TMI Blog2022 (12) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... ELHI HIGH COURT] held that for the purpose of computing period of holding, date of allotment should be considered, but not the final sale deed executed for conveying the title and interest in the property. Hence, we direct the AO to compute long term capital gains as claimed by the assessee. Deduction claimed u/s. 54F - We find that the assessee has spent about Rs. 88,75,400/- towards construction of another residential house which includes purchase of land, payment for labour charges and payment to M/s. Raj Constructions for material supply. However, the contractors M/s. Chintu Constructions and M/s. Raj Constructions could not complete construction for various reasons. In the mean time, the assessee went out of India for official work and could not oversee construction work and only after she came back settled dispute with contractors and ultimately completed construction in the year 2009 and obtained necessary electricity connection to prove that the house property has been successfully completed. No doubt, the assessee could not complete construction of house within three years from the date of transfer of original asset. However, for any reason which is beyond control of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold within a year and treated as STCG without considering the para 5 above. 7.Further, the Ld. AO also denied the exemption u/s 54F without considering the investment made by the appellant on purchase of land in Potheri advances made for the construction. 8. Thus, it is prayed before the Hon'ble Forum to treat the said transaction as Long Term and allow deduction u/s 54F as the said investment in the new asset is ready and put to use. 9. For the above reasons and other reasons that may be adduced at the time of hearing, the addition made by the Ld. AO may kindly be deleted and justice rendered. 10.The appellant craves leave to amend, alter or delete any of the above grounds of appeal. 3. The brief facts of the case are that the assessee is an individual, had e-filed return of income for the assessment year 2013-14 on 27.11.2013, admitting total income of Rs. 2,26,900/-. During the financial year relevant to assessment year 2013-14, the assessee sold a vacant land at Madambakkam for a consideration of Rs. 86,40,000/-. This land was purchased by the appellant on 06.01.2012 from Shri. R. Radhakrishnan. The assessee had computed long term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) had also rejected deduction u/s. 54F of the Act, because the deduction is available only in respect of transfer of long term capital asset and not to short term capital asset. The relevant findings of the CIT(A) are as under: 8. Decision : I have duly considered the assessment order, written submissions and various details filed by the appellant in adjudicating the instant appeal. From the perusal of grounds of appeal taken by the appellant, there exist three issues which require to be addressed in the instant appeal, which are as follows: i.Whether the land sold by the appellant on 12.04.2012 is a short term or long term capital asset? ii.In case, the above land is of long term in nature, whether the appellant is entitled for deduction U/s.54F? iii.Whether the sale of land situated at Nayapakkam Village is taxable in the hands .of the appellant? Issue wise adjudication is as follows: Issue No.1:- Nature of land sold on 12.04.2012 i.e., Short Term or Long Term On 12.04.2012, vide sale deed document numbering 3032/2012, the appellant sold a vacant land at Madambakkam for a consideration of Rs.86,40,000/-. This land was purchased by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of transfer of long term capital assets and not to short term capital assets. Hence, the ground of the appellant is dismissed. Issue No3: Taxability of sale of land situated at Nayapakkam Village: On 14.06.2012, vide registered sale deed numbering 3393 of 2012, the appellant's spouse Shri. V.G Pannerselvam acting as Power gent on behalf of Smt P.Chitra and Smt Geetha Chandrasekaran had sold a land situated at Nayapakkam Village for a consideration of Rs. 24,96,000/- the appellant's son-in-law The AO treated the sum of Rs.24.96.000- as taxable income of the appellant under the head Capital Gains and after allowing deduction towards cost of Rs.5,63,670/-, the resulting sum of Rs.19,32,330- is assessed in the appellant's hands. From the perusal of registered sale deed, it is noticed that the transaction of sale was between the appellant's spouse and her son-in-law, in which the appellant has no role. It is a settled law that recitals of the registered sale deed are final and one cannot go beyond the registered document. In the instant case, it is clearly spelt out in the registered sale deed that the appellant's spouse is a Vendor and her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration received for sale of property for the purpose of acquiring new asset and therefore, merely for the reason of non-completion of house property within the stipulated period, benefit of deduction u/s. 54F of the Act cannot be denied. In this regard, relied upon the following judgments: 1. CIT v Ravindar Kumar Arora (2012) 342 ITR 38 Delhi 2. CIT v Sardarmal Kothari and another (2008) 302 ITR 286 3. CIT v Sambandan Udayakumar (Karnataka High Court) 4. Nipom Mehotra v ACIT (2008) 110 ITD 520 (Bangalore) 7. The Ld. DR, on the other hand referring to allotment letter from M/s. Baskar Co., submitted that documents furnished by the assessee are not convincing. Although, assessee claims to have get allotment of flat in the year 1984, but could not explain substantial delay in execution of sale deed i.e., on 06.01.2012. In between there were multiple transactions, right from PoA to one person to sale agreement to the assessee. The assessee could not explain said transactions with original documents. Therefore, the AO has rightly considered sale deed dated 06.01.2012 and held that profit is short term capital gain. The Ld. DR further submitted that the AO has rightly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments furnished by the assessee, we find originally the land was purchased by Smt. G. Meenakshi and Shri. Baskar, son of Smt. Meenakshi in the year 1983. Smt. Meenakshi and Shri Baskar developed the land into residential flat in the name of M/s. Baskar Co. and sold to prospective buyers. Therefore, from the above facts, there is no doubt with regard to allotment letter furnished by the assessee from M/s. Baskar Co., stating that the impugned property has been allotted to the assessee on 28.12.1984. We further analyzed, documents like PoA between Smt. Meenakshi and Shri. R. Radhakrishnan, subsequent sale agreement and sale deed. From the above documents, one undoubted fact emerged is that the ultimate purchaser of the property is the assessee Smt. P. Chitra, because the allotment letter is in the name of the assessee. Subsequently, PoA was executed in favour of Shri R. Radhakrishnan, brother of assessee. Shri. R. Radhakrishnan, as an agent of the owner entered into a sale agreement with the assessee and finally executed the sale deed. If you take sequence of events, it is undoubtedly clear that the assessee has acquired right over the above property in the year 1984 and is enjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled dispute with contractors and ultimately completed construction in the year 2009 and obtained necessary electricity connection to prove that the house property has been successfully completed. No doubt, the assessee could not complete construction of house within three years from the date of transfer of original asset. However, for any reason which is beyond control of the assessee, construction could not be completed and also assessee has spent entire amount of consideration received for transfer of original asset for acquiring new asset, then there is no reason for the AO to deny deduction u/s. 54F of the Act. Further, provisions of section 54F should be construed liberally as per various High Court decisions including Hon ble Madras High Court in the case of CIT vs Sardarmal Kothari and another (2008) 302 ITR 286, and also Hon ble Delhi High Court in the case of CIT v Ravindar Kumar Arora (2012) 342 ITR 38 (Delhi). A similar view has been taken by Hon ble Karnataka High Court in the case of CIT v Dilip Raj Sekar (2019) 260 Taxmann 317 Kar, and also ITO vs Saroj Rani Gupta (2019) 104 Taxmann.com 132. Therefore, we are of the considered view that, the AO has erred in denyi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
