The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the capital gain exemption under section 54F of the Income Tax Act, 1961 cannot be granted to the assessee merely on the basis of the facts mentioned in the sale deed.
The assessee sold his property and claimed section 54F exemption in his income tax return. The Assessing Officer, however, rejected the claim observing that as per the narration on page 2 of the said registered document, the transferors acknowledged the receipt of rupees 11 lakhs in cash from the assessee on the date of execution of the document i.e., on 04.07.2016 and the possession was also handed over on 04.07.20216. According to the Assessing Officer, when the property was sold on 06.05.2013 and purchased the property on 04.07.2016, which is two years beyond the transfer of the capital asset, the assessee is not entitled to the benefit under section 54 of the Act.
The assessee contended that he has purchased the property within two years and produced all the supporting documents.
The Tribunal bench comprising Accountant Member G Manjunatha and Judicial Member V Durga Rao observed that “the case of the assessee is that he has entered into an agreement with the sellers Shri M. Elumalai & Smt. B. Deepa and paid cash of ₹.10,90,000/- on 08.04.2015 and the balance amount of ₹10,000/- was to be paid within two years. They also acknowledged the receipt of the payment and possession also. We have gone through the sale agreement, which does not bear the signature of the assessee, and also translated a copy of the sale agreement into English dated 08.04.2015 and found that nowhere in the sale agreement it is mentioned that the possession was given to the assessee. In the alleged letter filed by the assessee that the amount of ₹.10,90,000/- was paid and possession was handed over to the assessee, neither date is mentioned nor there is the signature from the sellers of the property.” “As per the sale deed dated 04.07.2016, the entire amount was received by the sellers on 04.07.2016, and possession was also handed over to the assessee on 04.07.2016. Under the above facts and circumstances, we are of the opinion that the sale agreement dated 08.04.2015 is not genuine. Accordingly, the benefits under section 54 of the Act cannot be granted to the assessee for the main reason that the sale deed clearly mentions that the entire sale consideration was received on the same day, and possession was also handed over. In view of the above, we find no reason to interfere with the order of the ld. CIT(A). Thus, the ground raised by the assessee is dismissed,” the Tribunal said.
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