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9. The assessee also submitted before the CIT(A) that the AO was incorrect in treating the transaction as colourable or sham transaction merely because the builder was a related concern. It was argued that all payments had been made through banking channel, the loan was sanctioned by Union Bank of India after due scrutiny, and notarized documents and possession records demonstrated transfer and enjoyment of the property. The assessee further contended that the Inspector's report was obtained behind its back without affording any opportunity to cross-examine or rebut the findings and therefore, could not be relied upon against the assessee. The assessee also placed on record electricity bills, municipal tax receipts, loan repayment statements, the possession agreement, and other documentary evidence to substantiate its claim. No registered sale deed was available or produced during the appellate proceedings before the CIT(A), as the same did not exist at that stage.

29. Finally, the ld. AR submitted that the assessee's case was squarely covered by judicial precedents, the investment was bona fide and genuine, and the AO had erred in denying the exemption claimed u/s 54F of the Act by adopting a hyper-technical and restrictive approach. He submitted that the CIT(A) had passed a well-reasoned order by applying settled law and appreciating evidences placed on record and, therefore, prayed that the appeal of the Revenue be dismissed.

30. In brief rejoinder, the ld. CIT-DR submitted that the arguments advanced by the assessee do not address the core statutory deficiencies noted by the AO. He contended that reliance on judicial precedents permitting exemption u/s 54F of the Act in cases of adjoining or multiple flats was misplaced because those decisions presupposed a valid, registered transfer of ownership and actual user as a single residential unit, conditions demonstrably absent in the present case. The ld. CIT-DR argued that mere execution of notarized documents or payment through banking channels cannot substitute the statutory requirement of purchase evidenced through a registered conveyance. He further submitted that the assessee's claim of possession was disproven by physical verification, which revealed that one flat was being used as a builder's sample unit and the other was occupied by a third party. He maintained Asodariya Gordhanbhai Ranchodbhai (HUF) that the assessee's failure to utilize the sale proceeds for acquisition, the related-party nature of the transaction, continued ownership in the name of the builder during the relevant period, and delayed registration of the sale deed in 27.07.2024 collectively indicate that the arrangement lacked commercial substance and was structured solely to claim exemption. He, therefore, urged that the order of the AO, being factually sound and legally correct, deserves to be restored in full and the order of the CIT(A) be reversed.

36. We also find merit in the contention of the revenue that mere execution of notarized documents, i.e., agreement for sale and possession deed, and routing of payments through banking channels cannot substitute the legal requirement of "purchase" in the sense in which that expression is understood in property and tax law. The Hon'ble Supreme Court in Suraj Lamp & Industries Pvt. Ltd. has categorically held that ownership of immovable property does not pass by way of unregistered agreements to sale, power of attorney, affidavits or similar private arrangements, and that such devices cannot be recognized as transfers of title. When section 54F uses the expression "purchased", it must be interpreted harmoniously with this settled position. In our considered view, in absence of a registered conveyance deed, the assessee cannot be said to have "purchased" the flats in question for the purposes of section 54F.

38. The argument that possession coupled with payment is sufficient also does not avail the assessee on facts. Possession, for tax purposes, is not a mere recital in a notarized document; it must correspond to actual control, dominion and the right to exclude others, reflected in the objective circumstances. Here, the Inspector's report which is supported by photographs and has not been effectively rebutted shows that the assessee never enjoyed such possession. One flat continued to be in use of the builder for business demonstration and the other was in occupation of a third party with a nameplate. The assessee has not produced any evidence of actual residence or any contemporaneous material from which genuine residential use could be inferred. In these circumstances, the plea of "possession" is more notional than real.