9911796707
TMI Blog2014 (9) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (A) has erred in confirming the denial of exemption u/s 54 of the Income Tax Act in respect of Long Term Capital Gain of Rs. 10,66,400/-. 2. The brief facts of the case are that the assessee is an individual. He has filed his return of income for assessment year 2009-10 on 28.08.2009 declaring total income of Rs. 5,66,860/-. The case of the assessee was selected for scrutiny assessment. A notice u/s 143(2) was issued and served upon the assessee. On an analysis of the record, it revealed to the Assessing Officer that the assessee had sold a house property on 1.9.2008 for a consideration of Rs. 95.00 lakhs. It was a long term capital asset to the assessee after deducting the indexed cost of acquisition at Rs. 31,00,209/-. The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property. 3. Dissatisfied with the order of the Assessing Officer, the assessee carried the matter in appeal. The learned CIT (A) had called for a remand report. According to the learned CIT (A), a sum of Rs. 35,25,600/- was paid within a period of one year prior to sale of house property. The learned CIT (A) had called for a remand report from the Assessing Officer and the Assessing Officer has agreed to this extent. The observation of the learned CIT (A) read as under: "4.1 The Assessing Officer erred in law in denying the exemption u/s 54 of the Act in respect of long term capital gains of Rs. 45,92,000/-. 4.2 The Assessing Officer erred in law in taxing the sum of Rs. 45,92,000/- being the long term capital gains at normal rate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that possession of the flat booked on 25.11.2006 was handed over to the assessee in May, 2008 meaning thereby the flat was transferred within the meaning of section 2(47) of the Income Tax Act in May, 2008. This period falls in the window period of one year prior to the sale of the long term capital asset i.e. the sale was made on 1.9.2008. The possession was handed over in May, 2008. He further contended that the sale deed for purchase of the flat was executed on 15.10.2009. Even if the date is being taken as transfer of the flat in the name of the assessee, then it falls within the window period of two years from sale of the long term capital asset. Therefore, with both angles, the investment in the new flat ought to have been allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he record carefully. On a perusal of section 54, we are of the view that exemption u/s 54 on utilization of capital gain for purchase of a residential house or construction of a residential house is being given in sub-section 1. Sub-section 2 provides a mechanism if the capital gain was not appropriated by the assessee towards the purchase of the new asset within one year before the date on which the transfer of the residential asset took place or which is not utilised by him for the purchase or construction of new asset before the date of furnishing the return of income u/s 139 shall be deposited by him before furnishing such return in a scheduled account. The language of section nowhere suggests that the same gain is to be utilised for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee would be accepted on the day when draw of lots for allotment of flat taken place in the society and ultimately allotment letter was issued to the assessee. This letter was issued in October, 1998 whereas the land was sold in September, 1995. Therefore, it was held that investment was not made within a period of two years from the sale of the agricultural land and therefore, the assessee is not entitled. The second reason assigned by the Hon'ble Court was that agricultural land was owned by Vipn Malik (HUF) and flat was not purchased in the name of HUF, rather it was in the name of Vipin Malik. Thus, this authority in a way goes in favour of the assessee in the present case. It is not for the proposition that benefit u/s 54 wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, then such allotment is final, unless it is cancelled or the allottee withdraws from the scheme. The allottee under the scheme of self financing gets title on the issue of the allotment letter. Shri Vipin Malik sought the benefit of this circular on the ground that he has made payment to a cooperative society. The Hon'ble Court has observed that this circular is not applicable in the alleged payments to the cooperative society, where draw of lots would be announced later on. 6. In view of the above discussion, we are of the view that the learned CIT (A) has erred in restricting the benefit u/s 54 to the extent the payments made within a period of one year for purchase of the new asset. The purchase of the new asset is to be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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