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2016 (1) TMI 795 - ITAT MUMBAI

2016 (1) TMI 795 - ITAT MUMBAI - TMI - Eligibility of deduction u/s 54 - Exemption from long term capital gains - Held that:- We find that assessee had entered into an agreement for purchase of a flat no. 1402 on 31.01.2007. However, the said agreement was completely rectified and replace with a new agreement which was entered for purchase of a different flat No. 1302 on 19.04.2008. The possession of the said flat was given on 21.02.2009 and agreement for sale was made on 30.03.2009. Old flat wa .....

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ellant Cross Objector : Shri Vijay Mehta, Shri Anuj Kisnadwala For The Respondent : Shri S K Mahapatra ORDER PER AMIT SHUKLA, JM: The aforesaid appeal by the revenue and Cross Objection filed by the assessee are against impugned order dated 11.09.2013 passed by CIT(A)-31, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2009-10. We will first deal with Revenue s appeal, vide which following grounds have been raised : 1. The Ld CIT (A) erred on the facts and circumst .....

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the decision of the Hon ble Delhi High Court in the case of R.L. Sood - 245 ITR 727 wherein it was held that for the purpose of section 54, the date of agreement to purchase should be taken as the date of purchase . 2. Brief facts are that, the assessee is an individual who has sold property, wherein he was 50% owner along with the other coowner, Smt. Surekha C Shah, for an amount of ₹ 34,02,147/-. The said sale proceeds have been invested in the purchase of a new flat to the extent of &# .....

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at Andheri, Mumbai. Assessee had entered into agreement for purchase of the new premises in January, 2007. The said building was under construction. Assessee had booked the flat on 14th Floor. Payment for the acquisition of said premises was being done as per construction (slab-wise). In April, 2008, due to inadequate approvals obtained by the builder, assessee was offered flat on 13th floor instead of 14th Floor. Deed of rectification was entered between the builder and the assessee on 19th Ap .....

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efore and 2 years after the date on which transfer of the old asset took place. 3. Before the CIT(A), the assessee made very elaborate submissions which have been incorporated by the CIT(A) from pages 3 to 6 of the appellate order. The Ld. CIT(A), noted the entire facts and also analyse the provisions of section 54 and observed that in the present case, the sale of the old property was registered on 30.03.2009 and the window period of the investment as per section 54 fall between 30.03.2009 to 3 .....

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nd allowed the assessee s claim after observing and holding as under :- The argument of the appellant is that the rectified deed is to be taken as the deed for purchase of new flat. A perusal of the documents in question reveals that the Agreement for Sale dated 23.01.2007 was registered vide number BDR-1-776/2007 and the subsequent Deed of Rectification dated 19.04.2008 was registered vide number DR-5272/1/2008. Thus both documents were duly registered as per the provisions of the Maharashtra O .....

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tes in Clauses 2 and 3 as follows: 2. That the purchasers have purchased Flat No. 1302 on 13th Floor, A Wing in the Building known as Waterford at C.D. Barfiwala Road, Andheri West, Mumbai -400 058, due to inadvertence in the Agreement number of Flat is wrongly mentioned as Flat No. 1402 on 14th Floor A Wing Waterford at C.D. Barfiwala Road, Andheri West, Mumbai -400 058. 3. That hereinafter the purchasers shall be known as the owners of Flat No. 1302 on 13''' Floor A Wing "WATE .....

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by the appellant. 6.5 The appellant has also contended that 'purchase' could happen only on taking possession of the flat, which occurred in January 2009, thus the claim u/s 54 is allowable. The reasons for the change of flat number mentioned in the Agreement for Sale have been duly explained by the appellant and are found acceptable since the modification in proposed number of storeys in a building due to restrictions by government regulatory authorities such as the Airports Authority .....

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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 section 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 section 54(1) you are exempt." 6.5.2 In the case of CIT vs Shahajada Begum (AP) 173 ITR 397, the appellant had sold a house .....

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nership would be taken from the point in time when 'domain and control were given into the assessee s hands' and allowed the claim of the appellant. 6.53 In the case of CIT v Dr. Laxmichand N. Nagda reported at 211 ITR 804, the Hon'ble Bombay High Court adjudicated on a matter wherein exemption u/s 54 had been disallowed by the A.O. on the grounds that the sale deed was not registered within the specified period. The Court while examining the allowability of the claim emphasized that .....

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ntextual meaning to the word 'purchase in an insurance policy, the Madras High Court in the case of C. Duraiswami Iyengar v. United India Life Assurance Co. Ltd. AIR 1956 Mad. 316 has observed : "We consider that the word 'purchase' in Article 116 must be given a wider meaning so as to include the construction of a new building; that is to say, the word 'purchase' has got the same connotation as 'acquisition'." (p. 322) 4. The Supreme Court in the case of CI .....

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the title passes, came to the conclusion that the expression 'purchase' would connote the domain and control of the property given into the assessee's hands. 6. Taking into consideration the letter as well as the spirit of section 54 and the word 'towards' used before the word 'purchase' in sub-section (2) of section 54, it seems to us that the said word is not used in the sense of legal transfer and, therefore, holding of a legal title within a period of one year is .....

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new flat clearly vests in the appellant through the execution of this document. In addition, the appellant has received possession from the developer in January 2009 and the Occupation Certificate is also dated 24.02.2010, thus both these events are also falling within the investment window as per section 54. 6.5.5 Thus after due consideration of the entire conspectus of facts available on record and the judicial principles laid down which have been discussed in the proceeding paragraphs, 1 hold .....

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gistered and submitted that, in fact the property has been purchased within one year if the relevant dates viz. 19.04.2008 and 22.01.2009 or 20.03.2009 is taken into consideration. The reasons given by the CIT(A) are based on proper appreciation of facts and material on records and hence such a finding cannot be tinkered with. 6. The Ld. DR strongly relied upon the order of the AO and submitted that, what is to be seen within the terms of section 54 is not the date of agreement for sale registra .....

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he said flat was given on 21.02.2009 and agreement for sale was made on 30.03.2009. Old flat was sold on 6th April, 2009. Thus, the claim of exemption u/s 54 made by the assessee was very much well within the window period as defined in section 54. Therefore the finding of fact as recorded by the CIT(A) (incorporated above) is affirmed and thus ground raised by the revenue is dismissed. 8. In Cross Objection, assessee has raised following grounds :- 1. The learned CIT(A) ought to have held that .....

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