S. 54F Relief allowable Even If there was Delay in Investing Money within Time due to Dispute in Property: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that the relief under section 54F of the Income Tax Act would be available to the assessee even if there was a delay in investing in the new property due to some dispute in the said property.

The assessee is an individual and engaged in the business of Labour work for electric fitting owned a 1/3^rd share in property along with two other individuals. The said property was sold out for an amount of Rs. 66,00,000/-. The AO during the assessment proceedings observed that the property purchased was registered in the name of the assessee vide dated 10.10.2011 which is beyond the period prescribed under the provision of Section 54F of the Act. Accordingly, the AO denied the exemption claimed by the assessee u/s 54F of the Act.

On appeal, the assessee claimed that the delay in getting the property registered was due to some litigation for getting the same settled. Thus, the delay occurred due to the situation which was beyond the control of the assessee. Therefore, the assessee claimed that he should not be penalized by not allowing exemption u/s 54F of the Act on account of the delay occurred due to the unavoidable situation.

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Failed to secure relief from the first appellate authority, the assessee approached the Tribunal by filing the second appeal.

The Tribunal noted that there was a delay on account of some dispute in the property which prevented the assessee from investing the money within the time as specified under section 54F of the Act.

“Thus, it is clear that the assessee could not comply with the provision of Section 54F of the Act which was beyond his control. Therefore, we are of the view that the assessee is very much eligible for deduction u/s 54F of the Act for the amount which has been invested by him beyond the prescribed period but before getting the registration of the property provided there was sufficient reason which prevented the assessee for making in the investment within the prescribed time,” the Tribunal said.