Sec. 54 is a beneficial provision and is to be construed keeping in view the intention of the Legislature to give relief in the matter of payment of tax on the long-term capital gain.

Capital Gains—Profit on sale of property used for residence

—Assessee filed her return of income which was selected for scrutiny and accordingly, notice u/s 143(2) was issued

—In course of assessment proceeding, AO noted that assessee sold residential property for a total consideration of Rs. 300 lacs, however, assessee’s share was 1/3rd in said residential property which comes to Rs. 100 lacs and accordingly claimed deduction of entire capital gain u/s 54 by investing in residential plot for purpose of construction of residential house

—Assessee could not get possession of said residential plot within stipulated time for reasons beyond her control and delay on developer’s part however, AO completed assessment u/s 143(3) by denying benefit of deduction on ground that construction could not be started within stipulated time

—CIT(A) dismissed assessee’s appeal—

Held, assessee claimed deduction u/s 54 by investing entire sale proceeds before due date of filing ITR u/s 139 for purchase of another residential property

—Construction on said land could not be completed within stipulated period of three years for reasons beyond assessee’s control i.e., farmers agitation against Yamuna Authority related to area in which plot was located and change of developer as project was sold to other developer

—In such circumstances, benefit of deduction could not be denied to assessee

— Sec. 54 was a beneficial provision and had to be construed keeping in view intention of Legislature to give relief in matter of payment of tax on LTCG

—Assessee’s appeal allowed.

NUTAN CHOPRA vs. ASSISTANT COMMISSIONER OF INCOME TAX

(2019) 57 CCH 0396 DelTrib