Capital Gain exemption u/s 54F denied for want of proof of delay by builder

Capital Gain exemption u/s 54F denied for want of proof of delay in construction by the builder as per time frame.

ABCAUS Case Law Citation:
ABCAUS 3645 (2023) (01) ITAT

Important Case Laws relied upon:
T Shiva Kumar vs ITO 9158 ITD 329
Satish Chandra Gupta vs AO (54 ITD 508) 
ACIT vs Kamlakar Moghe (378 ITR 561) (Bom. HC)
Sunil Kumar Saha vs ITO (156 ITD 1) (Kol. Trib)

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the denying the capital gain exemption u/s 54F of the Income Tax Act, 1961 (the Act) claimed by the Appellant.

Initially the assessment was completed u/s 143(3) accepting the returned income. Subsequently, the case was reopened after recording the reasons and notice u/s 148 of the Act was issued.

The assessee was show caused that why the amount laying unutilized in capital gain deposit scheme be taxed under section 54F(4) of the Act.

The main contention of the assessee was that the delay for utilization of the amount in ‘Capital gains Account Scheme, 1998 was beyond her control as initial investment was cancelled due to unavailability of the project and the payment for second project got delayed  on  account of  the  builder who  did not being complete the construction as  per the time frame agreed initially.    

However, the Assessing Officer rejected the contention of  the assessee and denied the claim of deduction of payment made for purchase of beyond the period of 3 years from  the date of the sale.

The CIT(A) placing reliance on the judgment of the Hon’ble Supreme Court that exemption provision has to interpreted strictly, upheld the finding of the Assessing Officer.

The Tribunal asked the assessee to furnish evidence in  support of the contention that delay in investment by the assessee was due to the delay on the part of the builder in  not completing the construction as per time frame. However, no such evidences were furnished by the assessee.

In view of the above the Tribunal opined that the ratio of the decisions relied upon by the assessee cannot be applied to the case.

In view of the facts and circumstances and the binding precedent followed by the CIT(A), the ITAT upheld his order and dismissed the appeal of the assessee.

Download Full Judgment Click Here >>

• ITAT allows exemption of Rs. 25 lakhs u/s 10(10A) to non-government employees
• PCIT has revisionary jurisdiction u/s 263 over the cases passed by the NFAC or the JAO
• Appellate court interfering with MACT finding must undertake reappreciation of evidence
• When delay is not huge & involves huge monetary liability, lenient approach to be taken
• EoGM of company can not ratify diversion of fund raised by preferential issue – SC