TMI Blog2014 (6) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of section 54 is to give relief in respect of profits on the sale of a residential house. The amount of capital gain has been invested by the assessee in new house property - the payment had started from November, 2004 and were paid in installments up to August, 2008 - the payments were made in view of the agreement entered into by the assessee with the developer in November, 2004 whereas the possession of the house was handed over to the assessee in January, 2008 and property was registered in the name of the assessee in May, 2008 - as per section 54, the assessee was required to invest in the new house property between the period 19.10.2005 to 19.10.2008 - The AO in view of the date of agreement being before 19.10.2005 disreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and in the circumstances of the case, the Ld CIT(A) has erred on facts and in law in deleting the disallowance made by the Assessing Officer amounting to Rs.22,49,585/- (Rs.58,56,567/- - Rs.36,636,982/- being payment before 19.10.2005) as to claim exemption u/s 54 the assessee should have invested the LTCG in another house property during the period 19.10.2005to 19.10.2008 i.e. within a period of one year before or two years after the date of transfer of property but the assessee has purchased another house property vide agreement dated 4.12.2004. 3. That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. 2. The brief facts of the case are that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before Ld CIT(A) and submitted as under:- a) That payment for purchase of house has been made over a period of time starting from November, 2004 to August, 2008. The deduction u/s 54 cannot be denied simply because the few payments have been made as per terms of buyer s agreement prior to the period stipulated under the Act. b) That it is very important to distinguish between buyer s agreement and conveyance deed. A conveyance deed is a document for transfer of the absolute title of the property for certain agreed price whereas the buyer s agreement is a contract that defines future sale. c) That a buyer s agreement is a promise to buy something from some one whereas a conveyance deed is of far more importance and has far mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period starting 7th November, 2004 to August,2008. The offer of possession of the apartment was given on 29th January, 2008. The property has been registered on 5.5.2008. As per section 54 of the Act the capital gain earned from sale of a residential house is not chargeable to tax if the assessee purchases within a period of one year before or two years after the date of transfer or constructs within a period of three years after the date of transfer, a house property. The exemption of course is limited to the amount of capital gains invested in the new house. Thus for the purpose of claiming exemption u/s 54 of the Act, cost of the new house and the time period during which the new house is constructed/purchased is to be kept in mind. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use has been made even prior to one year from the date of transfer. Therefore, it is held that the amount paid by the appellant prior to the period 19.10.2005 will not be eligible for exemption u/s 54 of the Act. Support in this regard is drawn from the decision of Hon'ble Delhi High Court in the case of Vipin Malik vs. CIT 183 Taxman 296 rendered in the context of section 54F, wherein the Hon'ble High Court upholding the order of Hon'ble ITAT Delhi observed as under :- Where most of amount had already been paid to co-operative society for purchase of a flat before one year of sale of agricultural land, amount, which was available to be taxed as capital gain, could not be said to have been utilized for purchase of flat eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas the possession of the house was handed over to the assessee in January, 2008and property was registered in the name of the assessee in May, 2008. As per section 54, the assessee was required to invest in the new house property between the period 19.10.2005 to 19.10.2008. The Assessing Officer in view of the date of agreement being before 19.10.2005 disregarded the claim of assessee ignoring the fact that actual conveyance deed was executed between this period of 19.10.2005 19.10.208. The claim of the assessee cannot be rejected simply because of the fact that certain payments were made before the period 19.10.2005. The Ld CIT(A) though has considered the investment in the house as eligible investment u/s 54 but has excluded the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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