TMI Blog2019 (6) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 29/12/2017 passed by CIT(A)-11, New Delhi for Assessment Year 2015-16. 2. The grounds of appeal are as under:- 1. That, on the facts and circumstances of the case and the provisions of law, the order passed by the Learned Assessing Officer under section 143(3) is erroneous, arbitrary, without application of a judicial mind, and bad in law. 2. That, on the facts and circumstances of the case and the provisions of law, the Learned AO erred in rejecting the claim for deduction of Rs. l,08,58,660/- u/s 54F. 3. That, on the facts and in the circumstances of the case the Learned AO completely overlooked the fact that section 54F is a beneficial provision which requires to be interpreted in a liberal manner, particularly in a case where the Appellant had established its bonafide. 4. That, on the facts and in the circumstances of the case the Learned AO erred in ignoring the fact that the possession and title deeds of the Okhla property was handed over to the buyer on 5.10.2013 itself in part performance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the prescribed period of one year. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the sole dispute relates to disallowance of claim u/s 54F (₹ 1,08.58.660/-). The Ld. AR filed the following details: (i) Capital gains arising on Sale of industrial property at Okhla Sale price of Okhla Property 2,60,00,000/- Brokerage paid 2,60,000/- Net sale consideration 2,57,40,000/ Less: indexed cost of acquisition 71,56,149 Long Term Capital Gain 1,85,83,851 Less deduction u/s 54EC 50,00,000/- Net Long Term Capital Gain (as determined by AO. Page 37 of Paper book) 1,35,83,851/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer erred in treating the case of the assessee to be falling under the first limb of Section 54F(1) namely purchase of a new residential property, whereas the assessee s case came under the second limb, namely construction of a new residential house property. The assessee purchased the residential house at Lucknow on 10.10.2013 and completed construction of an additional floor on it by 30.03.2015. Since construction was completed within three years of execution of the sale deed of Okhla property on 26.03.2015, the requirement of second limb of Section 54F stood fulfilled. The Ld. AR submitted that in cases of construction of new residential house, the statutory requirement is only of construction within three years after the date of transfer. There is no requirement that the land or building on which construction is to be carried out should be purchased after the date of transfer of the old property. There is also no requirement that the land or building on which construction is to be carried out should have been purchased within one year before the sale of the old property. The Ld. AR relied upon the following decisions: 1. CIT Vs. Bharti Mishra [2014] 41 TAxma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. The Ld. DR further submitted that the original capital asset was transferred through a registered sale deed only on 26/5/2015. The conveyance deed was executed on 21/3/2015. On perusal of the memorandum of understanding, the same was executed on 31/5/2013 as it is noticed that the buyer have agreed to purchase the free hold industrial property from the assessee. The free hold industrial property in question was obtained on 21/3/2015. The MOU mentioned the conditions of free hold for the transfer of the capital asset. Hence, the transfer of rights associated with the property was actually took place on 21/3/2015 whereas the free hold was obtained from the government agency as per MOU signed by the assessee at 31/5/2013. Thus, the Assessing Officer held that the original long term capital asset i.e. an industrial property at Okhla Industrial area was sold on 26/3/2015 a new residential house at Lucknow for ₹ 87,23,200/- was purchased on 10/10/2013 i.e. one year five months 15 days before the transfer of the original capital asset. The cost of improvement incurred for the Lucknow property amounts to ₹ 21,35,460/-. The assessee claimed a deduction of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), the buyer was entitled to use/lease the said property. However, it is to be observed that complete rights in the property were not transferred to the buyer as the buyer was entitled to only use/lease the said property but was not given the right to transfer/ sell the property. The complete rights in the property were transferred to the buyer only by the way of the sale deed executed in his favour on 26.03.2015. Accordingly, it is clear that the property was transferred in accordance with the provisions of section 2(47) of the Act only on 26.03.2015. 5.3.2. In view of the original property being sold on 26.03.2015, the eligibility of the appellant for claim of deduction u/s 54F of the Act is to be analyzed with reference to this date only. It is observed that the appellant has purchased a residential house on 10.10.2013 for ₹ 87,23,200/- i.e. the new residential property was purchased by the appellant much before the prescribed period of one year i.e. one year five months and fifteen days before the transfer of the original asset. In view of this, I am of the opinion that the appellant is not entitled for deduction u/s 54F of the Act, as the investment by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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