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TMI Blog2018 (12) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,00,000/- toward the reinvestment made by the assessee appellant. 1.2.1. That even if it is held that benefit u/s 54 is not available then too, it is not taxable in the year under consideration. 2. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing." Ground nos. 1 and 1.1 are regarding disallowing the claim of indexed cost of construction/improvement. 2. The assessee filed his return of income on 3rd January, 2012 declaring total income of Rs. 2,02,300/-. The assessee declared income from Long Term Capital Gain and also claimed deduction under section 54 of Rs. 10,00,000/-. On examination of record, the AO noted that while computing the Long Term Capital Gain, the assessee has deducted indexed cost of improvement at Rs. 1,07,505/-. The AO asked the assessee to furnish the documentary evidence in support of the cost of improvement/construction in the property in question. Since the assessee did not furnish any supporting evidence, accordingly the AO disallowed the claim of indexed cost of improvement/construction of Rs. 1,07,505/-. The assessee challenged the action of the AO before the ld. CIT (A). However, in the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces Pvt. Ltd. and made a payment of Rs. 10,00,000/- to the builder prior to the sale of the existing property under consideration on 29.09.2010. The AO conducted the enquiry in this regard and found that the said builder has submitted the plans to the Government authorities for development of the land at Mumbai in the month of October, 2013 and was expecting the approval in May, 2014. Accordingly, the AO denied the claim of deduction under section 54 of the Act by holding that the payment to the builder M/s. Ornate Spaces Pvt. Ltd. was made prior to the date of sale of property. However, the assessee has failed to acquire the allotment of the said flat within a period of 2 years from the transfer of original asset or till the date of the order and, therefore, the assessee failed to purchase or construct the new residential house within the prescribed period under section 54 of the Act. The assessee challenged the action of the AO before the ld. CIT (A) and reiterated his claim that once the assessee has made the investment for purchase of new residential house, then even if there is a delay on the part of the builder to obtain the plan sanctioned from the Government authorities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential house. However, at the time of advancing the said amount in the year 2010 even the plan was not in existence and the builder has submitted the plan only in the month of October, 2013 which was expected to be approved in the month of May, 2014. Further, the ld. D/R has submitted that the proviso to section 54(2) is only for the purpose of not utilizing the amount deposited in the Capital Gain Account Scheme and, therefore, the said proviso cannot be extended for the purpose of investment without depositing the amount in the Capital Gain Scheme Account. Since the time period of 2/3 years have already expired at the time of passing the assessment order, therefore, there was no reason for awaiting for the expiry of time period provided under section 54 and then making an addition in the subsequent assessment year. The ld. D/R has submitted that the time period for making the investment had expired before the assessment order was passed by the AO. Therefore, it was already became final that the assessee has failed to acquire or purchase a new residential house within the time period prescribed under section 54 of the Act. 9. We have considered the rival submissions as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t due to the delay in launching of the Project. It is clear that neither on the date of payment of advance nor till the expiry of time period prescribed u/s 54 the alleged asset being residential house was in existence and at the most the assessee acquired a right to purchase a flat in the upcoming project to be developed in future. Therefore, it is clear that the said investment made by the assessee was not in accordance with the scheme of the provisions of section 54 of the Act which is an incentive provided for acquisition or construction of new residential house for assessee's own residential needs. It appears that this investment was not made by the assessee for acquiring the residential house for the assessee's own immediate need and, therefore, the decisions relied upon by the assessee would not help the case of the assessee once the assessee has clearly failed to satisfy the substantial and primary condition of acquiring the residential house within the prescribed period under section 54 of the Act. As regards charging the capital gain in subsequent year as per the proviso to section 54(2) of the Act, which reads as under :- "Provided that if the amount deposited under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made available to the assesses to claim deduction u/s 54 of the Act by treating the allotment of flats by the DDA under self finance scheme at par with the construction of flat. (iv) The appellant claimed deduction u/s 54 of the Act for acquiring a flat at Mumbai and claimed to make payment in the year 2010. However, till 29th January, 2014, even the necessary approval have not been received by M/s. Ornet Spaces Pvt. Ltd. and it was anticipated to be received by May, 2014. Till the date of this order, nothing has been brought on record by the appellant that a flat duly constructed has been allotted to it or possession of the same has been given to it. It may be mentioned that as per provisions of section 54 of the Act, the appellant has either to purchase or construct a residential house property within two or three years, as the case may be, from the date of sale of the subjected property sold by the appellant on 29.09.2010. However, in the instant case under consideration, the appellant has not constructed any property even almost after six years of sale of the subjected property on 29.09.2010. It may be mentioned that in a recent decision in the case of Yashovardhan Sinha vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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