Quote for the Day:

Every test in life makes us bitter or better. 
Every problem comes to "make us" or "break us". 
Choice is ours, 
whether become "victim" or "victor"

Income Tax Case Law:

"Does the legal ownership timing of a new property really dictate your capital gains exemption? The Hyderabad ITAT challenges conventional wisdom on Section 54F investment timing!"

In the recent ITAT Hyderabad ruling in Deputy Commissioner of Income-tax vs Syama Reddy Mali Reddy (2025), the tribunal took a progressive stance on the interpretation of Section 54F of the Income Tax Act regarding capital gains exemption on reinvestment in residential property.

The assessee, a Non-Resident Indian, sold multiple plots and invested the sale proceeds in a new residential flat by making substantial payments before filing her income tax return. However, the registration of the new property and issuance of the occupancy certificate occurred after the statutory two-year period from the original asset's sale.

The Assessing Officer initially denied the exemption claiming the purchase was not completed within the prescribed time limit given the late registration. The Tribunal disagreed, holding that "purchase" under Section 54F is not confined strictly to registration or possession but includes making the investment/payment within the specified period. The tribunal emphasized that the intent of Section 54F is to encourage reinvestment of capital gains into residential property and should be interpreted liberally.

The court allowed exemption proportionate to the investment made within the prescribed timeframe, referencing authoritative precedents including the Supreme Court and earlier ITAT decisions that support a pragmatic, substance-over-form approach to "purchase."

This landmark decision aligns the tax law with real-world complexities like delayed registration due to circumstances such as international travel restrictions and confirms that timely financial commitment, not merely paperwork, secures capital gains benefits under Section 54F.

Key Takeaway:

Taxpayers who invest sale proceeds in residential properties on time but face registration delays can still claim capital gains exemption, affirming a taxpayer-friendly interpretation of Section 54F by the Hyderabad ITAT.

For Judgment,  Please click here

GST Case Law:

Facts:

Multiple entities linked to the Gumber family (including Genesis Enterprises, Kabun Enterprises OPC Pvt Ltd, Aayme Sourcing Creations OPC Pvt Ltd, etc.) were subjected to search and seizure by GST officials. The petitioners alleged that searches were unauthorised, their homes were raided, and that electronic devices and CCTV footage from their residence were seized, violating privacy.​

Key Allegations vs. Department Position:

Petitioners claimed unlawful, partly unauthorized searches; however, the court held all actions lawful under Section 67 of the CGST Act, finding proper “reasons to believe” had been recorded.​

Petitioners sought resumption of business/de-sealing, but the court did not grant such relief.​

Allegations of violation were raised regarding the seizure and use of residential CCTV footage, but the court determined that only restricted use was permitted and no violation was proved, specifically prohibiting the use or dissemination of any family-related CCTV footage infringing privacy.​

Petitioners presented several claims as substantiated, but the court recorded these as unverified and directed they should be examined later, not treated as established facts.​

Court Findings & Directions:

The Delhi High Court found no grounds to declare the search unauthorized or without legal basis, holding that the investigation and search under Section 67 were valid due to credible evidence and the complex network of companies under the Gumber family.​

The court acknowledged strong privacy concerns, particularly regarding residential CCTV. It ordered that any residential CCTV devices seized could only be opened in the presence of a family member and their representative, with only relevant footage to be accessed and the rest returned; any private content violating privacy could not be used or disseminated by authorities.​

Directions were given for investigators to follow proper safeguards and standard operating procedures, ensuring lawful handling of digital evidence and respect for taxpayer rights during ongoing tax proceedings.​

Decision & Outcome:

The writ petitions seeking intervention during the ongoing investigation were dismissed/disposed of.

The search, seizure, and investigation by the GST Department were upheld as lawful.

Petitioners’ privacy was to be protected regarding seized residential CCTV footage, which could only be accessed with safeguards as directed by the court.​

Key Takeaway:

The Delhi High Court validated the GST Department’s search and seizure operations under Section 67 as lawful and justified in light of evidence of fake ITC and fictitious entities, but carved out protections for the right to privacy of the petitioners in handling residential CCTV content—setting out a balanced precedent for future investigations.

For Judgment,  Please click here

Useful Update:

( Contribution by Adv. Shubham Goel )

									Recently, the Hon’ble Supreme Court of India, in a landmark judgment in the case of M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr. [Special Leave Petition (C) No. 6092 of 2025 dated August 14, 2025], clarified the interpretation of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).  
									

For detailed summary,  Please click here

For Judgment,  Please click here

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