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Judgment
This assessee's appeal for assessment year 2018-19, arises against the Ld. CIT(Appeals)/National Faceless Appeal Centre, New Delhi's order in DIN & Order No. ITBA/NFAC/S/250/2025-26/1081852796(1), dated 16.03.2026 involving proceedings under section 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').
Heard both the parties. Case filed perused.
Learned Counsel for the assessee at the outset invites the tribunal's attention to the learned CIT(A)'s lower appellate discussion upholding the assessment findings denying her section 54 deduction claim in issue, reading as under:-
5.7.As per the ground no. 3, the appellant has contended against the disallowance of the exemption u/s 54. The appellant has stated that she had sold her residential property on 19.02.2018 for a consideration of Rs. 54,50,000/-. The indexed cost of acquisition was Rs. 21,15,817l-, resulting in a Long-Term Capital Gain (LTCG) of Rs. 33,34, 183/-.
5.8.The appellant claimed exemption u/s 54 stating that the purchase of a new residential house for Rs. 51,07,500/- was done on 07.08.2018 and submitted that the due date for filing the ITRu/s 139(1) had been extended by CBDT from 31.07.2018 to 31.08.2018. Therefore, according to her, the investment was made within time and there was no requirement to deposit the unutilized amount in the Capital Gain Account Scheme.
5.9.For reference, the relevant part of section 54 is stated below:
"Profit on sale of property used for residence.
54.(1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,-(i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or
(ii)if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. ……….
(2)The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of subsection (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,-
(i)the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii)the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid."
5.10.The AO examined the purchase deed and observed that the document was actually registered on 20.12.2022, i.e., more than three years after the date of transfer of the original property. The signatures and stamp duty date on the purchase deed confirmed registration in December 2022, not August 2018.
5.11.Even at the appellate stage, the appellant has only relied upon a press release extending the due date of filing the ITR and claimed that purchase of property was made within the due date. However, no corroborative documentary evidence such as bank statement showing payment at that time, or possession certificate has been furnished. The appellant has submitted the copy of the purchase deed and on its perusal, the AO's findings are found to be correct. The copy of the purchase deed indeed bears the registration date of 20.12.2022.
5.12.As per section 54(1), the appellant is required to purchase a new residential house either within one year before or two years after the date of transfer, or construct one within three years. This condition has not been satisfied as discussed above. The appellant has neither utilized the entire sale consideration before the due date nor deposited it as required u/s 54(2).
5.13.In view of the above discussion, the disallowance of exemption u/s 54 is upheld and the ground no. 3 is dismissed….”
That being the case, the assessee further invites the tribunal’s attention to the pages 31 to 37 of her paper book indicating it clear registration of new residential property as to have/had taken place/stood finalized on 07.08.2018 only; and that the date given herein i.e. 20.12.2022 is that of issuance of a certified copy thereof. This clinching factual position has gone unrebutted from the Revenue side. The assessee’s instant sole substantive ground claiming section 54 succeeds in very terms.
The assessee’s appeal is allowed.
Order pronounced in the open court on 7th July, 2026.