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TMI Blog2023 (7) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The facts of the case in brief as emanating from records are: The assessee in its return of income claimed exemption of Rs. 45,46,285/- u/s. 54 of the Act on long term capital gains from sale of a residential house. The assessee had sold a flat on 04/08/2012. The flat sold by the assessee was jointly owned by the assessee with his wife. The assessee booked two flats in the joint name with his wife on 18/4/2011. The possession of the flats was received by the assessee on 26/11/2014 (possession letters at page 315 and 318 of the paper book). The assessee claimed that since assessee has utilized long term capital gain arising from sale of residential house towards purchase of new residential house within the time specified u/s. 54(1) of the Act, the assessee is eligible to claim exemption u/s. 54 of the Act. The Assessing Officer held that the assessee had booked the residential flats, beyond one year before the date of transfer of a residential house and the possession of flat was received after two years from transfer of a residential house, hence, the assessee is not eligible to claim exemption u/s. 54 of the Act. Aggrieved against the assessment order dated 21/03/2016 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is against disallowance of claim of exemption u/s. 54 of the Act. Before proceeding further to decide the issue it would be relevant to refer to the sequence of events. Date Events. 18/04/2011 The assessee along with his wife Mrs. Rituja Hemanth Phatak enters into a registered agreement for sale with Rahejha Universal Ltd. for purchase of Flat No.1303 & 1304, 13th Floor, B-Wing at Raheja Reflection Serenity, Mumbai. 04/08/2012 The assessee and his wife sold Flat No.905, 9th Floor, B-Wing, DSK Madhuban Co-operative Housing Society. 26/11/2014 The possession letter of Flat No.1303 & 1304 at Raheja Reflection Serenity received by the assessee. The contention of the assessee is that flats were booked by the assessee in a building under construction and the possession of the flats were received by the assessee within three years from the date of transfer of long term capital asset, hence, the assessee qualifies the condition i.e. the assessee has within a period of three years after the date constructed one residential house in India. 6. The relevant extract of the provisions of section 54 of the Act as applicable to the assessment year under appeal reads as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ildar vs. ITO(supra) has held that where the assessee has acquired a flat in a building under construction, it would be a case of construction and not purchase of property. The relevant extract of decision setting out the facts and conclusion is as under: "5. We heard the parties on this issue and perused the record. We have earlier noticed that the assessee has booked a flat, which was under construction, and made payments over the year. The final payments were made subsequent to the date of sale of old flat. The Ld A.R submitted that the final payment was made on 22-10- 2014 and possession of new flat was obtained on 11-12-2014. 6. xxxxxxx 7.xxxxxxx 8.xxxxxxx 9.xxxxxxx 10. Section 54 of the Act provides the condition that the construction of new residential house should be completed within 3 years from the date of transfer of old residential house. According to Ld A.R, section 54 is silent about commencement of construction and hence commencement of construction can precede the date of sale of old asset. In the instant case, the assessee had booked the flat much prior to the date of old flat. We notice that the Hon'ble Karnataka High Court has held in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied is that the assessee must have acquired a right to a specific flat in such a building under construction. 8. No contrary decision is brought to the notice of the Bench. In light of facts of the case and decisions referred above, we accept the appeal of assessee. The assessee is eligible to claim exemption u/s. 54 of the Act as the construction of residential house completed within three years from the relevant date. Consequently, the impugned order is set-aside and appeal of the assessee is allowed. ITA NO.268/MUM/2022 -A.Y. 2013-14: 9. The ld. Authorized Representative of the assessee submitted that the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act after disallowing assessee's claim of exemption u/s. 54 of the Act. The Assessing Officer vide order dated 27/09/2016 levied penalty of Rs. 14,72,240/-. Against the order levying penalty, the assessee filed appeal before the CIT(A). The CIT(A) vide impugned order dismissed appeal of the assessee and upheld penalty levied u/s. 271(1)(c) of the Act . The ld. Authorized Representative of the assessee submitted that assessee in his return of income had disclosed the transaction of capital gain on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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