Ramautar Saraf (HUF) Vs. ITO, Ward 59(3)

Parties Involved

Facts Summary

The assessee, Ramautar Saraf (HUF), sold a house property situated at 76, Cotton Street, Kolkata-700007 to M/s Vidhi Vyapaar Pvt. Ltd. for a consideration of ₹6,25,00,000/-. The assessee computed the capital gain from the sale of the property at ₹5,48,40,817/- and claimed a deduction under section 54 of the Income-tax Act, 1961. The capital gain was utilized by purchasing land amounting to ₹2,80,70,000/- for the construction of a residential house. The Assessing Officer (AO) disallowed the deduction of ₹2,86,42,500/- on the ground that the assessee failed to meet the statutory conditions of section 54. The Commissioner of Income-tax (Appeals) (CIT(A)) also dismissed the appeal after considering additional evidence. The assessee started the construction of the house within three years but could not complete it due to delays in obtaining the building plan approval from the Kolkata Municipal Corporation (KMC).…

Legal Issues

• 1. Whether the disallowance of deduction of ₹2,86,42,500/- under section 54 of the Act was justified.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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