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2014 (11) TMI 261 - AT - Income TaxTreatment of LTCG u/s 54 - Whether the amount of the capital gain is equal to the cost of the new residential house and Capital Gains chargeable under the Act and Assessee is entitled for exemption u/s 54 of the Act or not - Assessee did not construct new house nor purchased a new house – Held that:- The Assessee has sold two properties, Flat at Lawande Manor for ₹ 81 lacs and Flat at Cabo Housing complex for ₹ 1.60 crore - The flat at Lawande Manor was owned by Shri Girish Ragha and sold to Shri Arjun Mangaldas by sale deed - The Assessee has invested ₹ 1,64,22,535/- to purchase a new residential house from M/s. Ashraya Real Estate Developers with the agreement that the house has to be handed over within two years - As per Sec. 54 of the Income Tax Act, Assessee has sold two residential properties; one on 17.9.2009 and other on 1.12.2009 - The last property was sold on 1.12.2009, the Assessee has to get the house and occupancy certificate from M/s. Ashraya Real Estate Developers before 1.12.2011 - the Assessee has sold the second property on 1.12.2009 - The Assessee has made the payment on 16.3.2010 - The Assessee was required to get the house and occupancy certificate on/before 1.12.2011 - the Assessee got occupancy certificate of the property on 17.1.2014 - As per Sec. 54 the Assessee is required to get the occupancy certificate within two years but the possession was handed over to the Assessee only on 17.1.2014 - The Assessee submitted documentary evidence before us to show that after purchasing the property there was a civil suit filed by the other parties and Assessee could not start construction and licence for constructing the house was obtained by the Assessee on 16.5.2011. The Assessee's construction was delayed, therefore, Assessee has taken the contention before CIT(A) that though the Assessee has made the payment but the Assessee could not get the possession within three years – relying upon CIT vs. Sadarmal Kothari [2008 (6) TMI 15 - MADRAS HIGH COURT] - in order to get the benefit u/s 54 of the Income Tax Act, the Assessee need not complete the construction of house and occupy the same - If the Assessee has invested the money and the occupancy certificate is got delayed which is beyond the control of the Assessee, then, the Assessee is entitled for deduction u/s 54 of the Act - if substantial amount is paid in terms of purchase agreement within the stipulated period, exemption u/s 54 is available even if the premises is handed over after the stipulated period - the Assessee has paid the amount within the time but Assessee got the occupancy certificate after three years - the Assessee is entitled for deduction u/s 54 of the Act - CIT(A) has rightly held that the Assessee is entitled for deduction u/s 54 of the Act – Decided against revenue.
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