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2019 (3) TMI 466 - AT - Income TaxEligible u/s 54 and 54F - alleged that on the date of transfer of Dhruv Malad Building, the assessee was owner of more than one residential house other than the new asset - complete rights in the property vests with the owner only when he receives possession of the said property - HELD THAT:- The duty of the AO is to correctly compute the real income of the assessee in accordance with the statutory provisions. AO is empowered to disallow any deduction claimed by the assessee if it is not in accordance with provisions of Act, in the same manner, he is duty bound to allow deduction to the assessee if the assessee is eligible for such deduction under the provisions. Since the capital gain arises from sale of residential house, the assessee is eligible to claim deduction under section 54. That being the case, the restrictions imposed under the proviso to section 54F(1) will not apply to the assessee. Therefore, we do not feel the necessity to deliberate on the issue whether the property at Vapi is a residential or commercial building. No infirmity in the decision of Commissioner (Appeals) in this regard. Having held so, now it is necessary to examine whether the investments made by the assessee in the new assets (flats) would qualify for deduction u/s 54 of the Act. AO while disallowing assessee’s claim has observed that mere letters issued by the real estate development company allotting flats to the assessee does not confer ownership rights, hence, assessee cannot be considered to be the owner of the flat to claim deduction. However, in our considered opinion, once the assessee makes investment in purchase of flats and flats are allotted in its name, the conditions of section 54 of the Act are satisfied. The materials placed on record clearly prove that not only the flats were allotted to the assessee in the impugned assessment year but the sale deeds relating to the flats purchased were executed and registered in favour of the assessee before the end of the financial year relevant to the assessment year under dispute. That being the case, the investments made by the assessee in purchase of flats is within the period prescribed under section 54(1) of the Act. Therefore, the assessee is eligible to claim deduction under section 54 of the Act in respect of the investment made in purchase of new flats. - Decided against revenue.
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