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2019 (7) TMI 602 - ITAT DELHIExemption u/s 54 - sale of residential property OR vacant land with malba - builder demolished and redeveloped the old residential property into new residential building consisting of ground floor, 1st floor, second and third floor - HELD THAT:- From the records it can be seen that it is an undisputed fact that the subject property was being used as residential house by the assessee from the period of its purchase on 09.08.2007 to the date of handing over its vacant possession to the builder for re-development and construction vide collaboration agreement dated 18.04.2012. From the Clause of collaboration agreement, it can be seen that what was transferred / handed over to the builder was the existing structure of the residential property. The builder demolished and redeveloped the old residential property into new residential building consisting of ground floor, 1st floor, second and third floor. Thus, the assessee lost all rights upon the entire existing structure which comprises residential house. The reliance upon the decision in case of Ved Prakash Rakhra [2012 (10) TMI 286 - KARNATAKA HIGH COURT] as well as Gita Duggal [2013 (3) TMI 101 - DELHI HIGH COURT] and CIT vs. Smt. K.G. Rukminiamma 2010 (8) TMI 482 - KARNATAKA HIGH COURT] are apt in present case. By virtue of collaboration agreement, the assessee permanently lost the share beyond the 1st floor in the old residential property i.e. from 2nd floor onwards and in fact received the share up to the 1st floor in the newly constructed residential building. So the assessee permanently dis-possessed of 2nd floor onwards in old and new residential property. Thus, the assessee has rightly claimed exemption u/s 54. As per the provisions of Section 54, the assessee purchased residential property. The said property was held by the assessee for more than three years from the date of acquisition and it is a case of long term capital gain on transfer of residential property. The said residential property was subject matter of Collaboration Agreement dated 18.04.2012 under which the possession was transferred to the developer and the rights of the purchased property were lost. The consideration received by the assessee under Collaboration Agreement was ₹ 5.50 cores and also the cost of construction of the area of building coming to the share of the assessee which was comprising of area in basement, ground floor and first floor and the said amount was to be treated as sale consideration on account of transfer of the property by the assessee to the builder under Collaboration Agreement. The gain arising on the said transfer was utilized for purchase of residential property at Greater Kailash-III, New Delhi as per the sale registration dated 09.07.2013. Thus the new residential property was acquired within two years from the date of transfer of the said property i.e. date of collaboration on 18.04.2012. Thus, there is no need to interfere with the findings of the CIT(A). Assessing Officer was not correct in disallowing the claim u/s 54 of the Income Tax Act, 1961. The appeal of the revenue is dismissed.
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