TaxTMI 
TaxTMI 
2013 (7) TMI 110
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....ng term capital gain of Rs. 41,98,599/-. The plot was sold vide Sale Deed dated 07.11.2005. The assessee had also entered into an agreement (Apartment Buyers' Agreement) for purchase of flat bearing No.RT 0033 in DLF Royalton Towers, DLF City Phase V, Gurgaon on 17.11.2004, for an amount of Rs. 85,14,500/-. Total consideration of Rs. 85,93,765/- was paid upto 29.06.2005, i.e., even before the capital gains accrued to the assessee out of which Rs. 37,21,449/- was paid during A.Y. 2005-06 and Rs. 48,72,316/- during Assessment Year 2006-07. Exemption of Rs. 29,94,435/- was claimed u/s 54F of the Act on the amount paid during the Assessment Year 2006-07 for purchase of a flat. During the course of assessment proceedings, it was submitted that the entire Capital Gain of Rs. 41,89,599/- was exempt from tax as the cost of the new asset purchased is more than the net consideration received by the assessee and that the assessee had obtained substantial domain over the property. A copy of Apartment Buyers' Agreement, details of the payments made and correspondence with the builder were filed before the Assessing Officer. 3. The Assessing Officer, however, rejected the assessee's claim u/s....
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....ervations made in the assessment order to the effect that the assessee had not acquired substantial domain over the property on the payment of consideration for the same; that the provisions of Section 2 (47) (iiia) of the Act are applicable and ownership or transfer of ownership has to be determined in terms of acquisition of possession or part possession of the property; that the title of the property would have got vested in the assessee only on obtaining of Certificate of Occupation and Use from the competent authority as well as possession, which has not come about in the present case; that the ownership stands transferred only on obtaining completion/occupation certificates and registration of Deed of Declaration, which has also not been done herein; that since the assessee neither owns, nor holds legal title over the property, deduction u/s 54F of the Act is not available to it. 6. The ld. counsel for the assessee, on the other hand, has placed strong reliance on the impugned order. It has been contended that as per the provisions of Section 54F (1) of the Act, purchase of the capital asset is the only requirement. Reliance has been placed on 'CIT vs. Aravinda Reddy', 120....
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....given its common meaning as buying for a price or payment; and that in the Section there is no stress on cash and carry. 9. In the present case, once the assessee had admittedly paid the entire consideration for the purchase of the residential premises even before the capital gain accrued to him, the requirements of Section 54F(1), in our considered opinion, are amply met. For the deduction under the Section, nothing further is required. 10. The Ld. CIT (A) decided in favour of the assessee and in our opinion, correctly so, by holding that Section 54F of the Act is a beneficial provision designed to promote re-investment of sale proceeds of long-term capital assets in residential house properties; that its purpose is to give impetus to the house building activity in order to meet the acute shortage of housing and for this purpose, providing an incentive to tax payers by exempting from tax long-term capital gains arising from the transfer of other assets where the net consideration is invested by the tax payer in residential house. 11. Besides, in 'Aravinda Reddy' (supra), the obtaining relevant legal position, as rightly noted by the Ld. CIT (A), is as follows:- &....
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....uestion of law arises. VI. In Balraj Vs. CIT (2002) 254 ITR 22 (Del.) it was held that for claiming exemption under section 54, it is not necessary that the assessee should become the owner of the property purchased by registration of the document as provided under section 17 of the Registration Act. It was further held that section 54 speaks of purchase. This case has been relied upon by the Indore Bench of Madhya Pradesh High Court in CIT vs. Ajit Singh Khajanchi (2008) 297 ITR 95 (MP). VII. In P K Datta Vs. ITO (2006) 100 TTJ (Pune) 133, the assessee entered into an agreement with a builder/ developer to acquire a row house in the blocks to be built by the latter. The assessee was required to pay various sums under a fixed time schedule. The developer was entitled to terminate the agreement and sell the row house to any other person in case of any default by the assessee. It was held that it was not an agreement for construction but an agreement for construction and sale of one row house to the assessee. Substantial portion of the consideration was paid by the assessee within the period of two years from the date of sale of old property. It was he....