Rajeev B. Shah vs. ITO ITAT “SMC” Bench, Mumbai Before Mahavir Singh, Judicial Member ITA No.: 262/Mum/2015. A.Y.: 2010-11. Date of Order: 8th July, 2016 Counsel for Assessee / Revenue: Subhash Shetty & R. N. Vasani / Somanath S. Ukkali

Section 54F – due to fault of the builder project not
completed on time. assessee  entitled to relief.

Facts
The assessee sold a plot of land for a consideration of Rs.19.35 lakh and
earned long term  Capital Gains of Rs.14.81 lakh. The assessee invested a
sum of Rs. 18.60 lakhs for buying a residential flat under construction. The
Developer allotted flat no.602 in the project for a sum of Rs.143.96 lakh on
the terms and conditions given in the letter of allotment issued to him by the
Builder dated 16­03-2010. The AO rejected the claim of deduction u/s. 54F of
the act on the ground that the property is incomplete and registered document
was not filed by the assessee to claim deduction u/s. 54F of the act.

Before the Tribunal, the assessee explained that the builder was avoiding the
customers due to disputes and the project was also stalled and there was no
further progress in construction of the project. the  assessee also
filed civil suit before the Hon’ble Bombay High Court for an order and direction
calling upon the developer to commence construction of the project as per the
agreement evidenced by the allotment letter.

Held
According to the Tribunal,  it was not in the assessee’s hands to get the
flat completed or to get the flat registered in his name. The intention of the
assessee was very clear and he has invested almost the entire sale
consideration of land in purchase of this residential flat. It was impossible
for the assessee to complete the formalities i.e. taking over possession for
getting the flat registered in his name and this cannot be the reason for
denying the claim of the assessee for deduction u/s. 54 of the act. in view of
the above, the Tribunal held that the assessee is entitled for deduction u/s.
54F  of the Act.