TMI Blog2016 (6) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal No.CIT(A)-26/IT-64/ITO.15(1)(2)/12-13 dated 24.02.2014. The assessment was framed by the ITO 15(1)(2), Mumbai, for A.Y. 2010-11 vide his order dated 29.01.2013 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue in this appeal of the assessee is against the order of the CIT(A) confirming the action of the AO in disallowing deduction on account of Long Term Capital Gains claimed by the assessee by observing that new residential house was not purchased within the time limit prescribed u/s 54 of the Act. 3. Briefly stated the facts of the case are that the assessee is engaged in the business of manufacturing of ornaments through his proprietary concern. During the year under consideration, the assessee claimed deduction u/s. 54 and 54EC of the Act of Long Term Capital Gains arising out of sale of house property and claimed consequential deductions. The assessee sold his flat for a consideration of ₹ 55 lacs on 24.02.2010 resulting into Long term capital gain of ₹ 50,94,568/- after taking indexed cost of acquisition at ₹ 3,79,832/-. The assessee claimed that he has purchased a flat vide agreement dated 28.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55 lacs on 24.02.2010 and this resulted into Long term capital gains of ₹ 50,94,568/- after claiming indexation of cost of acquisition. The assessee claimed deduction u/s. 54 of the Act in respect to which he entered into an agreement for purchase of Flat with M/s. Sharpmind Developers on 28.12.2007. The relevant events relating to the transaction reads as under: Date of Purchase Agreement of under construction flat 28.12.2007 Date of Registration 28.02.2008 Date of Payment ₹ 9.35 L FY 07-08 Rs.10 L FY 08-09 Rs.10.71 L FY 09-10 Date of O/C 31.03.2009 Date of possession 11.09.2009 5. Before us the learned counsel for the assessee argued that the assessee entered into an agreement with M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on which the assessee has purchased the property for the purpose of residence within the meaning of Section 54 of the IT Act, 1961. Till such time, he had only the right to purchase house property, he added. He relied on the following decisions:- (1) CWT v. K.B. Pradhan [1981] 130 ITR 393 (Ori.) (2) K.P, Varghese v. ITO [1981] 131 ITR 597 (SC) (3) CIT v. Mrs. Shahzada Begum [1988] 173 ITR 397/38 Taxman 31 (AP) (4) Purushottam Govind Bhat v. First ITO [1985] 13 ITD 939 (Bom.) (5) Damodar Raheja 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his exemption. 7. In identical issue in Purushottam Govind Bhat's case (supra) the Tribunal held as under: The right the assessee has got is a peculiar type of right which certainly cannot be classified as ownership. To say, therefore, that the assessee has purchased the property would in law be erroneous. On the contrary, that the assessee has an interest in this flat 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 the facts of the case, the decision of the Tribunal in Purushottam Govind Bhat's case (supra) really comes to favour the assessee. In the said case, the assessee joined the society in 1977. He was allotted a flat and occupied the same on 1-1-1980. The Tribunal held, joining the society and paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 looked at the substance of the transaction and come to the conclusion that the purchase was substantially effected when the agreement of purchase was carried out or completed by payment of full consideration on July 29, 1988, and handing over of possession of the flat on the next day. 7. On the other hand, the learned senior DR relied on the decision of Hon ble Gujarat High Court in the case of CIV s. Jindas Panchand Gandhi [2005] 279 ITR 552 (Guj) wherein, the issue was regarding the claim of deduction u/s. 80T and also whether the asset is a Long term or Short term, not the claim of deduction u/s. 54 of the Act. 8. In such circumstances and in the given facts of the case and also the case law relied on by learned Counsel for assessee in the case of V M Dujodwala (supra) coordinate bench of this Tribunal and also of Hon ble Bombay High Court in the case of Smt. Beena K ..... X X X X Extracts X X X X X X X X Extracts X X X X
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