 3 years and non-deposit in Capital Gains Account Scheme. Tribunal held that payments were made within the prescribed period from Capital Gains Account, so disallowance was baseless. Cited case laws supported that completion of construction within 3 years is not mandatory for claiming deduction u/s 54F if substantial investment is made. Tribunal found CIT(A) erred in disallowing the claim and allowed the appeal.

Enhancement of Income:
CIT(A) enhanced income from capital gains due to non-completion of construction within 3 years. Tribunal held that CIT(A)'s observation of non-deposit in Capital Gains Account was factually incorrect as amounts were deposited and utilized from the account. Tribunal allowed the appeal based on sufficient evidence on record.

Disallowance of Expenses:
CIT(A) disallowed expenses incurred for purchase of a new residential unit. Tribunal found that stamp duty registration costs were duly submitted as evidence, and thus allowed the expenses.

Conclusion:
Tribunal allowed the appeal, holding that disallowance of deduction u/s 54F was unwarranted as payments were made within the prescribed period, and completion of construction within 3 years is not mandatory. The CIT(A)'s enhancement of income and disallowance of expenses were also overturned based on factual inaccuracies and availability of evidence. The appeal was allowed on 12/05/2023.

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