TaxTMI 
TaxTMI 
2026 (7) TMI 1642
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....n 31/3/2026 of M/s Fitternity Health E-Solutions Private Limited against other shares and on the said Long-Term Capital Gain the Assessee claimed exemption under Section 54F of the Act amounting to Rs. 6,91,52,369/- on account of investment in residential house property purchased vide Deed of Transfer dated 30/3/2021 registered on 30/6/2021 from HP Trading, sole proprietory of her husband Shri Karan Haresh Motwani for a total consideration of Rs. 7,50,00,000/-. The property is situated at Flat No. 102, Usha Sundar Premises CHSL, Juhu Tara Road, Santacruz (West), Mumbai. The consideration of Rs 7,50,00,000/- was paid on 27/5/2021 - Copy of registered Deed of Transfer registered on 30/6/2021 [Pg 109-161]. 3. Before AO assessee made submissions dated 19/12/2022 [Pg 314 318] filed on 21/12/2022. Assessee submitted that she has not purchased the house in which she is residing but a different house. It was further submitted that the house was purchased for her future security as the house in which she is residing was the parental property of her husband. She further stated that she intended to let out the property. It was also stated that she and her husband are both entrepreneurs in ....
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.... is residing but a different house, (ii) the house was purchased for her future security, (iii)the house in which she is residing was the parental property of her husband, (iv) she further intended to let out the property and (v) she and her husband are both entrepreneurs in their own right. Ld. Counsel submitted that the purchase was duly registered, stamp duty was paid, transaction was carried out at market value and actual consideration was paid. Assessee had also explained the funds raised by her for making the investment. The ld. AO and ld. CIT(A) wrongly held that the purchase was carried out with a view to avoid taxes as the husband had claimed set-off of business loss against short term capital gains. Ld. Counsel submitted that both the authorities failed to appreciate that the impugned property was purchased from the Appellant's husband in June 2021, whereas the business losses in his hands arose only on 31.03.2022 and thus as on the date of purchase neither he had the losses accrued nor could they have been contemplated. 6. Ld. Counsel for the assessee placing reliance on the decisions of Kavita Manoj Damani v ITO (2025) 175 taxmann.Com 723(Mum)(Trib) & Nidhi Siddh....
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....e had made an arrangement to purchase the house property owned by her husband thereby entered into family transaction to avoid payment of tax. A.O. placed reliance on the decision of the Hon'ble Supreme Court in the case of McDowell & Co. Ltd. V. CTO (supra). On appeal the Ld. CIT(A) sustained the action of the Assessing Officer in denying the deduction claimed u/s 54F of the Act to the assessee. 11. On perusal of the assessment order we find that the only reason for disallowance of deduction claimed by the assessee was that the spouse of the assessee had claimed set of the short term capital gain against the business loss and the assessee and her spouse made an arrangement of purchase and sale of property to avoid tax. 12. We find no merit in the contentions of the Assessing Officer. It is pertinent to note that the impugned property was sold to the assessee in June, 2021 whereas the business loss in the hands of the spouse of the assessee arose only on 31.03.2022 and therefore as on the date of purchase/sale neither (the assessee's spouse) at the loss was accrued to nor he could have anticipated such loss. Therefore, setting of business loss against short term capital gain ....
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....wal and Shaili Kejriwal. It is submitted that there is no bar in the Act for purchase of property from a relative. Ld. AR further opposed the objection of Ld. AO that the agreement is sham because it was signed by Ramesh Kejriwal himself and on behalf of the assessee. It is submitted that such grounds raised by the Ld. AO are not justified. It is submitted by Ld. AR that the deduction u/s 54 was just incidental, the transaction between the family members was with the intention to preserve unity and peace within the family by avoiding differences that arise when living jointly in the same premises. The allegation of AO that the seller has not paid any tax cannot be the reason for denial of deduction u/s 54F, as the sellers, in their computation of income are not required to pay tax computed under the scheme of law. 15. Regarding the finding of AO that purchase of flat by assessee was not a colourable device, it is squarely covered by the settled principles of law that tax planning may be legitimate, provided it is within the framework of law. Ld. AR placed reliance on various decisions, wherein the findings supporting the contentions of assessee are as under: In th....
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.... 26. Now, coming to exemption claimed by the assessee u/s 54 amounting to Rs 3,96,55,000/-, the same relates to purchase of another flat by the assessee from her husband vide registered agreement to sell dated 18/03/2021 for a stated consideration of Rs 3,85,00,000/- on which the assessee has paid stamp duty of Rs 11,55,000/-. The factum of ownership of the said flat in the name of the husband of the assessee vide agreement to sell dated 27/03/2015 is not in dispute nor the contents of the subject registered agreement to sell dated 18/03/2021 wherein the title in the property has been transferred by him in the name of the assessee." In the case of ITO Ward 6 (3), Pune vs. Kalawati Vijaykumar Agarwal, ITA No.979/Pun/2023 (AY 2021-22) "11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A)/NFAC and the paper book filed by both the sides. We find the assessee claimed deduction u/s 54F of the Act towards investment in the residential property purchased from her husband Shri Vijaykumar Satyanarayan Agarwal Shri Vijaykumar Satyanarayan Agarwal had acquired the said property from his HUF Vijaykumar....
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....was between the relatives or related parties, while the entire transactions are under the permissible legal framework, which could not be dislodged or contradicted by the revenue authorities. Further, the allowable deduction to assessee cannot be denied only on the ground of doubt or surmise that the transaction was an artificial transaction for the purpose of tax evasion in absence of any cogent reasonings, whereas the outcome of transaction in the form of deduction u/s 54F was only incidental or may be a tax planning, as there was no legal flaw in the transactions undertaken, so far as concerned authorities have not raised any dispute for such transactions. 17. Consequently, we direct the AO to delete the entire addition made on account of denial of deduction u/s 54F of the Act." 14. Further, we observe that in the case of Kavita Manoj Damani v ITO (2025) 175 taxmann.com 723 (Mum) (Trib) the Tribunal held that when the assessee sold two residential flats and claimed deduction u/s 54 on capital gains arising from sale of flats and invested in purchase of another new flat from her husband, since the assessee had purchased new flat within stipulated time period of two ye....