The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the benefit of capital gain deduction under section 54F of the Income Tax Act, 1961 cannot be denied to the assessee merely on the ground that the conveyance deed was not registered.
The assessee, an individual, filed the income tax returns for the relevant year. The Assessing Officer, during the scrutiny proceedings, held that the assessee has sold 50% share in a commercial property of Rs.3.5 crores and has shown Long Term Capital Gain (LTCG) of Rs.3,15,35,564/- in the return of income out of which assessee claimed deduction under section 54EC of the Income-tax Act, 1961 to the tune of Rs.49,55,589/- and deduction under section 54F of the Act for Rs.2,65,79,975/-.After the completion of the proceedings, the AO proceeded to disallow deductions claimed by the assessee under section 54F of the Act on failure of the assessee to furnish sale deed of the property and thereby madean addition of Rs.2,65,79,975/- under the head “income from capital gains”.
On appeal, the first appellate authority confirmed the denial of deduction. Therefore, the Revenue approached the Tribunal for relief.
While dismissing the appeal, the bench comprising Accountant Member Anil Chaturvedi and Judicial Member Kuldip Singh has held the assessee has duly proved details of payment made by her to the vendee/her parents qua the property in question; and that the assessee has also proved on file photograph of the property along with electricity and water bills to prove her possession over the property.
“In our considered view for all intents and purposes and for the purpose of the Act, the assessee shall be construed as owner of the property,” the bench said.,
“In view of what has been discussed above, we are of the considered view that benefit of deduction u/s 54F of the Act cannot be denied to the assessee merely on the ground that conveyance deed has not yet been got registered particularly when the assessee is proved to be in possession of the property in question out of which she was already owner in possession of 1/3rd share since 2008 after making a complete payment of the sale consideration to the vendors and has duly proved her possession over the property by way of electricity and water charges bills. So, we find no reason to interfere into the impugned order passed by the ld. CIT (A) allowing deduction to the assessee u/s 54F of the Act,” the bench said.
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