2022 (1) TMI 639 - AT - Income Tax

Appellate Tribunal affirms assessee's deduction under Income Tax Act

ACIT 16 (3), Mumbai Versus Shri Niranjan Bhadang

The Appellate Tribunal upheld the CIT(A)'s decision in favor of the assessee, allowing a deduction of Rs. 2,40,03,938 under section 54F of the Income Tax ... Deduction u/s 54F - flat purchased “within a period of one year before” as contemplated under section 54F - sale of the whole of the under-construction immovable property (i.e. duplex flat comprising of both flat no. 601 and 701) - According to the AO gain resulting from sale of second flat No. 701 could not be allowed to be off-set against the investment in flat no. 4801 as the flat was transferred on 24.11.2014 being the date when the last and final instalment of the full consideration was received, which obviously falls beyond the period of one year - whether the date of sale/transfer is 22.70.2014 or the date when the final installment of sale consideration was received on 24.11.2014 and whether amount of ₹ 9,37,94,130/- paid by the assessee on 31- 10-2013 under agreement dated 19-09-2013 for acquisition of immovable property at Lodha Bellisimo can be off set against the gains earned by him on the sale of under construction immovable property (a duplex flat bearing no. 601 & 701) at Bhagtani Krishang on 22-07-2014 under a decree of the Hon'ble Bombay High Court u/s 54F? - HELD THAT:- For the purpose of section 54F of the Act, the date of sale is the date of agreement to sell and not when the full and final consideration is received by the seller. In the present case the Hon’ble High Court passed consent decree providing for sale of both flats i.e. flat nos. 601 and 701 on 22.07.2014 which is, in our considered opinion the date of sale of flat and not 24.11.2014 when ₹ 4,50,00,000/- was received. Therefore, we are inclined to uphold the order of CIT(A) 0by dismissing the appeal of the Revenue. Issues:1. Interpretation of section 54F of the Income Tax Act, 1961 regarding the eligibility of deduction for capital gains.2. Determination of the date of transfer/sale for the purpose of claiming deduction under section 54F.3. Assessment of whether the date of agreement to sell or the receipt of final consideration is relevant for calculating the period under section 54F.Analysis:1. The appeal was filed by the Revenue against the CIT(A)'s order concerning the assessee's claim of deduction under section 54F of the Income Tax Act, 1961 for the assessment year 2015-16. The primary issue was whether the CIT(A) erred in allowing the assessee's claim of deduction amounting to Rs. 2,40,03,938 under section 54F of the Act.2. The Assessing Officer (AO) contended that the gain from the sale of the second flat could not be offset against the investment in another property as the final installment was received beyond the stipulated period under section 54F. The AO issued a show cause notice to the assessee, questioning the deduction claimed under section 54F. The assessee argued that the date of transfer of the second flat was when the court decree was passed, not when the final installment was received.3. The CIT(A) allowed the appeal of the assessee, stating that the date of transfer was when the High Court decree was passed, making the purchase of the new flat within the stipulated period under section 54F. The CIT(A) relied on legal precedents to support this interpretation. The Appellate Tribunal concurred with the CIT(A)'s decision, emphasizing that the date of sale is the date of the agreement to sell, not the receipt of the final consideration. The Tribunal upheld the order of the CIT(A) and dismissed the Revenue's appeal.4. The Tribunal's decision was based on the understanding that the date of sale for the purpose of section 54F is the date of the agreement to sell, as established by legal precedents and a comprehensive analysis of the relevant provisions. The Tribunal concluded that the delay in receiving the final installment did not alter the date of transfer, and the assessee was eligible for the deduction claimed under section 54F.