1. Assessee sold 1/4th share in residential house for INR 8,75,00,000. The assessee has earned long term capital gain of INR 6,20,94,441 as computed in assessment order. The assessee claimed deduction u/s. 54 of the Income-tax Act,1961 (“I.T. Act”) for INR 5,70,94,441 for construction of new house.
 

2. The Assessing Officer denied the claim u/s. 54(1) of the I.T. Act made by the assessee on the ground that the amount has not invested in Capital Gains Accounts Scheme (CGAS) till 05-08-2016 (i.e., Within the extended due date of filing the ITR for AY 2016-17 u/s. 139(1) of the I.T. Act). The deposit in CGAS was delayed by 31 days. CIT(A) deleted the addition against which revenue filed appeal before ITAT.
 

3. ITAT noted that the assessee has paid from the entire capital gains deposit along with interest accrued thereon in relation to the expenses relating to the construction of new house between 02-11-2017 to 03-02-2018 within 3 years, which is within the time limit prescribed under section 54(1) Of the Act.
 

4. ITAT contended that the intention behind section 54 is very much clear that and assessee who receives the sale consideration has to invest in the new house within the specified time frame. Merely because the assessee deposited the amount with a delay of 31 days in the CGAS, he cannot be denied with the benefit of section 54 of the Act.
 

5. The ITAT considered the judgement of Hon’ble High Court of Karnataka in the case of Venkata Dilip Kumar Vs. CIT which states that — ‘Mere non-compliance of a procedural requirement under section 54(2) itself cannot stand in the way of the assessee in getting the benefit under section 54, if he is, otherwise, in a position to satisfy that the mandatory requirement under section 54(1) is fully complied with within the time limit prescribed therein.’
 

6. In view of the above, ITAT concluded that the CIT(A) has rightly deleted the addition of IN R made u/s. 54 of the I.T. Act.
 

7. Accordingly, the appeal filed by revenue was dismissed.