2014 (6) TMI 559

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.... when the assessee has wrongly claimed exemption in violation of provisions specified u/s 54 of the Income Tax Act, 1961 and the Assessing Officer has rightly disallowed the exemption wrongly claimed holding that the investment In the new house/apartment has not been made during the period stipulated u/s 54 of the Act. 2. On the facts and in the circumstances of the case, the Ld CIT(A) has erred on facts and in law in deleting the disallowance made by the Assessing Officer amounting to Rs.22,49,585/- (Rs.58,56,567/- - Rs.36,636,982/- being payment before 19.10.2005) as to claim exemption u/s 54 the assessee should have invested the LTCG in another house property during the period 19.10.2005to 19.10.2008 i.e. within a period of one year bef....

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....w of the above, the Assessing Officer made a finding that investment was not as per provisions of section 54 and therefore, he made an addition of Rs.45,34,045/- to the income of the assessee (being capital gain earned by assessee not utilized as per provisions of section 54. 3. Dissatisfied with the order, the assessee filed appeal before Ld CIT(A) and submitted as under:- a) That payment for purchase of house has been made over a period of time starting from November, 2004 to August, 2008. The deduction u/s 54 cannot be denied simply because the few payments have been made as per terms of buyer's agreement prior to the period stipulated under the Act. b) That it is very important to distinguish between buyer's agreement and conveyance ....

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....er going through the submissions of Ld AR partly allowed the appeal of the assessee. The relevant para of Ld CIT(A)'s order is reproduced below:- "I have carefully considered the submission made by the appellant, it is seen that the property in question has been purchased by making payments from the period starting 7th November, 2004 to August,2008. The offer of possession of the apartment was given on 29th January, 2008. The property has been registered on 5.5.2008. As per section 54 of the Act the capital gain earned from sale of a residential house is not chargeable to tax if the assessee purchases within a period of one year before or two years after the date of transfer or constructs within a period of three years after the date of tr....

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....se of house under self financing scheme is also treated as a construction of the house in view of Circular No. 672 dated 16.12.1993. In the instant case, though the property has been handed over to the appellant within the stipulated period however it is seen that a portion of investment in the house has been made even prior to one year from the date of transfer. Therefore, it is held that the amount paid by the appellant prior to the period 19.10.2005 will not be eligible for exemption u/s 54 of the Act. Support in this regard is drawn from the decision of Hon'ble Delhi High Court in the case of Vipin Malik vs. CIT 183 Taxman 296 rendered in the context of section 54F, wherein the Hon'ble High Court upholding the order of Hon'b....