2025 (12) TMI 970

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....(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 2. The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2022-23 on 15.10.2022 declaring total income of Rs. 3,85,83,230/-. The case was selected for scrutiny under CASS to examine the deduction claimed under Section 54F of the Act. The assessee had sold a capital asset (Artwork/Painting) on 16.10.2021 for a consideration of Rs. 17,74,75,000/- against which deduction under Section 54F of the Act was claimed in respect of purchase of a residential property for Rs. 22,50,00,000/- on 31.03.2022. The Assessing Officer had disallowed the claim of deduction under Section 54F of the Act for the reason that the assessee was owner of on....

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.... the assessee should own only one residential house was not satisfied in this case and, therefore, the Assessing Officer had rightly disallowed the claim for deduction under Section 54F of the Act. The Ld. CIT-DR submitted that the assessee had constructed two villas within one year of the sale of original asset and the fact these two villas were under construction on the date of sale of original asset, on which capital gain was derived, was not under dispute. He, therefore, strongly supported the order of the Assessing Officer rejecting the claim for deduction u/s 54F of the Act. 6. Per contra, Shri Vartik Chokshi, Ld. AR of the assessee, submitted that the assessee had one residential house (old villa) acquired in 2006, which was given....

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....ved on sale of this property was duly offered for tax. Thereafter, the assessee had sold the Artwork/Painting on 16.09.2020 and the capital gain derived thereon was invested in purchase of residential house on 31.03.2022 for a consideration of Rs. 22,50,00,000/-, against which the deduction under Section 54F of the Act was claimed. The Assessing Officer had disallowed the claim of deduction u/s 54F of the Act for the reason that the Villa Nos.13 & 14 were in construction on the date of sale of Artwork/painting and the construction of which was completed on 15.05.2022. Further, the Assessing Officer had also rejected the claim of the assessee that Villa Nos.13 & 14 were the business assets of the assessee, for which no cogent reason has been....

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....es as business asset just to claim deduction u/s 54F of the Act. which was otherwise not allowable to the assessee. "5.1.6 However in his reply the appellant has shown (along with various documentary proofs) that he had inherited a painting jointly with his sister from their father. During the year under consideration, the said painting was sold on 16 Sept 2021 and the Appellant received Rs. 17,74,75,000/- as his share and earned capital gain of Rs. 17,43,05,000/- The Appellant claimed the deduction under section 54F of the Income-tax Act, 1961 ('the Act') the Act for capital gain earned on said painting of Rs. 17,43,05,000/- by investing in a residential house before filing the return for the year. The assessing officer ha....