Amount Equivalent To Capital Gains Utilised For Acquisition Of New House: ITAT Allows Capital Gain Exemption

The Delhi Bench of the Income Tax Appellate Tribunal has allowed the capital gain exemption under section 54 of the Income Tax Act on the grounds that the amount equivalent to the capital gains has been used for the acquisition of a new house.

The two-member bench of Yogesh Kumar US (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) has observed that the agreement for sale was signed on August 8, 2014, and the payments had been completed by October 8, 2014.

The assessee/appellant contended that the Commissioner of Income Tax Appeals erred in law as well as on the facts without considering the submission and other documentary evidence submitted by the appellant and disallowed the deduction claim by the appellant under Section 54.

On July 13, 2016, the assessee filed an income tax return declaring income of Rs. 21,98,100. During the course of assessment proceedings, the Assessing Officer noted that the assessee had claimed a deduction of Rs. 1,13,88,413 under Section 54 of the Income Tax Act, 1961.

The assessee has made payments for booking on 10.06.2014 of Rs.10 lakhs and 19.06.2014 of Rs.15 lakhs. Up until November 4, 2014, the remaining payments totaled Rs. 1,33,74,400.

As per Section 54F of the Income Tax Act, capital gains on the transfer of certain capital assets are not to be charged in cases of investment in residential houses.

The tribunal, relying on Section 54F, allowed the appeal of the assessee.

Case Title: Anik Chatterjee Versus ITO

Citation: ITA No.6933/Del/2019

Date: 16.12.2022

Counsel For Appellant: CA Renu Suri, CA Tarun Khandhari

Counsel For Respondent: Sr. DR Kanav Bali

Click Here To Read The Order