Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Shri Hasmukh N. Gala Versus Income Tax Officer 20 (1) (3) , Mumbai

2015 (8) TMI 1204 - ITAT MUMBAI

Claim of exemption under section 54 denied - no purchase deed was executed by the builder and that there was only an allotment letter issued - Held that:- As per the Revenue the advance could be returned at any time and, therefore, the assessee may lose the exemption under section 54 of the Act. In our considered opinion, the aforesaid does not militate against assessee’s claim for exemption in the instant assessment year, as there is no evidence that the advance has been returned. In case, if i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r in denying the claim of exemption under section 54 in the instant assessment year.

The assessee can be said to have complied with the requirement of section 54 of the Act; and, the exemption has been incorrectly denied by the lower authorities. As a matter of passing, we may also mention here the reliance placed by Ld. Representative of the assessee on the decision of our Coordinate Bench in the case of Shri Khemchand Fagwani vs. ITO, [2015 (8) TMI 1019 - ITAT MUMBAI] wherein also c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d against the impugned appellate order dated 21/11/2013 passed by Ld. CIT(A)-31, Mumbai pertaining to the assessment year 2010-11, with reference to the assessment order dated 03/01/2013, passed in terms of section 143(3) of the Income Tax Act, 1961(the Act). 2. In this appeal although assessee has raised multiple grounds of appeal, but essentially the grievance of the assessee is against the stand of the income-tax authorities in denying the claim of exemption under section 54 of the Act. 3. Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as exempt under section 54 of the Act on the strength of having acquired a new residential house being Flat Nos. 1 & 2 on 4th Floor in C-Wing, Ramniwas Building, Malad (E). The investment in acquisition of the new residential house was claimed by the assessee based on an advance of ₹ 1.00 crore given to the builder as booking advance through a cheque dated 6/2/2010. The assessee produced a copy of receipt of payment and allotment letter dated 15/10/2010 from the builder to justify acq .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ransfer of old house the construction of the new property was not completed and that assessee had not gained possession of the new premises also. He, therefore, held that assessee did not comply with the requirements of section 54 of the Act in as much as it could not be said that assessee had purchased a new residential house within the period prescribed therein. The Assessing Officer was of the view that giving of advance could not be treated as equivalent to purchase for the purpose of sectio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bserved that though assessee had parted with money, but he did not acquire possession or domain over the new residential house and, therefore, the denial of the claim of exemption under section 54 of the Act was affirmed. 5. In the above background, Ld. Representative for the assessee vehemently pointed out that the claim of the assessee has been unjustly denied by the lower authorities. It has been pointed out that assessee had duly invested the amount in acquisition of a new residential proper .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tablished that assessee had invested towards acquisition of a new residential house. In the course of hearing, reliance has been placed on the following decisions:- 1. CIT vs. Mrs. Hilla J. B. Wadia , 216 ITR 376(Bom) 2. CIT vs. R.L. Sood, 245 ITR 727 (Del) 3. CIT vs. Kuldeep Singh, 270 CTR 561 (Del). 5.1 It was also contended that the Chandigarh Bench of the Tribunal in the case of Smt. Ranjeet Sandhu vs. DCIT, 49 SOT 7 (Chandigargh) held that completion of construction within the time limit pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ready been noted by us in the earlier para and the same are not being repeated for the sake of brevity. 7. We have carefully considered the rival submissions. The crux of the controversy before us relates to the understanding of the expression purchase contained in section 54 of the Act. Notably, an assessee is entitled to the benefits of section 54 of the Act, if he has purchased the new property within a period of one year before the date of transfer of the old property or within two years fro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee was found not to have complied with. The Assessing Officer also noted that assessee had not constructed a new residential house within a period of three years from 8/12/2009. On the other hand, the claim of the assessee is that it has fulfilled the requirements of section 54 of the Act because he has paid ₹ 1.00 crore to the builder for acquisition of flat and the builder has issued an allotment letter in respect of the specific Flat being, Flat Nos. 1 & 2 on 4th Floor in C-W .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the specified period and it is also quite apparent that the new property was still under construction. So however, the allotment letter by the builder mentions the flat number and gives specific details of the property. 7.2 In this context, the Hon ble Delhi High Court in the case of Kuldeep Singh (supra) has explained the meaning of the expression purchased in the context of section 54 of the Act in following words:- 8. The word 'purchase' can be given both restrictive and wider mean .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

execution of release deed by the brother thereby joint ownership became separate ownership for price paid would be covered by the word 'purchase'. It was observed that the word 'purchase' used in Section 54 of the Act should be interpreted pragmatically. In a practical manner and legalism shall not be allowed to play and create confusion or linguistic distortion. The argument that purchase primarily meant acquisition for money paid and not adjustment, was rejected observing that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xempt. The purpose was plain; the symmetry was simple; the language was plain. 9. Recently Supreme Court in Civil Appeal Nos. 5899-5900/2014 titled Sanjeev Lal v. CIT [2014] 46 taxmann. Com 300 again examined Section 54 in a case where the assessee had entered into an agreement to sell a house to a third party on 27th December, 2002 and had received ₹ 15 lacs by way of earnest money and subsequently received the balance sale consideration of Rs.l.17 crores (total being ₹ 1.32 crores) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he agreement to sell was executed on 27th December, 2002 but the sale deed could not be executed because of inter-se litigation between the legal heirs, as one of them had challenged the will under which the assessee had inherited the property. The agreement to sell, it was held had given some rights to the vendor and reduced or extinguished rights of the assessee. This, it was observed was sufficient the purpose of Section 2(47), which defines the term transfer in relation to a capital asset. I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ld be granted. Principle of purposive interpretation should be applied to subserve the object and more particularly when one was concerned with exemption from payment of tax. The assessee, therefore, succeeded. The observations made in the said decision are also relevant on the question whether the payments made by the assessee to the person with whom he had entered. Into. An earlier agreement to sell should be allowed to be set off as expenses incurred in relation to the sale deed which was exe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the basic purpose behind section 54 of the Act is to ensure that the assessee is not taxed on the capital gain, if he replaces his house and spend money earned on the capital gain within the stipulated period. The parity of reasoning explained by the Hon ble Delhi High Court in the case of Kuldeep Singh (supra) squarely covers the controversy in the present case in favour of the assertions made by the assessee. Therefore, we are inclined to uphold the plea of the assessee for exemption under sec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version