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July 2026

Once the assessee has demonstrated that capital gains has been substantially invested in construction of a residential house, the deduction cannot be denied merely on the ground that certain additional documents such as approval letters, possession certificate or complete set of bills were not furnished. The provisions of section 54/54F are beneficial in nature and are intended to promote investment in residential housing. Therefore, the same should be interpreted liberally. Substantive compliance of the conditions is sufficient, and the claim cannot be denied on mere technicalities.

By Jagdish T Punjabi, Chartered Accountant Devendra Jain & Aditya Bhatt, Advocates
Reading Time 5 mins

29. TS-571-ITAT-2026 (Bangalore)

Javaji Naga Darshan v. ITO

A.Y.: 2022-23

Date of Order: 15.4.2026

Sections: 54, 54F

Once the assessee has demonstrated that capital gains has been substantially invested in construction of a residential house, the deduction cannot be denied merely on the ground that certain additional documents such as approval letters, possession certificate or complete set of bills were not furnished.

The provisions of section 54/54F are beneficial in nature and are intended to promote investment in residential housing. Therefore, the same should be interpreted liberally. Substantive compliance of the conditions is sufficient, and the claim cannot be denied on mere technicalities.

FACTS

The assessee, in his return of income returned long term capital gains of Rs 33,18,773 on sale of immovable property and claimed entitlement to deduction under section 54 of Rs 45,00,000, but restricted the same to Rs 33,18,773 being amount of capital gains.

In the course of assessme

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