Relief u/s 54 Allowable Even if Sale Deed Wasn’t Registered if Assessee Had Executed Agreement to Sale | ITAT

Case Details: Umesh Sumanlal Shah vs. Income Tax Officer - [2024] 163 taxmann.com 578 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• • Ms Suchitra Kamble, Judicial Member & Narendra Prasad Sinha, Accountant Member
  • Parin S. Shah, AR for the Appellant.
  • C.S. Sharma, Sr. DR for the Respondent.

Facts of the Case

Assessee filed its return of income for the relevant assessment year and declared long-term capital gains (LTCG) arising from the sale of a property. During the assessment proceedings, the Assessing Officer (AO) observed that the assessee did not purchase any residential property against the capital gain arising from the sale of the property. Accordingly, he disallowed the deduction claim under Section 54 of the Income Tax Act and added the same to Long Term Capital Gain.

Aggrieved by the order, the assessee preferred an appeal to the CIT(A). The CIT(A) dismissed the appeal, and the matter reached the Ahmedabad Tribunal.

ITAT Held

The Tribunal held that the assessee showed consideration in his return of income under Capital Gain. The assessee made an investment in new residential property, paid full consideration for the property, and took possession of it. The assessee furnished the bank statement and Municipal Tax bill, which specifically showed the assessee’s name as the occupier. The payment of Municipal Tax and the bill to that extent is sufficient evidence of possession by the assessee.

The observation of the AO that the deed of conveyance must be duly stamped and registered by law will support the conduct of the assessee regarding the actual consideration paid by the assessee as well as the investment made by the assessee in the relevant Assessment Year and which is duly reflected in the return of income as well as books of the assessee.

Further, in Sanjeev Lal v. CIT, 365 ITR 389, the Supreme Court ruled that if an assessee executes an agreement to sell a house and buys a new residential property within a year of that agreement, and the sale deed is delayed due to an order by a competent authority, a valid transfer under Section 2(47) of the Act is recognized.

Thus, the assessee was eligible for relief under Section 54 for purchasing the new property, provided other conditions were met.

List of Cases Referred to

• • Sanjeev Lal v. CIT [2014] 46 taxmann.com 300/269 CTR 1/365 ITR 389/225 Taxman 239 (SC) (para 7).