TaxTMI 
TaxTMI 
2014 (11) TMI 261
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....ion was made, being the assessee had not returned any property income from the properties sold." 2. The brief facts of the case are that the Assessee filed return of income declaring income of Rs. 43,93,660/-. The Assessee is a civil engineer by profession and started his business as sub-contractor 16 years back. The Assessee has his own firms named M/s. Ashraya Constructions and M/s. Ashraya Real Estate Developers. In A.Y 2010-11 the Assessee got Rs. 1,64,22,535/- as Long Term Capital Gains but invested in purchase of new residential house as per Sec. 54 of the Act. The Assessee has in financial year 2009-10 sold two residential properties and invested the amount to purchase new residential property as per Sec. 54 of the Income Tax Act, 1961. The Assessee sold property bearing no. 17117, Matriz No. 1, Santa Inez, Panaji to Shri Arjun Mangaldas for total consideration of Rs. 81,00,000/- vide sale deed dt. 17.9.2009. The property was in the name of the Assessee. From the sale proceeds, Assessee got Long Term Capital Gains of Rs. 33,60,000/-. The Assessee sold another property bearing Flat no. E-102, Matriz no. 1258, Survey no. 235/1 Taleigao to Shri Shobhit Gupta for sale conside....
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....Assessee : "Q,No.6. Please give details of the properties you sold during the year 2009-10. Ans. I have sold two properties in the financial year 2009-10. They are, 1) Flouse no.11/125/2, of chalta number 326 of PT sheet 77, Panaji and 2)Flat number E-102, in CABO Complex, Landscape town, Dona Paul, Talegao. Q.No.7. How much long term capital gains you got out of the above sales? Ans. I got Rs. 1,64,22,535/- as Long Term Capital Gains from the above two sales. Q.No.8. Why you have not offered the LTCG for tax? Ans. The existing flat was small and I wanted to shift to Dona Paul. I invested the LTCG to purchase the new Residential House. Q.No.9. From whom you made agreement to purchase a residential property? Ans. I Made agreement with M/s Ashray real Estate Developers to purchase the new Residential property. Q.No, 10. That means you have made agreement with your own firm to purchase residential property. Ans. Yes. As I was already into this field, I thought why I have to invest in others property so I made investment in my own Firm i.e., M/s Ashray Real Estate Developers. Q.No.16. Whether you received the flat from Ashray real estate developers? Ans. No, ....
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....o house on said site and Assessee agreed that they have not received the house. The AO was of the view that Assessee's intention was not to offer long term capital gains for taxation and he tried to escape from the liability to pay taxes. The AO also held that the Assessee has invested for purchasing residential house but the vendor has not handed over the house to them is not acceptable because the vendor is the Assessee himself. Therefore, action of Assessee of making payment to his own firm for purchasing residential house is questionable and the AO has relied on the following decisions and disallowed the same :- 1) M.B. Ramesh Vs ITO (Kar) 320 ITR 451 "Exemption u/s 54 denied relying on Panchayat records which showed that no residential property on the site- Upheld" 2) Shantaben P. Gandhi Vs CIT (Guj) 129 ITR 218 "To claim exemption u/s 54, the construction of the new house should be within two years after the transfer of the existing house and not before the date of transfer" 3) 28 taxmann.com 286 (Chandigarh - Trib.) [2012] "Assessee would not be entitled to deduction under section 54F on her failure to construct new residential property within specified period o....
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....umstances beyond his control. He should not be denied deduction and penalised for no fault of his as the litigation was not anticipated and beyond his control. The A.O., in his support has placed reliance on many judicial pronouncements, which are analysed as under: i) M. B. Ramesh vs ITO (Kar) 320 ITR 451. In this case exemption u/s 54 was denied relying on panchayat records which showed that there was no residential property on the site. In my opinion, ratio of the above quoted judgement is not applicable in the instant case, as it is not in dispute that the appellant actually constructed a residential house. ii) Shantaben P. Gandhi Vs CIT (Guj) 129 ITR 218 In this case exemption was denied as the new property was not completed within the stipulated time limit. Ratio of CIT Vs V. R. Desai (Ker) 197 Taxman 52 and V. K. S. Bawa Vs ACIT (ITAT Del) 53 ITD 232 are not applicable in the instant case because the appellant actually started construction of the house property, so he did not need to deposit money in the capital gain account. On the other hand, the appellant has placed reliance on the decision in the case of CIT Vs Sardarmal Kothari & Anr. In this cas....
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....r of Income tax, Circle 1(1), Panaji, Goa, and have passed the assessment order u/s. 143 (3) of the Income Tax Act. 5. Scrutiny notice u/s 143(2) of the IT Act, was issued to the assessee on 30/8/2011 and the AO passed the assessment order u/s 143(3) of the IT Act', disallowing the assessee claim u/s 54 of the IT Act, of Rs. 1,64,22,535/-. Annexure - II. 6. During the assessment year, the assessee had sold two residential house properties, specifically flat at Lawande Manor, St.Inez, Panaji, for Rs. 81.00 lacs (Purchased in June'2004) and flat at Cabo Housing Complex at Landscape Town-Phase II, for Rs. 160.00 lacs (Purchased in Sept'2005). 7. Flat at Lawande Manor was owned by Shri. Girish Ragha and was sold to Shri. Arjun Mangaldas by executing the sale deeds dated 17/09/2009 for Rs. 81.00 lacs. Enclosed find the copy of the sale deed. Annexure -- III. 8. Flat at Cabo Housing Complex at Landscape Town was owned jointly by Shri. Girish Ragha and his wife Smt. Ashwini Ragha and was sold to Shri. Shobit Gupta vide memorandum of understanding dated 01/12/2009 and subsequent sale deed dated 20/12/2010 for Rs. 1.50 crores. Further, amount of Rs. 10.00 lacs was re....
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....00/- upfront to the developer and the balance of Rs. 10,24,400/- to be payable at the time of sale deed. 4. M/s. Ashray Real Estate Developers is partnership firm of Shri. Girish Ragha and his wife Smt. Ashwini Ragha formed in year 2006 and are carrying on the business of civil constructions, real estate development and work contracts. Further, it should also be noted that Shri. Girish Ragha is a qualified Civil Engineer and Smt. Ashwini Ragha is a qualified Architect and both of them look after the business of the partnership firm in very professional manner. Further, the partnership has executed number of real estate contracts and files its income tax returns under PAN AAMFA9760F 5. AO has disallowed the exemption u/s 54 of the Income Tax Act'1961, claimed by the assessee on the ground that possession of the new residential flat purchased by the assessee was not obtained within 2 years from the date of transfer and also that the assessee has purchased the flat from the partnership firm where he and his wife are the only partner. 6. We reproduce section 54 of the Income Tax Act'1961 as below: 54. [(1)] [Subject to the provisions of sub-section (2), where, in th....
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....ion as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,-- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 7. As noted above the assessee has sold two residential house properties and utilized the capital gain made on the sale of the properties towards purchase of new residential house property. Assessee had appropriated the tot....
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....land made by the developer was rejected by the collector giving the reason of legal case on the property. Copy of the partition rejection letter is enclosed. Annexure -- XII. vii. As such the delay was on account of matters which were outside the control of the developer and are out to be condoled. 9. Further, the clause 6 of the agreement with the developer in regard to the delivery of the flat reads as follow: "The VENDOR shall complete and deliver possession of the SAID APARTMENT within a period of 24 months from the date of Agreement". As such the assesee had purchase the residential flat to avail the benefit of section 54 of the Income Tax Act and has also confirmed that the same will be delivered to him within two years. 10. Further the clause 7 of the agreement with the developer reads as follows: "The VENDOR shall not be liable for delay in delivery of possession of the SAID APARTMENT due to any Act of God, Force Majeur, non-availability of construction material or due to any notice/order/rule of any authority, delay in the issuance of Occupancy Certificate or such other unforeseen circumstances beyond the control of the VENDOR and the VENDOR shall be entitle....
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....within the period stipulated in S.54. For circumstances beyond the control of the assessee, the construction could not be completed" and as such directed the AO to delete the entire additions amount to Rs. 1,64,22,535/ - Further, all the above issues were raised by us with the CIT (A) and also the documents were submitted during the course of the assessment proceedings as such assessee request for taking the above on record and disposal of the appeal while upholding natural justice." 5. We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that the Assessee has sold two properties; Flat at Lawande Manor for Rs. 81 lacs and Flat at Cabo Housing complex for Rs. 1.60 crore. The flat at Lawande Manor was owned by Shri Girish Ragha and sold to Shri Arjun Mangaldas by sale deed. Flat at Cabo Housing complex was jointly owned by Shri Girish Ragha and his wife Smt. Ashwini Ragha and sold to Shri Shobhit Gupta by sale deed. This fact is not disputed by the AO. The Assessee has invested the sale proceeds in purchase of residential property at Taleigao, Tiswadi, Panaji from M/s. Ashraya Real Estate Developers and executed ag....