TaxTMI 
TaxTMI 
2026 (2) TMI 313
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....der dated 22.12.2017 held that an impugned of Rs. 35,00,000/- qualifies for deduction u/s 54 of the Act and the amount of Rs. 6,66,46,841/- did not qualify deduction and same was added back to the income of assessee under the head of long term capital gain. 3. Against order dated 22.12.2017 of ld. AO the assessee filed appeal before the ld. CIT(A) which was dismissed vide order dated 17.03.2025. 4. Being aggrieved appellant assessee preferred present appeal with following grounds: "1. That the order passed by the Ld. Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), dated 17.03.2025, is bad in law and on facts and liable to be quashed, being contrary to the facts of the case and settled judicial principles. 2. That the Ld. CIT(A) has erred in upholding the denial of exemption under Section 54 of the Income Tax Act, 1961, without properly appreciating the evidences, facts, and circumstances of the case. 3. That the Ld. CIT(A) failed to appreciate that the new residential property at A- 227, New Friends Colony, New Delhi was substantially acquired and constructed well within the statutory period of 3 years from the date of....
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....ssee submitted that ld. CIT(A) erred in confirming partial allowance of exemption u/s 54 of the Act by Ld. AO to the extent of Rs. 35,00,000/- in place of Rs. 7,01,41,842/- claimed by the assessee. 6. The assessee had sold a property B-480, New Friends Colony as on 12.09.2014 for a sale consideration of Rs. 7.20 Crores. The assessee entered into a collaboration agreement with two persons namely, Sh. Khalid Riaz and Sh. Anisuddin for purchase and construction of another property A-226, New Friends Colony during the year under consideration. The assessee had to pay the following amounts for the said property; For purchase of rights in land: To Khalid Riaz 75,00,000/- To Anisuddin 75,00,000/- Estimated cost of construction 6,00,00,000/- In this manner the assessee claimed exemption under section 54 amounting to Rs. 7,01,41,842/-. 7. The A.O. allowed assessee the exemption only to the extent of Rs. 35,00,000/- being the amount paid to Sh. Khalid Riaz till the due date of filing the return for the year under consideration. The A.O. raised following observation in order to not provide full exemption under section 54 of the Act: i. The assessee....
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.... the following documents before lower authorities: PB. Pg. Sale deed dt. 15.09.2014 9 Purchase deed dt. 26.09.2017 46/64 Copy of collaboration agreement 39 Details of payment made to Khalid Riaz for purchase 82-83 Details of payment made to Anisuddin for purchase 84 Bank statement showing above payments 85-116 Details of construction expenses 117-119 Bank statement showing construction expenses 120-147 Invoices of construction expenses in a separate PB. 9. Construction cost incurred within three years has to be allowed. Funds not necessarily to be kept in Capital Gain Account Scheme: * Narayan Ravi Prakash Vs. ITO, WP No. 8936 of 2022, Karnataka HC * Venkata Dilip Kumar Vs. CIT, [2019] 419 ITR 298 (Mad), Madras HC * CIT Vs. K Ramachandra Rao, ITA No. 494 & 495 of 2013 & 46 & 47 of 2014, Karnataka HC * Shri Krishnamoorthy Vijayaraghavan Vs. ITO, ITAT Chennai, ITA No. 1976/CHNY/2025, ITAT Chennai * Sarita Gupta Vs. Pr. CIT, Ghaziabad, ITA No. 1174/Del/2022, ITAT Delhi * Jagan nath Singh Lodha Vs. ITO, ITA No. 508 & 514/Jodh/1999, ITAT Jodhpur * M....
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....ransactions to purchase and construction which was corroborated with Bank statement and details etc. A final sale deed was submitted assessee was not confronted with inspectors report to suggest that construction was not completed within 3 years. Sale consideration was kept in bank saving account in HDFC page No. 85 of paper book. Details of construction expenses are page No. 117 with corresponding bank statement page No. 122 onwards. The details of document before the lower authorities are as under: PB. Pg. Sale deed dt. 15.09.2014 9 Purchase deed dt. 26.09.2017 46/64 Copy of collaboration agreement 39 Details of payment made to Khalid Riaz for purchase 82-83 Details of payment made to Anisuddin for purchase 84 Bank statement showing above payments 85-116 Details of construction expenses 117-119 Bank statement showing construction expenses 120-147 Invoices of construction expenses in a separate PB. 17. The ld. AR has relied the Coordinate Bench case in ITA No. 415/Del/2022 titled as Philip Ghani Vs. DCIT in order dated 21.03.2024, the relevant part of the decision is reproduced as under: "6. Hear....
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....al gain or alternatively, a new residential house has been constructed in India, within three years from the date of the transfer, which resulted in the capital gain. The said section does not exclude the cost of land from the cost of residential house. 22. It is axiomatic that Section 54(1) of the said Act does not contemplate that the same money received from the sale of a residential house should be used in the acquisition of new residential house. Had it been the intention of the Legislature that the very same money that had been received as consideration for transfer of a residential house should be used for acquisition of the new asset, Section 54(1) would not have allowed adjustment and/or exemption in respect of property purchased one year prior to the transfer, which gave rise to the capital gain or may be in the alternative have expressly made the exemption in case of prior purchase, subject to purchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain. 23. At the cost of repetition, it is reiterated that exemption of capital gain from being charged to income tax as income of the p....
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....llowing the initial exemption of Rs. 5,000/-. The assessee pleaded before the ITO that capital gains to the extent of being invested in the construction of a new house at Safdarjang Enclave, New Delhi was not taxable under s. 54 of the Act. Whereas the ITO accepted the contention that the Golf Link house had been used for the purpose of residence for more than two years before the sale, he rejected the contention of the assessee that the Safdarjang Enclave, New Delhi, house had been completed by the assessee within a period of two years from the date of sale of the Golf Link house. The ITO was, therefore, of the view that s. 54 of the Act was not applicable. In the alternative, the assessee pleaded before the ITO that he started the construction of another residential house at 64 Surya Nagar, Agra on 10th March, 1963 and that came to be completed within two years of the sale of the Golf Link house and that the capital gains to the extent of being invested in the construction of the Surya Nagar house was not taxable under s. 54 of the Act. The ITO, however, took the view that the assessee had started construction of this house prior to the sale of the Golf Link hou....