LTCG - denial of benefit of deduction u/s 54F
As per AO there was no evidence proving the house is actually constructed within the time prescribed therein -
ITAT PUNE:-MAHADEV DASU JADHAV VERSUS ITO, WARD-1, LATUR, No.- ITA No. 24/PUN/2025
Dated.- March 28, 2025
The assessee is an individual filed return of income declaring total income at Nil. According to Assessing Officer, an information gathered that the assessee has sold a plot comprising 50R at Khadgaon, Latur for a consideration of Rs. 17,26,000/- on 18.01.2007. A notice u/s 148 was issued asking the assessee to file copy of return of income, bank account extracts and working of capital gain. According to Assessing Officer, there was no response from the assessee but an Authorized Representative appeared before the Assessing Officer in response to the notice u/s 143(2) of the Act. According to Assessing Officer, the assessee claimed deduction u/s 54F of the Act. According to Assessing Officer, on perusal of the details submitted by the assessee that the assessee purchased a plot on 09.04.2003 and permission for construction was granted on 29.06.2005. Further, he observed that the assessee is not entitled to claim of deduction u/s 54F of the Act as there was no evidence proving the house is actually constructed within the time prescribed therein. Further, he observed that the assessee is not entitled as the plot was purchased on 09.05.2003 i.e. 3 years and 7 months prior to the date of sale i.e. 18.01.2007. Accordingly, the Assessing Officer denied deduction u/s 54F of the Act and computed capital gain by determining the total income of the assessee at Rs. 11,95,150/- vide its order dated 20.03.2015.
Having aggrieved by the said order of the Assessing Officer, the assessee preferred an appeal before the CIT(A). The CIT(A) held that there is no infirmity in the order of the Assessing Officer in denying deduction u/s 54F of the Act by holding that the assessee had constructed the house even before sale of properties.
Decision the assessee claimed deduction u/s 54F of the Act claiming that he had constructed a house utilizing the sale proceeds of three properties, which is evident from para no.3 of the assessment order. The Assessing Officer denied the said deduction by observing that the assessee is not entitled to claim of deduction u/s 54F of the Act as the assessee claimed to have purchased plot on 09.04.2003 which is 3 years and 7 months prior to the sale of asset. Further, the Assessing Officer also observed that in respect of sanctioning of plan for construction on 30.06.2005 which is also 1 year and 6 months prior to the sale of asset. In this regard, there is no dispute by the Ld. AR. The contention of the Ld. AR is that the requirement u/s 54F is that the assessee has to construct a new residential house within 3 years from the date of transfer of original asset or purchase a new house one year before or two years after the date of transfer of original asset. On perusal of the impugned order as well as the Assessing Officer’s observation along with the materials supplied in paper book containing pages 1 to 7, we note that the assessee had not constructed the new house after the date of sale of original asset as the purchase of plot, approval of plan and permission for construction were all affected before the sale of original asset. In this regard, we find no dispute from the Ld. AR, therefore, in our opinion, the arguments of Ld. AR is not acceptable. On plan reading of provisions u/s 54F of the Act in order to get deduction u/s 54F of the Act, the assessee was required to purchase the house within a period from 19.01.2006 to 18.01.2009 or the assessee should have constructed the house within a period of 3 years from the date of sale i.e. 19.01.2007 to 18.01.2010. On perusal of the valuation report in page no.1 which clearly shows the year of construction in completion is given between years 2005-06, 2006-07 and 2007-08. Therefore, it is clear that the assessee is neither purchased a house within one year nor constructed house within specified period contained in provisions u/s 54F of the Act. Therefore, we find no infirmity in the order of Ld. CIT(A) in confirming the order of Assessing Officer and denying deduction u/s 54F of the Act. Thus, the sole ground raised by the assessee is dismissed.