TaxTMI 
TaxTMI 
2026 (7) TMI 35
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....um of appeal, the assessee has raised various grounds along with sub-grounds. However, for the sake of brevity, the same are not reproduced herein. 3. The grounds raised by the assessee are interconnected and pertains to the issue of deduction claimed u/s. 54 of the Act. 4. The relevant facts are that the assessee, an individual, filed her ROI declaring total income of Rs. 21,03,290 comprising salary income of Rs. 6,11,600.00 income from house property of Rs. 1,23,738.00 and business income of Rs. 13,92,525.00 only. During the relevant year, the assessee sold a vacant site for a total consideration of Rs. 55,60,000 through a registered sale deed dated 12.04.2021. The said property had originally been purchased by the assessee on 18.06....
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....er to make the property habitable, the assessee carried out necessary construction works such as construction of an additional room and pooja room, digging of a borewell, construction of underground sump, compound wall with gate and other renovation works. The assessee contended that the entire sale proceeds were utilized for construction and improvement of the residential property and therefore the benefit u/s. 54F of the Act was rightly claimed. It was further submitted that the AO ignored the engineer's certificate and supporting documents and wrongly treated the expenditure as mere renovation and disallowed the deduction. 5.1 The Ld. CIT(A) observed that in AY 2020-21 the assessee had sold two house properties and invested the long-t....
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....24,251 made by the AO and decided the grounds raised against the assessee. 6. Aggrieved by the order of the ld. CIT-A, the assessee preferred an appeal before us. 7. The Ld. AR before us has filed a paper book running from page 1 to 79 containing copies of the sale deed, purchase deed, return of income, notices issued by the AO, replies filed by the assessee and other relevant documents. The assessee submitted that the Ld. CIT(A) erred in upholding the disallowance of deduction claimed u/s. 54F of the Act amounting to Rs. 25,24,251 out of the capital gains reported by the assessee for the year under consideration. 7.1 It was submitted that the assessee had incurred the said expenditure towards additional construction and renovation....
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....cant site resulting in long-term capital gain of Rs. 25,24,251.00 only. The assessee claimed deduction u/s. 54F of the Act on the ground that the said amount was utilised towards construction and improvement activities in the residential property owned by him. 9.1 On perusal of the material available on record, we note that the assessee had undertaken various works in the residential property including construction of additional room, pooja room, compound wall, underground sump, borewell and other related works. The assessee has also placed on record the certificate issued by the registered engineer certifying the nature of work carried out along with details of expenditure incurred. The authorities below rejected the claim mainly on the....
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....icate that it was to encourage investments in the acquisition of a residential plot and completion of construction of a residential house in the plot so acquired. A bare perusal of said provision does not even remotely suggest that it intends to convey that such construction should be completed in all respects in three (3) years and/or make it habitable. The essence of said provision is to ensure that assessee who received capital gains would invest same by constructing a residential house and once it is established that consideration so received on transfer of his Long-Term capital asset has invested in constructing a residential house, it would satisfy the ingredients of Section 54F. If the assessee is able to establish that he had invest....