2014 (12) TMI 208

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....of assessment proceedings the Assessing Officer noted that the assessee is one of the co-parceners who has jointly sold the land of Kadam family located at Pune for a consideration of Rs. 3.40 Crore on 25-10- 2007. As per sale deed, the assessee received an amount of Rs. 53,12,500/- as her share of consideration. From the computation of income shown by the assessee the A.O. noted that after taking into account the indexed cost of acquisition, the assessee has computed the long term capital gain at Rs. 45,71,405/-. Out of the above the assessee claimed to have made investment of Rs. 35,72,240/-. The assessee further claimed deduction u/s. 54 amounting to Rs. 30,73,912/- and declared Long Term Capital Gain of Rs. 14,97,493/-. From the details furnished by the assessee during the course of assessment proceedings the A.O. noted from the copy of purchase deed as well as the possession deed of the flat purchased at Pune that the claim of deduction u/s. 54 does not appear to be in conformity with provisions of Sec. 54 of the Act. He noted that the sale transaction has occurred in the month of October, 2007 and the details of the payment made to Soba Associates with whom the flat was booke....

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....opened the bank account just for the purpose of deposit of sale consideration and for the purchase of new flat is supported by the date of deposits and withdrawals from bank account. It was further submitted that the assessee has paid substantial amount to the builder before the completion of period of 3 years from the date of sale of original asset i.e. before 24-10-2010 and the flat was in his possession at the time of hearing. An amount of Rs. 23,45,075/- was paid before the completion of 3 years out of total consideration of Rs. 35,86,916/-. It was argued that the scheduled date of possession of flat by the assessee, as per agreement, was 15-08-2010 which was well within the time of 3 years from the date of sale of land which is as per the provisions of Sec. 54F of the I.T. Act. However the construction of the flat was delayed due to reasons beyond the control of the assessee and the assessee finally got the possession from the builder on 27-07-2011. It was argued that the agreement was for the construction of flat through a builder and not an agreement for purchase of flat. Relying on various decisions and the circular issued by the CBDT No. 471 dated 15-10-1986 and Circular N....

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....00/-   4.1 Referring to the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Jagtar Singh Chawla reported in 259 CTR 388 he submitted that when the assessee utilized the capital gains for purchase of property before extended due date u/s. 139(4), the assessee is entitled to benefit of Sec. 54F and not liable to capital gain tax. Referring to the decision of the Jodhpur Bench of the Tribunal in the case of Jagan Nath Singh Lodha Vs. ITO reported in 85 TTJ 173 he submitted that when the intention of the assessee from the very beginning is to purchase residential house and he having done so within 2 years of sale of flat he was entitled to exemption u/s. 54 in respect of the amount invested even though he failed to deposit the amount in the capital gain account scheme during the intervening period. Referring to the decision of the Madras "B" Bench of the Tribunal in the case of M.A.C. Khaleeli Vs. DCIT reported in 47 TTJ 639, 48 ITD 191, he submitted that the Tribunal in the said decision has allowed the claim of exemption u/s. 54 when the assessee, doing construction business, deposited capital gain from transfer of building in the housing d....

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.... by purchasing a house property before the extended due date u/s. 139(4) is eligible for exemption u/s. 54 of the I.T. Act. Referring to the latest decision of Hon'ble Supreme Court in the case of Shri Sanjeev Lal Vs. CIT vide Civil Appeal No.5899-5900 of 2014 order dated 01-07-2014 (copy filed) he submitted that now the issue is squarely covered in favour of the assessee by the above cited decision. He, accordingly, submitted that since the assessee has constructed the flat with a period of 3 years from the date of transfer of the capital asset, therefore, the deduction u/s.54F should be allowed to the assessee. 5. The Ld. DR on the other hand heavily relied on the order of the CIT(A). 6. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. There is no dispute to the fact that the assessee has received an amount of Rs. 53,12,500/- being her share in the joint property sold on 25-10-2007. There is also no dispute to the fact that the assessee kept the money in her savings account and did not deposit the money in the specified capital gain account scheme wit....