2022 (11) TMI 1115 - AT - Income Tax

Deduction u/s 54 - assessee is not eligible for the impugned deduction since she had purchased the house property in issue which falls beyond the prescribed time of one year before her sale deed - HELD THAT - A perusal of the assessee s undisputed purchase agreement re-investment document dated 14.12.2011 makes it clear that only 10% of the total purchase price had to be paid by the said date followed by a detailed payment schedule of 10% and 4% each on 11 various occasions, 5% on completion of brick work thereof and 4% each on four occasions and the remaining 5% at the time of occupation of the house property; respectively. There was a further stipulation in the agreement therein that possession had to be given to the purchaser/assessee only after she had complied with the foregoing detailed payment schedule. The assessee s bank statement which prima-facie suggests that the specified payment schedule had very well travelled beyond clinching date of 26.02.2013 i.e. one year before the sale deed executed by her on 27.02.2013 - Thus lower authorities have erred in law and on facts in disallowing the assessee s section 54 deduction claim - Decided in favour of assessee.

Summary

Issues:
1. Rejection of section 54 deduction claim by lower authorities.

Analysis:
The appeal for AY 2013-14 was against the CIT(A), Pune-3's order involving proceedings under 143(3) of the Income Tax Act, 1961. The sole substantive grievance of the assessee was the rejection of the section 54 deduction claim of Rs.77,48,507/- by both the lower authorities. The lower appellate discussion highlighted the facts related to the property transactions and the eligibility criteria for deduction under section 54 of the Act. The Revenue's stand was that the assessee was not eligible for the deduction as the purchase of the property in question was beyond the prescribed time limit. The assessee's purchase agreement reinvestment document dated 14.12.2011 was examined, revealing a detailed payment schedule extending beyond the crucial date. The bank statement further supported the compliance with the payment schedule.

The Tribunal found no merit in the Revenue's argument and held that the lower authorities erred in disallowing the section 54 deduction claim. The Tribunal considered the detailed payment schedule, possession conditions, and the bank statement as crucial evidence in favor of the assessee. Consequently, the disallowance of the deduction claim was overturned, and the appeal was allowed in favor of the assessee. The order was pronounced on 23rd November 2022.