TMI Blog2021 (2) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of Sale Deed registration decided by the parties. Copy of the Sale Deed Dated 19.02.2013 is also filed with the photograph of the property in question is affixed which clearly reveal that property under sale was incomplete and renovation work was going on and as such it was not in habitable condition. Due to this fact, the Supplementary Agreement was executed for completion of the work by the Seller i.e., M/s. Mahalakshmi Buildcon. It would, therefore, strengthen the submissions of the Learned Counsel for the Assessee that physical possession of the property after completion of the entire work was handed-over to the assessee on 19.04.2013 and as such it would fall within one year before the date of transfer of property at 80, Shanti Vihar, Delhi. Thus, assessee would be entitled for deduction under section 54 of the I.T. Act, 1961. Since the assessee filed revised computation of income before A.O, therefore, there is no bar on the powers of the Commissioner of Appeals being the First Appellate Authority to consider the case of assessee. The assessee also filed copies of the bills to show renovation in the property. Considering the entire material on record in the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax vs., Jai Parabolic Springs Ltd., [2008] 306 ITR 42 (Del.). Therefore, revised computation was rejected. The A.O. noted that assessee has claimed exemption of ₹ 77,34,426/- in the income tax return and in the revised computation at ₹ 99,22,300/-. This exemption has been claimed under section 54 on account of purchase of residential house property at Ground Floor D-50, Kushambi, Ghaziabad, Uttar Pradesh. On perusal of the Purchase Deed filed by assessee it was observed that this house was purchased on 19.02.2013 whereas the residential property at 80 Shanti Vihar, Delhi was sold on 24.02.2014. The A.O. noted that the exemption under section 54 is allowable only if the assessee purchased the residential house within one year before or two years after the date on which transfer of capital asset took place. The details of sale and purchase of property is tabulated in the assessment order as under : 3.3. The A.O, therefore, found that assessee is not entitled to claim exemption under section 54 in respect of capital gains arising on sale of property at 80 Shanti Vihar, Delhi. The A.O, therefore, allowed exemption under section 54 only in respect of lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same facts and also mentioned in the Supplementary Agreement that the Seller [First Party] had taken back the physical possession of the above said property from the Assessee [Second Party] from dated 19.02.2013 to dated 19.04.2013 for finishing and completion of the pending work of the above said property and after completion of the entire work, the Seller will handover the physical possession to the assessee on or before 19.04.2013. It is also mentioned in the Supplementary Agreement that Sale Deed was executed on 19.02.2013 because of time binding of Sale Deed registration. He has, therefore, submitted that since possession of the property in question have been taken after completion on Dated 19.04.2014 through the Possession Agreement, therefore, possession given by the Builder /Seller has to be taken as date of acquisition of new property for computing the capital gain under section 54 of the I.T. Act, 1961. Learned Counsel for the Assessee in support of the above contention relied upon Order of ITAT, Mumbai D-Bench, Mumbai in the case of Smt. Ramita Mahendra Mehta, Mumbai vs., ITO-9(2)(3), Mumbai, Dated 13.09.2017 in ITA.No.4535/Mum/2014 and Order of ITAT, Delhi F-Bench, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 19.04.2013 for finishing and completion of the pending work of the above said property and after completion of the entire work First Party will handover the physical possession of the property to the assessee on or before 19.04.2013. It is also mentioned in the Supplementary Agreement that Sale Deed of the property was executed on 19.02.2013 because of the time binding of Sale Deed registration decided by the parties. Copy of the Sale Deed Dated 19.02.2013 is also filed at Pages 11 to 98 of the PB in which at page-39 the photograph of the property in question is affixed which clearly reveal that property under sale was incomplete and renovation work was going on and as such it was not in habitable condition. Due to this fact, the Supplementary Agreement was executed for completion of the work by the Seller i.e., M/s. Mahalakshmi Buildcon. It would, therefore, strengthen the submissions of the Learned Counsel for the Assessee that physical possession of the property after completion of the entire work was handed-over to the assessee on 19.04.2013 and as such it would fall within one year before the date of transfer of property at 80, Shanti Vihar, Delhi. Thus, assessee would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on: Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing exemption of ₹ 11,04,423 under section 54F of the Income-tax Act, 1961, considering the date of possession of the new residential premises instead of the date of sale agreement and the date of registration? 2. Under section 54F of the Income-tax Act, in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not 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, the petitioner is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee by the builder on 11.09.2009 i.e. within the time limit prescribed u/s. 54 of the Act for claiming deduction u/s 54 of the Act. We find from the arguments of the learned counsel for the assessee as well as the learned DR that these facts are undisputed. The assessee from the very beginning has been claiming that the possession of the flat was handed over to the assessee only on 11.09.2009 and that date should be reckoned for the purpose of computation of claim of deduction u/s. 54F of the Act. We find that the learned counsel for the assessee relied on the decision of this Tribunal in the case of V M Dujodwala vs. ITO 36 ITD 130 (Mum), wherein the Hon ble Tribunal considered the facts of the case as under: He submitted that the builder being out of fund and for such other reason, went on delaying the construction. Just to help the builder to fasten the construction, the payments were made in instalments much earlier to the actual possession of the property. This is very common in transaction in flats. The construction was completed at a later date and on 24-11-79, the builder expressed his desire to offer the possession of the flat. That is the first date when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iar feature. The builder has to take plans of construction in his own name and sometimes in the names of his vendors and start construction. He invites prospective customers, enters into agreement for sale of flats proposed to be constructed by him and at times, demands the payment of price in one or more instalment. He may sometimes to finance his own construction activity, gives discounts and accepts lesser payment. The price paid before construction is complete, will be different from the price demanded by the vendors after the flat is constructed. The buyers even after having the agreement for purchase of the flat cannot exercise any right of ownership or their right cannot be traced to any part of the construction till such time the builder actually gives the possession of a particular flat to the buyer. After the completion of structure, it has to be inspected and cleared by the municipal authorities. Then the flat is ready for occupation which the builder normally intimates to the buyer. The buyer will then take possession and actually enjoy the house property to the exclusion of others. In this flat business, at times, the builder goes financially bad and delays the constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is within the period of one year and therefore the capital gains are clearly exempt from tax applying the provisions of Section 54. 6. The learned counsel for the assessee also relied on the decision of Hon ble Bombay High Court in the case of CIT vs. Smt. Beena K Jain 217 ITR 363 (Bom), wherein the Hon ble Bombay High Court has taken similar view by observing as under: 2. Under section 54F of the Income-tax Act, in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not 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 mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 54 of the Act as assessee has sold residential flat on 11.09.2009 and satisfied the requirement to purchase the new residential property within the period of one year before the date of transfer of the asset sold. Thus, we allow the claim of the assessee for deduction u/s 54 of the Act. 11. In the result the appeal of the assessee is allowed. 6.1. Similar view is taken by ITAT, Delhi F-Bench, Delhi in the case of Rajiv Madhok vs., ACIT (supra), in which in paras 4.10 to 10 it is held as under : 4.10 Accordingly, submitted that in view of the possession of the flat taken on 06/07/2012, which is well within period of two years from the transfer of the original asset (i.e. between 18.08.2011 to 18.08.2013) and thus the assessee is entitled for the benefit of section 54F of the Act. 4.11 The Tribunal in the case of Ayushi Patni (supra) after following the decision of the Hon ble Bombay High Court in the case of CIT Vs Smt. Beena Jain, 217 ITR 363, treated the date of the taking possession as the date of the purchase of the flat and allowed benefit of section 54F of the Act observing as under: 6. We have heard the submissions made by rival sides and have per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of transfer of capital asset. It is an un-rebutted fact that at the time of execution of agreement, the residential property was not in existence. Therefore, taking into consideration facts of the case, the date of possession of flat is the date of actual purchase for the purpose of claiming exemption u/s 54F of the Act. 9. We find that similar issue had come up before the Hon'ble Bombay High Court in the case of CIT Vs. Smt. Beena K. Jain (supra). The Hon'ble High Court in the appeal by Department, upholding the order of Tribunal and allowed the benefit of exemption u/s 54F to the assessee. The substantial question for consideration before the Hon'ble High Court was : Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing exemption of ₹ 11,04,423/- under section 54F of the Income Tax Act, 1961, considering the date of possession of the new residential premises instead of the date of sale agreement and the date of registration ? The Hon'ble High Court decided the issue in favour of the assessee by answering the question as under : 2. Under section 54F of the Income-tax Act, in the case of an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clause 46.0 of the buyers agreement (which is available on page 41 of the paper book), which is identical to clause 12 in the case of Ayushi Patni (supra) reproduced in para 8 of the decision. The relevant clause 46.0 of the buyer s agreement is reproduced as under: 46.0 The Allottee understands and confirms that the execution of this Agreement shall not be construed as sale of transfer under any applicable law and the title to the Allottee hereby allotted shall be conveyed and transferred to the Allottee only upon his fully discharging all the obligation undertaken by the Allottee including payment of the entire sale price and other applicable charges/dues, as mentioned herein and only upon the registration of the conveyance/sale deed in his favour. Prior to such conveyance, the allottee shall have no right or title in the apartment. 9. In view of the identical facts and circumstances, the ratio of the above decision in the case of Ayushi Patni (supra) is squarely applicable over the facts of the instant case and thus accordingly, we hold that the new asset i.e. residential house has been purchased within two years from the date of transfer of the original asset i. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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