TMI Blog2016 (1) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ion work having been carried out during the years 1997-98 and 2001-02, implying the relevant financial years. How could renovation be carried out in f.y. 1997-98, whereat the house was, by own admission, purchased? The additional loan of ₹ 2 lacs from the bank was sanctioned on 06/9/2001 (PB pg. 8), which is claimed to be the source of the investment, with even the assessee claiming the improvement to have been carried out in the year 2001, contradicting the said certificate. For the reasons afore-stated, we are inclined to be in agreement with the Revenue of the assessee as having been unable to establish its claim of having undertaken improvement of its house in 2001. Deduction u/s.54 on the capital gains denied - Held that:- Assessee being not eligible for deduction u/s.54 in view of the non-satisfaction of the primary condition of acquisition of house property within the time period stipulated u/s.54(1). The investment of the capital gains therein, naturally, is to be within this time period, for which a mechanism is provided. This represents the second limb of the provision; the return of income for the relevant year being, it may be appreciated, required by law to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see no reason for the disallowance in the circumstances and, accordingly, direct its deletion. 4. The fourth and the last ground of the assessee s appeal is in respect of sale of flat No. 203, Shivam Apartments, bearing the address: Road No. 5-D, Shri Krishna Puri, Patna. The same was purchased vide registered sale deed dated 20.06.2007 and sold on 15.01.2009. The A.O. was, therefore, of the view that the gain was short term capital gain (STCG). The ld. CIT(A), however, on the basis of the material adduced by the assessee, found that though the sale-deed was registered subsequently, the flat was acquired by the assessee much earlier, with the assessee having obtained a home loan of ₹ 5 lacs, from Punjab National Bank (PNB) vide sanction letter dated 13.06.1997 (PB pg. 6), so that the house property was in his view acquired by the assessee during f.y. 1997-98 and, therefore, entitled to be considered as held, in computing the capital gains arising u/s. 45, by the assessee from that year onwards. The claim toward cost of improvement was not accepted by the Revenue in the absence and/or lack of its substantiation. The principal evidence adduced by the assessee was by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify as an improvement, would also require being notified to the housing society or even approval of the relevant authorities. In fact, apart from nonspecification of the work, so that the very basis of the assessee s claim remains unknown, the certificate speaks of the renovation work having been carried out during the years 1997-98 and 2001-02, implying the relevant financial years. How could renovation be carried out in f.y. 1997-98, whereat the house was, by own admission, purchased? The additional loan of ₹ 2 lacs from the bank was sanctioned on 06/9/2001 (PB pg. 8), which is claimed to be the source of the investment, with even the assessee claiming the improvement to have been carried out in the year 2001, contradicting the said certificate. For the reasons afore-stated, we are inclined to be in agreement with the Revenue of the assessee as having been unable to establish its claim of having undertaken improvement of its house in 2001. 5.3 The ld. CIT(A) has disallowed the assessee s claim for deduction u/s. 54 for the following reasons (refer paragraph 9 of the impugned order): (a) that the new residential house (flat) at Noida was not completed by 15.01.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al asset) on 24.09.2004. The purchase of the new asset being more than one year prior to the transfer of the original asset, the assessee s claim was denied. The hon ble court, in view of the extended definition of the term transfer u/s. 2(47) of the Act, held in the assessee s favour in view of the agreement to sell entered into for the sale of the original asset on 27.12.2002, creating substantial rights in personam in favour of the purchaser. The delay in executing the sale-deed was for the reason of litigation with one, Ranjeet Lal, challenging the validity of the Will whereby the original asset had devolved on the assessee. The matter was in fact subjudice, with the court restraining the execution of the sale-deed in favour of a third party. How, we wonder, the said decision helps the assessee, and which was also not shown during hearing. The capital gains on the sale of his residential house has already been considered by the ld. CIT(A) as LTCG, with the Revenue being not in appeal. 5.5 The assessee has also placed CBDT Circular Nos. 471 dated 15.10.1986 and 672 dated 16.12.1993 in the paper-book. The same are toward reckoning the acquisition of the flats/residential hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal objection of the assessee being not eligible for deduction u/s.54 in view of the non-satisfaction of the primary condition of acquisition of house property within the time period stipulated u/s.54(1). The investment of the capital gains therein, naturally, is to be within this time period, for which a mechanism is provided. This represents the second limb of the provision; the return of income for the relevant year being, it may be appreciated, required by law to be filed by the due date u/s. 139(1). We are, at this stage, reminded of, and may profitably reproduce, the observations by the apex court in the case of CIT vs. T. N. Aravinda Reddy [1979] 120 ITR 46 (SC): 3. We find no reason to divorce the ordinary meaning of the word purchase as buying for a price or equivalent of price by payment in kind or adjustment towards an old debt or for other monetary consideration from the legal meaning of that word in s. 54(1). If you sell your house and make a profit, pay Caesar what is due to him. But if you buy or build another, subject to the conditions of s. 54(1), you are exempt. The purpose is plain; the symmetry is simple, the language is plain. Why mutilate the meaning by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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