TaxTMI 
TaxTMI 
2013 (11) TMI 514
X X X X Extracts X X X X
X X X X Extracts X X X X
....50, Jubilee Hills in the financial year 2007-08 vide sale document No. 2739/2007 and 2741/2007 dated 26.7.2007 for a gross consideration of Rs. 4,32,00,000 as against Sub-Registrar value of Rs. 5,04,92,000. According to the Assessing Officer, as the assessee sold the property on 26.7.2007 and the new investment made by the assessee is before 31.3.2007. In other words, the construction of house was substantially completed by 31.3.2007 i.e., before the sale of capital asset which led to capital gain. As such the condition laid down u/s. 54F of the Act was not fulfilled. Being so, the assessee is not entitled for deduction u/s. 54F and the same was denied. The assessee went in appeal before the CIT(A). 4. It was observed by the CIT(A) that the assessee started house construction in plot No. C-10, AFCHS, Sainikpuri, Secunderabad in the financial year 2005-06 vide construction agreement with Suguni Constructions Pvt. Ltd. on 21.12.2005. As per the agreement, the construction was to be completed and the house has to be handed over to the assessee under habitable condition on or before 20.3.2007. It was also noticed by the CIT(A) that as per Balance Sheet as on 31.3.2007 the value of con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tipulated in the agreement of construction. In fact, the present contention of the assessee that only part work was given to them is not supported by the terms of the agreement itself. Further, the claim of getting the work done on her own as also not been substantiated by giving any details or evidences regarding construction, purchase of materials, engaging of labour etc. In fact, the assessee has not been able to furnish any contemporaneous evidence regarding the alleged construction out of the sale proceeds of the original asset. 8. The DR submitted that a substantial amount had already been admittedly spent by the assessee before 31.2.2007 and it can be reasonably concluded that such huge investment would have indeed resulted In a habitable structure, which can be indeed called a residential house. Therefore, it is clear that on the date of sale of the original asset under discussion, the assessee was already having one residential house of her own. In fact, even if certain additions were made to the same, it cannot be said that a new residential house was constructed by the assessee out of the sale proceeds of the present original asset. The case laws relied upon by the Asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....54F of the IT Act. In this connection it is appropriate to consider the ratio laid down by Karnataka High Court in the case of CIT v. J.R. Subrahmanya Bhatt (165 ITR 571)wherein held that if the assessee has within a period of one year after the date on which the transfer took place purchased or has within a period of two years after the date of transfer constructed the new residential house, the assessee is entitled for deduction u/s. 54F of the Act, though the assessee has commenced construction before the sale but completed the construction within two years after the sale. The commencement of construction prior to the sale of capital asset is immaterial and the assessee is entitled for deduction u/s. 54 of the Act. 10. The relevant provisions of section 54F read as under: "54F. (1) Subject to the provisions of Sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....purchase or is construction by the D.D.A. of behalf of the allottee. Under the Self-financing Scheme of the Delhi Development Authority, the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking the delivery of possession is only a formality. If there is a failure on the part of D.D.A. to deliver the possession of the flat after completing the construction, the remedy for the allottee is to file a suit for recovery of possession. 3. The Board have been advised that under the above circumstances, the inference that can be drawn is that the D.D.A. takes up the construction work on behalf of the allottee and that the transaction involved is not a sale. Under the scheme, the tentative cost of construction is already determined and the D.D.A. facilitates the payment of the cost of construction in instalments subject to the cond....