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2019 (6) TMI 244

..... ssessee did not purchase new house within the stipulated time of one year prior to the date of transfer of original asset as per the requirement while claiming deduction u/s 54F. Besides this renovation to old house which was purchased before the date of transfer of original asset will not entitle the assessee to claim deduction u/s 54F. It is pertinent to note that the decisions relied upon by the Ld. AR will also not support the case of the assessee as in assessee’s case the purchase of new house was on 10.10.2013 while sale deed of Okhla Property was executed on 26.03.2015. - Decided against assessee. - I.T.A. No. 3051/DEL/2018 - 3-6-2019 - Shri G. D. Agrawal, Vice President And Ms Suchitra Kamble, Judicial Member For the Appellant : Sh. S. S. Khan, CA For the Respondent : Sh. N. K. Bansal, Sr. DRs ORDER 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, with .....

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..... l asset was transferred on 26.03.2015 and the new asset was purchased on 10.10.2013 which is beyond the prescribed time of one year before the transfer of original asset. It was contended by the assessee that he had applied for grant of free hold rights in the property (sold) on 31.03.2013 and the possession was handed over to the buyer on 05.10.2013 and due to the delay in getting free hold rights, the execution of sale deed was delayed to 26.03.2015. The Assessing Officer was not satisfied with the contention of the assessee and disallowed the deduction claimed u/s 54F of the Act by stating that the new asset was purchased earlier 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 Capi .....

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..... 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 TAxmann.com 50 (Delhi) 2. CIT(A) Vs. H. K. Kapoor [1998] 234 ITR 753 (Allahabad) 3. Tarun Jalali Vs. DDIT- ITa No. 2376/Del/2014 (Del. Trib.) 4. B. B. Sarkar Vs. CIT(A) [1981] 7 Taxman 239 (Cal.) 5. Mrs. Rahana Siraj Vs. CIT(A) [2015] 58 taxmann.com 333 (Karnataka) 6. Rustom Homi Vakil Vs. ACIT [2016] 69 Taxmann.com 42 (Trib.- Mumbai) 7. Mrs. Gulshanbanoo R. Mukhi Vs. JCIT [2002] 83 ITD 649 (Trib.- Mum) 8. CBDT Circular 667, dated 18/10/1993 9. CIT(A) Vs. Bharti Mishra [2014] 41 Taxmann.com 50 (Delhi) 10. CIT(A) Vs. Kuldeep Singh [2014] 49 taxmann.com 167 (Delhi) 11. Narasimha Raju Rudra Raju Vs. ACIT [2013] 35 taxmann.com 90 (Hyderabad-Trib.) 12. Smt. V. A. Tharabai Vs. DCIT [2012] 19 taxmann.com 276 (Chennai-Trib) 13. .....

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..... ,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 ₹ 1,08,58,660/- u/s 54F. The assessee has also claimed a deduction u/s 54EC on his investment in NHAI Bounds amounting to ₹ 15 lakhs. The deduction claimed by the assessee u/s 54EC is allowable on the investment in NHAI bounds was done on 30/04/2015. Thus, the deduction claimed by the assessee u/s 54F was disallowed as the assessee fails to satisfy the eligible conditions maintained u/s 54F of the Income Tax Act. The Ld. DR also relied upon the decision of CIT(A) Vs. Balbir Singh Maini 398 ITR 531 wherein the Hon ble Apex Court held that the income from capital gain on a transaction which never materialized is based on hypothetical transaction. 7. We have heard both the parties and perused the material available on record. The CIT(A) held as under:- 5.3. I have considered the facts of the case and the submission made by the AR. It is contended that the appellant had entered into an MOU for sale of property on 31.05.2013 and had .....

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..... 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 way of purchase of new residential house was not made in the stipulated time of one year prior to the date of the transfer of the original asset. As far as the improvement in this new house for ₹ 21,35,460/- is concerned, the same is also not eligible for deduction u/s 54F of the Act as the said deduction is not available for making improvement/renovation in the old house already acquired before he transfer of the original asset. …………………………………. 5.3.6. In view of the facts as discussed above and the legal position as upheld by various courts in the case laws referred above, it is held that the original asset was transferred in accordance with the provisions of section 2(47) of the Act only on 26.03.2015 and the appellant has not purchased the new house within the stipulated time of one year prior to the date of transfer of original asset and the deduction u/s 54F of the Act is not available for making renovation to the old hou .....

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