TaxTMI 
TaxTMI 
2026 (4) TMI 1618
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....Act of Rs. 45,00,000/- on account of construction of new residential house, which was restricted to Rs. 33,18,773/- being the amount of capital gain. 3.1 Vide notices issued under section 142(1) of the Act, the assessee was asked to furnish necessary details and evidence such as purchased of land on which house property was constructed, evidence for construction and proof of ownership of the constructed property. However, the assessee despite being provided with multiple opportunity only furnished sample bills copy of construction materials, which were held to be insufficient. Hence, the AO in the absence of required details and evidence, disallowed the assessee's claim for deduction under section 54 of the Act for Rs. 33,18,773/- only and added to the total income. 4. The aggrieved assessee preferred an appeal before the learned CIT(A). The assessee before the learned CIT(A) submitted that the AO erred in disallowing the deduction claimed u/s 54F of the Act without properly appreciating the facts and evidence placed on record. It was submitted that the assessee had entered into a joint development agreement, and a copy of the same was furnished during the course of proceedin....
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....nction letter from the local administrative and revenue, towards his claims during the appellate proceedings. Therefore, the claim of the assessee is hereby rejected and the addition made by the AO on account of deduction claimed u/s. 54F of the Act on account of LTCG is hereby confirmed. 5.2. Therefore, I do not find any excuse to take a divergent view from the findings of the AO as failure to file the documentary evidences in support of the clam of deductions u/s. 54F of the Act. In view of this fact, the addition made by the AO amounting to Rs. 33,18,773/- is hereby confirmed and the ground of appeal raised by the assessee vide No.1 is hereby dismissed. 5. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 6. The learned AR before us submitted that that the disallowance has been made in a purely mechanical manner without proper appreciation of evidence. It was submitted that the assessee had furnished all relevant documents including: * Copy of sale deed of the original property, * Joint Development Agreement (JDA), * Details of reinvestment in construction of residential house, * Bank statements e....
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....g plan, completion certificate, and full construction bills were not produced. Mere partial documents and bank statements do not conclusively prove utilization of capital gains for construction within the prescribed time. The learned DR also contended that ownership and legal title are important for claiming exemption. Accordingly, it was prayed that the disallowance made by the AO and sustained by the CIT(A) be upheld. 8. We have heard the rival contentions of both the parties and perused the materials available on record. The issue for consideration is whether the assessee is eligible for deduction u/s 54/54F of the Act in respect of capital gains reinvested towards construction of a residential house. From the facts on record, it is not in dispute that the assessee has earned capital gain on sale of immovable property and has claimed deduction on account of construction of a residential house. The only basis for denial of the claim by the lower authorities is alleged insufficiency of documentary evidence. 8.1 On perusal of the records, we find that the assessee has furnished a Joint Development Agreement (JDA) entered between the assessee and his family members to substant....
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.... purchase bills, and details of expenditure incurred through banking channels, we are of the considered opinion that the assessee has satisfactorily demonstrated the construction of a residential house and utilization of capital gains for the said purpose. Accordingly, the disallowance made by the AO and confirmed by the Ld. CIT(A) amounting to Rs. 33,18,773/- is not sustainable and is hereby deleted. Thus, the ground of appeal of the assessee is hereby allowed. 9. The next issue raised by the assessee is that the learned CIT(A) erred in not allowing the deduction of Rs. 1.8 lakh claimed under Chapter-VI-A of the Act. 10. The AO in the assessment order, disallowed the deduction claimed under Chapter-VI-A of the Act for Rs. 1.8 lakhs in the absence of supporting materials required to substantiate the claim of the assessee. 11. The aggrieved assessee preferred appeal before the learned CIT(A) and furnished documentary evidence in support of deduction claimed under section 80C and 80D of the Act which included copy for the payment of LIC premium, health insurance premium, investment in UTI and tax savings funds etc. 12. The learned CIT(A) considered the materials placed on....