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Muthuletchumi Janardanan Versus The Deputy Commissioner of Income-tax, International Taxation Circle, Ernakulam, Kochi.

2012 (12) TMI 1054 - ITAT COCHIN

Entitled to deduction u/s 54F - capital gain earned on sale of a property - Held that:- Time limit for the purpose of making investment in Capital Gains Account scheme may also be taken as the time limit prescribed u/s 139(4) of the Act. The assessment year under consideration, being assessment year 2005-06, the limitation would expire on 31.3.2007. The compliance of the provisions of sec. 54F (4) should be examined accordingly. - Both the tax authorities have stated that the “agreement for .....

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to clause (13)). If this fact is true, it is confusing as to how the tax authorities have mentioned the date of construction agreement as 04.7.2007. Both the parties did not offer any explanation about this contradiction. The assessee did not furnish a copy of conveyance deed dated 04.07.2007 also before us and hence we did not have the benefit of examining the same. - This factual aspect requires verification, even though it appears that it may not have any effect on the eligibility of dedu .....

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ny other document/explanation in support of its claim u/s 54F of the Act. - I.T.A. No. 372/Coch/2011 - Dated:- 7-12-2012 - SHRI N.R.S.GANESAN, JM and B.R.BASKARAN, AM For the Petitioner : Shri R.E. Balasubramanyam, CA For the Respondent : Smt. Susan George Varghese, Sr. DR ORDER PER B.R.BASKARAN, ACCOUNTANT MEMBER: The appeal of the assessee is directed against the order dated 31-01-2011 passed by Ld CIT(A)-III, Kochi and it relates to the assessment year 2005-06. The solitary issue urged in thi .....

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capital gain is exempt if the entire sale consideration is invested in purchase/construction of a house property. In case of purchase of house property, it should be purchased within one year before or two years after the date of transfer of the land. If it is a case of construction, the house should be constructed within three years from the date of transfer of land. Though the assessee booked a flat in the year 2005, it is stated that the document for conveyance of the undivided share of land .....

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g a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-…… (4) The am .....

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f the assessee for furnishing the return of income under subsection (1) of section 139) in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new .....

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s not deposited the sale proceeds in a Capital gains account scheme as stipulated in sub-sec. (4) of sec. 54F. Accordingly, the AO rejected the claim of deduction u/s 54F of the Act. 5. Before Ld CIT(A), the assessee contended as under:- (a) Booking of a flat falls in the category of Construction . For this proposition, the assessee relied upon the circular No.471 dated 15.10.1986 and Part 2 of Circular No.672 dated 16.3.1993, wherein the CBDT has clarified that the allotment of flats under the .....

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34.00 lakhs (c) For determining the test of ownership, the provisions of Transfer of Property Act, Registration Act have no application. Hence the conveyance of undivided share of land on 06-07-2007 does not have any implication in this case. In this regard, the assessee relied upon following case law:- (i) CIT Vs. Podar Cements Ltd (226 ITR 625)(SC) (ii) CIT Vs. Mysore Minerals Ltd (239 ITR 775)(SC) (iii) CIT Vs. Ajitsingh Khajanchi (2008)(297 ITR 95)(MP) (iv) CIT Vs. Mrs. Shahzada Begum (173 I .....

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(110 ITD 523)(Bang.) (e) ACIT Vs. Sapna Dimri (ITA No.151/D/2012)(Delhi) However, in the instant case, there was no necessity to make investment in the Capital Gains Account scheme, since the entire sale proceeds had been invested in purchase of new house before the extended time limit, i.e. before 31.3.2007 (one year from the end of the assessment year). (e) Sec. 54F, being a beneficial provision, it should be interpreted liberally so as to achieve the intention of encouraging housing and to pr .....

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d booked the flat which is termed as construction of flat and had paid advance money during the period between 22.12.2005 and 22.3.2006 and therefore, the money stands invested in the booking of the flat within the period of three years. But, the fact is that there was no document of transfer of the said property in the name of the assessee within the prescribed period, i.e., upto 15.4.2007* as the sale deed for purchase of flat was executed on 04.7.2007 and 06.7.2007. The assessee has also not .....

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s neither a valid agreement existed nor possession given to the appellant up to the prescribed period provided in the provisions of Income tax Act. The contention that the appellant paid entire money to the builder before the prescribed date cannot be termed as acquisition of flat since what was paid was only advance money for an unwritten verbal contract which could have been easily broken as stated above. No valid irrevocable documentation conferring ownership existed for purchase of the said .....

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unt in time before the time allowed for filing a return u/s 139(1). Hence, on both counts, the appellant failed to convince and therefore, I do not find any reason to interfere in the order of the AO and sustain the addition of ₹ 24,14,554/-. Aggrieved by the order of Ld CIT(A), the assessee is in appeal before us. 7. We have heard the rival contentions and perused the record. There is no dispute between the parties that the purchase of flat from a builder would fall in the category of Con .....

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Punjab and Haryana High Court in the case of CIT Vs. Ms. Jagriti Aggarwal (339 ITR 610):- 10 Having heard learned counsel for the parties, we are of the opinion that sub-s (4) of s. 139 of the Act is, in fact, a proviso to sub-s. (1) of s. 139 of the Act. Sec. 139 of the Act fixes the different dates for filing the returns for different assessees. In the case of assessee as the respondent, it is 31st day of July of the assessment year in terms of cl. (c) of the Expln. 2 to sub-s. (1) of s. 139 .....

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Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988 or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year. 11. A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-s. (1) i.e., before 31st day of July of the assessmen .....

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owed to an assessee under sub-s. (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-s. (1) of s. 139. Therefore, such sub-s. (4) has to be read along with sub-s.(1). Similar is the view taken by the Division bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar Jalan cases (supra) respectively . By following the above cited decision, we hold that the time limit for the purpose of making investment in Capit .....

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ments from time to time to the builder of the apartment. According to the assessee, the registration of the property got delayed since she was residing abroad. In various case law relied upon by the assessee, it is clearly stated that the registration (required to be done under the Registration Act) is not material, in order to decide about the ownership of the property. However, it also clearly stated that the said relaxation is permissible, provided the assessee has obtained possession of the .....

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ew that the deduction could not be denied merely because possession had not been taken within three years, as the action of taking of possession may be delayed on account of many factors. 11. In the instant case, the assessee has furnished the account statement obtained from the builder at pages 13- 15 of the Paper book. On a perusal of the said account statement, we notice that the account of the assessee has been almost closed by the builder by 18.01.2007, i.e., within three years from the dat .....

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