9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (5) TMI 1094 - AT - Income TaxLTCG - denial of exemption claimed u/s 54 - construction of the project had not started till the completion of a period of three years - HELD THAT - The plight of the house buyer is not hidden from anyone and in the recent past due to one or the other reason various housing projects by well-known builders across the country were delayed for no fault of the purchaser who continues to await the delivery and possession of his/her flat. Even in these circumstances the house buyer who intends to take the benefit of section 54 of the Act cannot be blamed if the construction of the flat is not completed within the period of three years from the sale of the original asset. Since in the present case it is undisputed that out of Long Term Capital Gain of Rs. 99, 35, 840/- earned by the assessee she has only utilised Rs. 50, 86, 472 in the new residential house therefore in view of the provisions of the proviso to section 54(2) of the Act the balance amount should be charged to tax u/s 45 of the Act in the year under consideration being the year in which the period of three years from the date of transfer of the original asset expires. AO though considered to tax the part of the capital gain amount which had not been utilised by the assessee for the purchase of a new residential house within the prescribed period however proceeded to make the addition of the entire Long Term Capital Gain of Rs. 99, 35, 840 earned by the assessee. Accordingly we direct the AO to restrict the addition on account of Long Term Capital Gain only in respect of the balance amount not utilised by the assessee for the purchase or construction of a new residential house. AO is directed to allow the exemption to the extent of Rs. 50, 86, 472 being the amount paid for the new residential flat by the assessee. As a result grounds no. 3 raised in assessee s appeal is partly allowed,
Issues Involved:
1. Initiation of reassessment proceedings u/s 147. 2. Compliance with principles of natural justice in the order u/s 250. 3. Denial of exemption claimed u/s 54 and addition of Rs. 99,35,840/- as long-term capital gains. 4. Allowance of exemption to the extent of Rs. 50,86,472/- paid for a new residential flat. Summary: Issue 1: Initiation of Reassessment Proceedings u/s 147 Ground No. 1, raised by the assessee challenging the initiation of reassessment proceedings u/s 147 of the Act, was not pressed during the hearing. Accordingly, the same is dismissed as not pressed. Issue 2: Compliance with Principles of Natural Justice in the Order u/s 250 The learned CIT(A) passed the impugned order after considering the submissions of the assessee, as noted on pages 4-8 of the impugned order. Accordingly, the Tribunal found no merits in ground No. 2 raised in the assessee's appeal. As a result, the same is dismissed. Issue 3: Denial of Exemption Claimed u/s 54 and Addition of Rs. 99,35,840/- as Long-Term Capital Gains The assessee sold a residential property on 31/07/2012 and claimed exemption u/s 54 by depositing the capital gains in the Capital Gains Account Scheme and booking an under-construction flat. The AO disallowed the exemption as the construction was not completed within three years. The learned CIT(A) upheld this decision, noting that the assessee was aware that the construction would not be completed within the stipulated time. The Tribunal, however, held that the purchase of an under-construction flat is tantamount to investing in the construction of a residential house for the purpose of section 54. The Tribunal directed the AO to restrict the addition on account of Long Term Capital Gain only to the balance amount not utilized by the assessee for the purchase or construction of a new residential house. Issue 4: Allowance of Exemption to the Extent of Rs. 50,86,472/- Paid for a New Residential Flat The Tribunal found that the assessee had deposited Rs. 1 crore in the Capital Gains Account Scheme and paid Rs. 50,86,472 to the builder for the new flat. The Tribunal directed the AO to allow the exemption to the extent of Rs. 50,86,472 being the amount paid for the new residential flat by the assessee. Consequently, ground No. 3 raised in the assessee's appeal is partly allowed, while ground No. 4 is allowed. Conclusion: In the result, the appeal by the assessee is partly allowed. The order was pronounced in the open Court on 21/05/2024.
|
