Top Stories Registration of House 24 months after Sale not ground to deny Exemptions u/s 54F: ITAT [Read Order] ITAT examined the components required to conclude the ‘Sale’ of House Property in the present matter By Avinash Kurungot – On October 15, 2024 10:40 am – 2 mins read The Visakhapatnam Bench of the Income Tax Appellate Tribunal ( ITAT ) recently held that a delay above 24 months to conduct registration of house after sale does not vitiate an Assessee’s ability to avail Exemptions under Section 54F of the Income Tax Act, 1961. ITAT was tasked with adjudicating an Appeal lodged by the Assistant Commissioner of Income Tax, Circle-1(1), Vijayawada against the Order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (CIT(A)-NFAC) passed under Section 143(3) of the Income Tax Act, 1961 and a cross-objection on the same instance, filed by the Assessee. Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

The Respondent-Assessee, Siva Jyothi Palam is an individual deriving income from salary and income from house property besides income from capital gains. The Assessee filed their income tax returns on 27.03.2018, admitting an income of Rs.16,15,580/- gained during the Assessment Year (A.Y.) 2017-18. The Assessee’s case was earmarked for scrutiny under Computer Assisted Scrutiny Selection (CASS) and statutory notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961 were served upon the Assessee. During proceedings under CASS, the Assessing Officer (AO) observed that the Assessee had sold vacant land at Gollapudi, Vijayawada for a consideration of Rs.5,40,31,000/- and subsequently purchased a house property at Chennai for a consideration of Rs.6,06,10,000/- while claiming deductions under Section 54F of the Income Tax Act, 1961.

Section 54F Exemptions availed by the Assessee were challenged by the AO on the ground that the house property had been purchased and possessed by the Assessee on 17.12.2019, more than twenty-four months after the date of sale of land property as per the sale agreement and payment of consideration thereof on 14.11.2016. The key argument raised by the Authorized Representative of the Assessee, C. Subrahmanyam was that the agreement for purchase of house property had been entered into immediately after sale of the vacant land and consideration thereof had been paid during the same period as well, much before the time period stipulated by Section 54F of the Income Tax Act, 1961.

The two-member Bench of ITAT comprising Duvvuru RL Reddy, Judicial Member and S Balakrishnan,  Accountant Member appreciated the undisputed fact that the Assessee had paid the entire sale consideration for the House property on 14.11.2016, thereby gaining possession of the house property instantly. Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here It was further observed by ITAT that the house property had been rented out by the Assessee, rent of which had been duly reflected in the returns filed by the Assessee for A.Y. 2016-17. In light of the observations made, ITAT referred to the decision of the Delhi High Court in Balraj vs. CIT (2002) among other decisions to rule the lack of infirmity in the order passed by the CIT(A)-NFAC, vitiating any need for interference. Since the main Appeal was dismissed, ITAT ruled that the grounds raised by the Assessee in the cross-objection thereby become infructuous in nature.