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Smt Ramita Mahendra Mehta Versus Income Tax officer 9 (2) (3) , Mumbai

2017 (9) TMI 1220 - ITAT MUMBAI

Denying the deduction u/s 54 - whether date of final possession given by the builder has to be taken as the date of acquisition of new property for computing the capital gains u/s 54? - Held that:- The date of final occupation of the property should be considered for calculation the period of eligibility for deduction u/s 54 of the Act. If the date of possession i.e. March 2009 is taken as date of purchase of new flat as contended by the assessee in its case the assessee is entitled to deduction .....

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ain Shri Mahaveer Jain, C.A. For The Revenue : Shri Purushotam Kumar ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) -20, Mumbai dated 17.04.2014 for the Assessment Year 2010-11. The only grievance of the assessee in his appeal is that the Ld.CIT(A) erred in denying the deduction u/s 54 of the Act. 2. Briefly stated the facts are that the assessee sold residential house property and claimed deduction u/s 54 of the A .....

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ich case according to the Assessing Officer the assessee not complied with the condition of purchasing a new flat within a period of one year prior to transfer of the existing property. 3. The assessee furnished its reply stating that though the agreement for purchase has been entered into on 18.08.2007 final possession of the property was received in the month of March 2009 and therefore date of final possession of the property has to be considered for the purpose of deduction u/s 54 and in whi .....

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ore lower authorities. He also placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Smt. Beena K. Jain [217 ITR 363] and submits that the date of possession of new residential premises is to be considered as date of acquisition instead of the date of sale agreement or the date of registration. The Learned Counsel for the assessee further submits that following this decision of the Hon'ble Jurisdictional High Court, the Coordinate Bench on the sim .....

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resulted into long term capital gains which was claimed as exemption u/s 54 of the Act as the assessee purchased a new flat by entering into agreement on 18.08.2007. The contention of the assessee was that though the agreement was entered into on 18.08.2007 for purchase of new flat, the final possession of the property for occupation was received from the builder only in the month of March 2009, though the entire purchase consideration was already paid by 11.07.2008 to the builder. Therefore, t .....

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ior to the sale she had entered into an agreement for purchase of a residential flat which agreement was dated September 4, 1985. The agreement was for purchase of a flat for a total consideration of ₹ 12,26,751 On the date of the agreement of sale, the assessee paid a sum of ₹ 1,35,000 as earnest money. This agreement was registered on October 27, 1985. The construction of the flat was finally completed in July, 1988. The assessee paid the consideration amount of ₹ 10,44,375 p .....

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ribunal was right in allowing exemption of ₹ 11,04,423 under section 54F of the Income-tax Act, 1961, considering the date of possession of the new residential premises instead of the date of sale agreement and the date of registration?" 2. Under section 54F of the Income-tax Act, in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not being a residential house, and the assessee has, within a period of one year before or two years af .....

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he agreement for purchase of the new flat was entered into more than one year prior to the sale. Hence, the petitioner is not entitled to the benefit under section 54F. In our view, the Tribunal has rightly negatived this contention and has held that the new residential house had been purchased by the assessee within two years after the sale of the capital asset which resulted in long-term capital gains. The Tribunal has held that the relevant date in this connection is July 29, 1988, when the p .....

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, as can be seen from the above decision the question raised by the Revenue as to whether the Tribunal was right in allowing the exemption u/s 54 of the Act considering the date of possession of the new residential premises instead of date of the sale agreement and the date of registration, has been held in favour of the assessee by rejecting appeal of the Revenue. 9. We also find that similar issue has been decided by the Coordinate Bench in the case of Bastimal K Jain v. ITO in ITA.No.2896/Mum .....

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.2009 because the flat got ready and occupancy certificate was received by the builder from the BMC only on 31.03.2009. In such facts, the learned counsel for the assessee stated that acquisition of property is to be considered as and when the possession of the flat was given to the assessee by the builder and that date falls as on 11.09.2009. According to the learned counsel for the assessee the vital conditions of section 54 of the Act are fulfilled when the property s possession was handed ov .....

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. 54F of the Act. We find that the learned counsel for the assessee relied on the decision of this Tribunal in the case of V M Dujodwala vs. ITO 36 ITD 130 (Mum), wherein the Hon ble Tribunal considered the facts of the case as under: He submitted that the builder being out of fund and for such other reason, went on delaying the construction. Just to help the builder to fasten the construction, the payments were made in instalments much earlier to the actual possession of the property. This is v .....

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en the flat construction was completed and available for residence and was actually allotted by the builder to the buyer in compliance with the agreement of sale entered upon by the builder earlier, it could be taken as ready for occupation and that was the date material for the purpose of counting period of one year within the meaning of Section 54 of the IT Act, 1961. He finally submitted that 9-4-1980, on which date the builder agreed to give possession of the flat would be taken as the date .....

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v. Eighth ITO [1984] 10 ITD 75 (Mad.). And finally Tribunal decided the issue that in case the assessee is allowed possession of the property, only from that date the ownership is to be considered for the purpose of deduction u/s. 54 of the Act. Tribunal held as under: 6. We have carefully gone through the facts of the case and the rival contentions. The question before us, though it is simple, raises problems of importance in metropolitan cities where there exists lot of problems for meeting b .....

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ty as stipulated in Section 54. The flat in cities is the most common and a peculiar feature. The builder has to take plans of construction in his own name and sometimes in the names of his vendors and start construction. He invites prospective customers, enters into agreement for sale of flats proposed to be constructed by him and at times, demands the payment of price in one or more instalment. He may sometimes to finance his own construction activity, gives discounts and accepts lesser paymen .....

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. Then the flat is ready for occupation which the builder normally intimates to the buyer. The buyer will then take possession and actually enjoy the house property to the exclusion of others. In this flat business, at times, the builder goes financially bad and delays the construction. Against this background of flat transaction, we are now faced with the provisions of Section 54 for granting exemption to the assessee, who at one time, enters into purchase and at other times, takes possession a .....

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as much as that of a full owner cannot be denied. The purpose of the assessee getting the flat allotted was to have the benefit of residential accommodation entirely in his control as if he was the full owner. Except, therefore, for a few technical requirements, the assessee can be said to be the full owner of the property. As a matter of fact, if not in law, therefore, it would be correct to say that the assessee has purchased a residential property. 8. Left with the relevant date to decide in .....

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unts are paid and the period over which they are paid may not be of much relevance. Considering the peculiar circumstances of that case, it was held that the benefit of Section 54 should be extended by taking the date of allotment and occupation as the relevant date of purchase. Following the said decision, we are inclined to hold that in this case also, the assessee has, though, entered into agreement for purchase of flat on 22-10-77, paid the money during 1977 to 1979, but the relevant date to .....

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has taken similar view by observing as under: 2. Under section 54F of the Income-tax Act, in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not being a residential house, and the assessee has, within a period of one year before or two years after the date on which the transfer took place, purchased a residential house, the capital gain shall be dealt with as provided in that section. As per the section certain exemption has to be allowed in r .....

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tly negatived this contention and has held that the new residential house had been purchased by the assessee within two years after the sale of the capital asset which resulted in long-term capital gains. The Tribunal has held that the relevant date in this connection is July 29, 1988, when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained possession of the flat. This has been taken by the Tribunal as the date of purchase. The Tribunal has l .....

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