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Tarun Jalali Versus DDIT, Circle-3 (1) , International Taxation, New Delhi

2018 (2) TMI 875 - ITAT DELHI

Disallowing rebate u/s 54F - investment made in residential house prior to date of sale of house - Held that:- Sub-section 4 of section 54F prescribes appropriation of sale consideration of original asset towards provision of new asset made within one year before the date of transfer of original asset, two years from the date of transfer or construction of new in-house property, within three years from the date of transfer of original receipt but the Act does not prescribe any condition as to th .....

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be eligible as deduction for the purpose of section 54 of the Act. - On the facts of this case, we find that the construction of house property had been completed within three years from the date of transfer and accordingly, we are of the view that the assessee is eligible for exemption u/s 54F in respect of the two disputed amounts viz. ₹ 12 lakh paid on 20.06.2008 and ₹ 14,91,697 paid on 22.08.2008 which were expended prior to the date of transfer of original asset. We allow .....

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he case are that the assessee sold a flat owned by him vide agreement to sale dated 30.09.2010. As per the assessee, he had entered into sale cum construction agreement dated 20.11.2007 with M/s Skyline Construction and Housing Pvt. Ltd. for purchase of flat no. A-304, Skyline Magnolia, Bangalore and had made payment amounting to ₹ 57,14,699/- towards the purchase of this new residential house on different dates ranging from 18.5.2007 to 15.4.2011. It was the assessee s contention before t .....

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efore the Assessing Officer that although the construction was started prior to the date of sale of old property, the same was immaterial as the construction was completed within a period of three years from the date of sale. The assessee also contended before the Assessing Officer that in the alternative even if it was to be considered as purchase of new house, he had made substantial investment towards purchase of new house during the year under consideration and further that the agreement to .....

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ear from the date of sale of the old property and further no substantial payments were made towards the cost of new asset and only an amount of ₹ 34,54,371/- was paid during the year under consideration. The Assessing Officer proceeded to add back the amount of exemption claimed by the assessee u/s 54 and amounting to ₹ 33,18,000/- to the income of the assessee. 2.1 Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax(A) who partly allowed the assessee s .....

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e upto the due date of filing of return u/s 139(1) of the Act should have been deposited in the notified capital gain account scheme before filing of return of income which was not so done by the assessee. The ld. Commissioner of Income Tax(A) further noted that the assessee had appropriated ₹ 7,62,674/- only towards the construction of new flat after date of transfer of old asset and, therefore, the assessee was entitled to deduction u/s 54 only in respect of payment of ₹ 7,62,674/- .....

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t the assessee was entitled to claim u/s 54. It is prayed that the claim of assessee for exemption u/s 54 may kindly be accepted. 3. Ld. AR filed written submissions and also submitted before the Bench that although the assessee had made payments of ₹ 57,14,699/- towards the new residential house, the amount of ₹ 5,06,415/- paid on 18.05.2007 and ₹ 6 lakh paid on 11.3.2008 were amounts for which no deduction was being claimed in the return of income. It was further submitted th .....

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was claimed in the return of income but was disallowed in the assessment. It was also submitted that the observation of the ld. Commissioner of Income Tax(A) in respect of these two payments as having not been deposited in the capital gains account scheme was incorrect as these amounts were actually expended by the assessee prior to the date of sale of property and, therefore, there was no requirement for having deposited this amount in the capital gains account scheme. Reliance was placed on t .....

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ce on the order of the ld. Commissioner of Income Tax(A). 5. We have heard the rival submissions and perused the material available on record. We find that the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs Bharti Mishra (supra) has observed that sub-section 4 of section 54F prescribes appropriation of sale consideration of original asset towards provision of new asset made within one year before the date of transfer of original asset, two years from the date of transf .....

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