Reimbursement of cost of property entitled to 54F deduction – Delhi ITAT

Sunil Sachdeva v ACIT (IT APPEAL NO. 4179 (DELHI) OF 2011) Delhi ITAT


During the course of assessment proceedings, Assessing Officer noticed that assessee sold shares of M/s Capital Advertising Pvt. Ltd. for a sale consideration of Rs. 5,62,87,500/-. Assessee claimed deduction of Rs. 1,22,23,250/- u/s. 54F of the I.T. Act. The assessee has invested Rs. 1,22,23,250/- on 31.7.2008 in the special gain account maintained with the Syndicate Bank.

The CIT(A) made an enhancement by holding that assessee is not eligible for deduction u/s. 54F(1) on the payment of Rs. 55,70,800/-. This has been denied on the ground that the payment was made by M/s Capital Advertising Pvt. Ltd. wherein the assessee was Director and not by the assessee himself.


  • Assessee duly made the arrangement for booking of the flat and necessary documentation were made by the assessee in his individual capacity.
  • Payment of Rs. 55,70,800/- was done on behalf of the assessee by M/s Capital Advertising Pvt. Ltd. and subsequently, the assessee had duly reimbursed the company amount involved
  • Section 54F does not require one to one correlation between the capital gain arising out of transfer of long term capital asset and utilization thereof for purchase/construction of residential house.

Other issues:

It was held that even though the amount of deposit on instructions of assessee issued on 30-7-2008 and the same was deposited by assessee’s bank in special capital gains account on 31-7-2008, assessee was entitled to exemption under section 54F.

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