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2016 (10) TMI 202 - ITAT MUMBAI

2016 (10) TMI 202 - ITAT MUMBAI - TM - Exemption of long term capital gain under section 54 - whether the condition relating to "construction" of flat instead of condition relating to "buying" of the flat is applicable while allowing the exemption ? - Held that:- The assessee had sold the property on 04- 03-2011 and, therefore, as per section 54, the assessee was required to construct a new residential house by 04-03-2014 since section 54 allows exemption to an assessee of long term capital gain .....

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gain earned by the assessee. - In our opinion, the Ld.CIT(A) rightly drew support from the circular issued by the CBDT No.672 dt 16-12-1993. It is further noted by us that section 54 is a beneficial provision intending to provide benefits to the assessee with a view to boost investment in housing infrastructure. Thus, while interpreting such provisions, an effort should be made in the direction so as to find out how the benefit of deduction can be granted and not to find out how the same ca .....

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COUNTANT MEMBER) For The Appellant : Shri V Perampulna For The Respondent : None ORDER Per ASHWANI TANEJA, AM This appeal has been filed by the revenue against the order of the Ld.CIT(A) dt 30-10-2014 passed against the assessment order u/a 143(3) dt 31- 01-2014 for A.Y. 2011-12 on the following grounds:- 1) On the facts and in the circumstances of the case and in law, the Ld.CIT (A) erred in holding that the condition relating to "construction" of flat instead of condition relating to .....

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rvice of notice by RPAD. However, we find that the matter could be disposed of even without the presence of the assessee. Therefore, we heard the Ld. Ld. Departmental Representative and the appeal is disposed of on the basis of material available on record. 3. The solitary issue raised by the revenue challenges the action of the Ld.CIT(A) for allowing exemption of long term capital gain (LTCG in short) claimed by the assessee u/s 54 of the Act. 4. The brief facts and background of the case are t .....

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t on the ground that the assessee had not received possession of the said flat and construction was still incomplete. It was also noted by the Assessing Officer that the purchase of the flat denotes absolute control over the property which the assessee did not acquire as the building was not complete. Being aggrieved, the assessee filed appeal before the Ld.CIT(A) and made exhaustive submissions to show that all the conditions prescribed u/s 54 were duly complied with and the Assessing Officer h .....

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ard to the claim of deduction made by the appellant u/s.54 of the Act. The claim of exemption was primarily denied on the ground that the appellant failed to take possession new residential property within two years of sale of old residential property and the building was not complete as on 0303.2013 The A.O. throughout the assessment order went on applying the condition of purchase of new residential property within two years of sale of old property, however, she overlooked the prevailing condi .....

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make payment in installments and builder was to hand over the possession of the flat after construction. Thus, in the present case, the condition of construction of new house within three years of sale of old property is applicable. 2.4 The appellant had sold the property on 04.03.2011 and, therefore, he was required to construct a new residential property by 04.03.2014. The purpose of section 54 is to allow exemption to the assessee of long term capital gain arising from sale of residential ho .....

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ars he had invested ₹ 1,03,50,932/- which was more than the amount of capital gain forming substantial part of his sale consideration, in construction of new residential house. Thus, in my view, the claim of exemption cannot be denied on the ground that the possession of the flat had not been taken within the period of three years. 2.5 The A.O. has tried to distinguish the case of the appellant and CBDT circular no.672 dated 16.12.1933, relied upon by the appellant on the ground that the s .....

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that the appellant has purchased residential flat and has invested the entire capital gain for the purchase of said flat- However, the dispute is that since the appellant has not received the possession within the specified period, the A.O. has denied the exemption. It is also pertinent to note that out of the entire capital gain of ₹ 69,23,238/- the appellant had invested ₹ 52,58,953/- on or before furnishing of return u/s 139(1). Whereas the balance amount of ₹ 16,64,285/ - w .....

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-on the amount involved for purchase of flat as against ₹ 69,23,238/- claimed by appellant. The A.O. is, therefore, directed to recompute the capital gain accordingly. 5. During the course of hearing before us, the Ld.DR supported the order of the Assessing Officer. 6. It is noted by us that the assessee had sold the property on 04- 03-2011 and, therefore, as per section 54, the assessee was required to construct a new residential house by 04-03-2014 since section 54 allows exemption to an .....

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