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2019 (8) TMI 54 - AT - Income TaxExemption u/s 54F denied - delay by the builder or on account of the reason for delay in allotment/construction of the flat - construction was delay by builder due to NOC from HAL and litigation - HELD THAT:- It was not the case of the AO that the assessee has not booked the flat with the builder. It is also not the case of the AO that he has not made the payment to the builder in time. It is also not the case of the Revenue that there was no stay by the High Court and the matter is not sub-judice before the High Court. The only reason given by the AO is that in case the writ petition is disallowed and the relief sought is declined then the assessee would not be entitled to flat. What is required to be seen is intention of the assessee at the time of making the investment in the building project. If there was no inhibition or embargo at the time of investment, at that time the assessee was entitled to the title of the residential unit, then the assessee is entitled to benefit of section 54F. Assessee cannot be denied benefit of section 54F on account of delay by the builder or on account of the reason for delay in allotment/construction of the flat, which are not attributable to the assessee. Undisputedly, the assessee had invested the amount for purchase of flat pursuant to illegally binding agreement. However, on account of withdrawal of NOC by HAL, project could not be completed and the flat was not allotted to the assessee. Section 54F is a beneficial legislation and has been inserted with a view to promote investment of the long term capital gains in the building of residential premises. On account of technical reasons, as mentioned above or on account of fraud or unscrupulous activities of the builder where said residential units without having proper clearance (not disclosed to the assessee at the time of booking or subsequent thereto) cannot be made a ground for denial of benefit of section 54F. In our view, the assessee is entitled to benefit of section 54F. However, on account of interdiction by Karnataka High Court, the possession had not been handed over to the assessee. We may fruitfully apply the mechanism that no order of the court was intending to harm any person. For no fault of the assessee, the assessee cannot be denied benefit of section 54F merely because the clearance of the project is pending before the Hon’ble Karnataka High Court. Hence, the appeal of the assessee is allowed. We rely upon the decision of Karnataka High Court in the matter of Dileep Ranjrekar [2019 (1) TMI 158 - KARNATAKA HIGH COURT] and Tribunal order in the matter of Balkishan Atal vs. ACIT 1 [2019 (3) TMI 476 - ITAT DELHI]. - Decided in favour of assessee
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