TMI Blog2020 (6) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... i Dinesh Gupta, CA For the Department : Shri Umesh Takyar, Sr. DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 31/01/2017 passed by the learned CIT(Appeals)-10, New Delhi [in short the Ld. CIT(A) ] for assessment year 2012-13 raising following grounds: 1. That on facts and in the circumstances of the petitioner s case, the learned Commissioner of Income Tax (Appeals)-10, New Delhi erred in law and on facts in upholding the order of the learned Assessing Officer and in sustaining the disallowance of the claim of ₹ 2,07,62,580/- made in terms of the provisions contained in section 54F of the Income Tax Act, 1961. 2. That on facts and in the circumstances of the petitioner s case, the learned Commissioner of Income Tax(Appeals)-10, New Delhi, erred in law and on facts in upholding the order of the learned assessing officer and in not allowing deduction under section 54F of the Act even for the amounts spent on construction of the residential house property after the date of long term capital gain/transfer of the original asset. 2. Briefly stated facts of the case are that the assessee filed return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 45 of the Act. But if an assessee invest in certain new assets, the capital gain is not charged to the extent provided in the provisions of the Act. One of such provision is section 54F of the Act. In the case the dispute is regarding availing of benefit under section 54F of the Act. Under the provisions of the section 54F, the long-term capital gain is not charged, if any individual or HUF invest the entire sale consideration arising on transfer of any long-term capital asset (not being a residential house), i.e., original asset, into a purchase or construction of residential house (i.e new asset). If the cost of the new asset is less than the net consideration in respect of the original asset, the capital gain in proportion to the cost of the new asset bears to the net consideration, is not charged under section 45 of the Act. 4.2 For availing the benefit of section 54F, the investment in purchase/construction of residential house has to be made as under: (a) Purchase of residential house within a period of one year before or two years after the date on which the transfer of the original asset took place, or (b) Construction of residential house within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AO, the residential house (flat) was purchased on 29/09/2009, which is beyond the period of purchase of residential house (i.e 17/08/2010 to 18/08/2013) and thus, the assessee was not entitled for the benefit of section 54F of the Act. 4.7 The assessee, however, referred to various clauses of the buyer agreement and submitted that on the date of the buyer agreement, the developer was yet to obtain all required permits and approval for construction, commissioning and development of the project [clause A(X)]; the super area of the flat was tentative and was to be confirmed after construction of project (clause 1.2); layout plans were subject to change (clause 1.7a); proposed building plans, design etc. were tentative (clause 8.2); if completion of the flat (project) delayed for the reasons beyond the control of developer, then developer was to be entitled for extension of time (clause 9.4.1). In view of the clauses of the buyers agreement and possession handed over in April, 2012, the assessee contested that the flat was constructed before April, 2012 and it was within the period construction of three years after the sale of original asset ( i.e. 18/08/2014). He relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.R. has placed reliance. The solitary issue raised in the present appeals by the assessee and Revenue is: Whether the assessee is eligible for claiming exemption u/s 54F in respect of residential flat / house for which the assessee has entered into an agreement for purchase more than one year before the date of transfer of capital asset ? The dates qua, transfer of capital asset, execution of agreement for purchase of residential flat and possession of the flat are not in dispute. 7. The contention of the assessee is that since final consideration was paid and the possession of flat was received within a period of one year prior to the date of transfer of capital asset, the same should be considered as the date of purchase. Whereas, the stand of Department is that the date of execution of agreement for purchase of flat should be considered as the date of purchase. 8. The ld. A.R. has drawn our attention to Clause (12) of the deed of agreement between the assessee and the builder for purchase of flat. The said clause is reproduced herein below : 12. Nothing contained in this Agreement shall be construed to as to confer upon the Purchaser any right whatso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being a residential house, and the assessee has, within a period of one year before or two years after the date on which the transfer took place, purchased a residential house, the capital gain shall be dealt with as provided in that section. As per the section certain exemption has to be allowed in respect of the capital gains to be calculated as set out therein. The Department contends that the assessee did not purchase the residential house either one year prior to or two years after the sale of the capital asset which resulted in the long-term capital gains. According to the Department, the agreement for purchase of the new flat was entered into more than one year prior to the sale. Hence, petitioner is not entitled to the benefit under section 54F. In our view, the Tribunal has rightly negatived this contention and has held that the new residential house had been purchased by the assessee within two years after the sale of the capital asset which resulted in long-term capital gains. The Tribunal has held that the relevant date in this connection is July 29, 1988, when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained posse ..... 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