Smt. Sabita Devi Agarwal v. ITO [2019] 104 taxmann.com 12 (Kolkata – Trib.)

Assessee earned long-term capital gain from sale of plot of land. She purchased another plot of land and entered into an agreement with a builder for construction of residential property thereon. She also gave certain amount as an advance to builder for construction purpose. While furnishing her return, she claimed exemption under section 54F. The AO rejected her claim on ground that she purchased a vacant plot of land and not a residential property.

On appeal, the ITAT held that the assessee had invested the net sale consideration in a plot of land and advanced money to the builder for construction of residential house property thereon. As per the Courts, this action per se was sufficient compliance of section 54F of the Act. It was further held that no investigation was done by the AO nor any material contrary to the evidence produced by the assessee was brought on record. Thus, it was held that the AO was wrong in denying the claim of the assessee for exemption under section 54F.