2014 (6) TMI 364

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....sed being not pressed. 3. Revenue's appeal raises following grounds of appeal: 1. The Ld. CIT(A) erred in law as well as fact in deleting the addition of Rs. 73,27,000/- ignoring the fact that essential criteria of purchase of property has not actually taken place. 2. The Ld. CIT(A) erred in law as well as fact in deleting the addition of Rs. 25,14,700/- ignoring the fact that IT Act, 1961 clearly doesn't provide any benefit in respect of 'cost of improvement' to the assessee u/s 54, as was interpreted by the CIT(A)." 4. Brief facts are: The assessee sold two properties in the asstt. Year under consideration, as under: (i) 1/2 share in residential house/ flat, Marine Drive, Mumbai. Capital gains arising thereon were invested in purchas....

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....e or cost of improvement. Thus, the assessee's claim for exemption of capital gains was reduced to this extent. 4.3. Aggrieved, assessee preferred first appeal. The CIT(A) allowed both the claims of the assessee. Aggrieved, Revenue is before us. 5. Ld. DR relied on the order of assessing officer. Apropos the investment in Jay Pee Green Greater Noida property it is contended that admittedly assessee was not given the possession of the new house and till the possession is granted, the investment cannot be held towards purchase of the new house but assumes only a character of provisional payment. A provisional payment cannot par take the character of purchase of flat. Reliance is placed on the ratio of decision in the case of Suraj Lamps & I....

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.... Vs. R.L. Sood 245 ITR 727. It clearly lays down that where an assessee paid substantial amount in terms of purchase agreement for new residential flat within specified period it amounts to assessee's compliance for requirement of sec. 54. Merely because the builder failed to hand over possession within specified period, assessee could not be denied benefit of benevolent provision of sec. 54. The Hon'ble Delhi High Court upheld the applicability of CBDT Circular no. 471 dated 15-10-1986. It is pointed out that this circular finds further reinforcement by issue of CBDT Circular no. 672 dated 16-2-1993. Thus, the fact that the assessee invested entire amount of capital gains towards purchase of new property remains unquestionable, relying on ....