TaxTMI 
TaxTMI 
2013 (8) TMI 944
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....s. 54 of the Act. Under section 54 of the Act, if an assessee who is an individual, derives long term capital gain from transfer of a long term capital asset, being a residential house and the assessee, (a) within a period of one year before or two years after the date on which the capital asset takes place purchases or (b) within a period of three years after the date on which the transfer takes place constructs a residential house, then to the extent the capital gain is used as aforesaid, the same will not be chargeable to tax. 4. The assessee claimed exemption u/s. 54 of the Act of a sum of Rs. 1.22 crores and offered to tax the remaining capital gain of Rs. 1,12,59,601. The question before the Assessing Officer was as to whether the assessee was entitled to the deduction as aforesaid. 5. The AO did not dispute the fact that the assessee entered into an agreement for purchase of a flat on 12.09.2007 with M/s. Century Chimes, a partnership firm and paid a sum of Rs. 40 lakhs as advance. Under section 54(2) of the Act, if the capital gain is not utilized in the manner set out u/s. 54(1) of the Act within the due date for filing the return of income u/s. 139 of the Act, then the ....
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....r No.471 dated 15.10.1996 and Circular No.672 dated 16.12.1993. The assessee also submitted that as per the agreement dated 12.09.2007 entered into by the assessee with M/s. Century Chimes for acquiring the new asset, the developer had to construct and hand over possession of the property within two years, but it had failed to do so and therefore the assessee should not be denied the benefit u/s. 54 of the Act. 9. On the above submission, the AO made the following observations:- "3.7 In the case laws relied on by the assessee, they are referring to the Board's Circular No.471. As per Boards Circular no.47l the clarification was with regard to the acquisition of a flat by an allottee under the self finance scheme of the Delhi Development Authority. The Board clarified that in the cases of allotment of flats under self finance scheme of the DDA, it shall be treated as cases of construction for the purpose of Capital Gains. Circular No.672 also refers to the scheme of allotment and construction of the flat by the Co-Operative Society or other Institution and in such cases, the purchases can be treated as cases of construction for the purpose of section 54. Thus, these circulars ref....
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....ions and subject to force majeure, availability of cement, steel and other essential items for the construction and also subject to unforeseen events like acts of God, earth quakes, floods, war or other local disturbances, changes in laws of the state or of the municipal corporation or any other causes or events beyond the control of the Vendor and also subject to the receipt of completion certificate/occupancy certificate from the municipal council and electricity, water and sanitary connections from the respective departments. (iii) In the event of the Vendor being unable to complete the construction under normal conditions and hand over possession of the Schedule C Property by the aforesaid date, the Vendor agrees to refund to the Purchaser at the option of the Purchaser the amount paid to the Vendor by the Purchaser till such date, within 60 days from the aforesaid date or pay a penalty of Rs. 2 per square feet for each month of delay starting from July 2008." 12. The assessee thus pointed out that by entering into the agreement for purchase of the flat dated 12.09.2007, the assessee was in fact constructing a residential house and therefore the assessee will have the bene....
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....ent itself was signed in September 2007, by which time an advance amount of Rs. 1 lakh had already been paid. The appellant entered into the transaction with the builder with the full knowledge that he would have to pay the full consideration for the flat by 30 June 2008. Since the original sale took place in May, 2007, this arrangement would have well met the stipulations of section 54 towards time-limitation for purchase of the new asset. As per the written submissions made in course of the appellate proceedings, the appellant states that the payment of Rs. 65 lakhs was delayed since the builder had defaulted on the timeline, However, there is no explanation provided as to why the payment as required under section 54 was not made within the specified period of two years when the agreement itself gave the appellant only about a year to make all. the payments in full, Knowing very well his liability towards capital gains, and being well-aware of the exemptions to be claimed by him, the appellant in my view neglected to affect the investment in time as required by the law. The agreement for sale contains provisions to cover delay from the builder's side, and the appellant was not re....
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....a Raju Vs. ACIT [2013] 35 taxmann.com 90 (Hyd. Trib) Circular No.471 dt. 15 October 1986 [1986] 162 ITR (St) 41 Circular No.672 dt. 16 December 1993 [1994] 205 ITR (St) 47 17. In the aforesaid decisions, courts have taken the view that acquiring a new flat is as good as construction of a residential house and therefore benefit of section 54 of the Act has to be allowed. 18. The ld. DR relied on the order of the CIT(Appeals). 19. We have heard the rival submissions. We have also gone through the several documents filed by the assessee in supports of its case. It is seen that the assessee sold the flat at Aga Abbas Ali Road, Bangalore on 07.05.2007. There is no dispute that the long term capital gain chargeable to tax on the sale of property by the assessee was Rs. 2,34,59,601. The assessee entered into agreement dated 12.09.07 for acquiring a flat bearing No.34 in 3rd floor at Kodigehalli, Yelhanka, Bangalore, which was being developed by a developer by name Century Chimes. The assessee paid advance of Rs. 40 lakhs to the developer and deposited a sum of Rs. 82 lakhs in capital gains account scheme as required under provisions of section 54(2) of the Act. Later on, this su....
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.... of the capital asset or two years subsequent thereto. In the case of a residential house, the condition laid down is that the residential house must have been constructed within three years after the sale of the capital asset. Therefore, for proper application of section 54(1), it has to be seen whether it is a case of purchase or construction. In view of the Board's Circulars No. 471, dated 15-1-1986 and No. 672, dated 16-12-1993, the instant case had to be taken as a case of construction of the residential flat and not as a purchase of a residential fiat. It was to be seen if the assessee fulfilled the conditions laid down under section 54(1). The assessee was allotted flat No. B-62 and it was changed to C-32 vide letter dated 19-11-1999 and by letter dated 4.1.2000, the possession of the flat was already given to the assessee. Therefore, the assessee was in total enjoyment of the property by 4-1-2000, i.e., within 3 years of the sale of her flat in Mumbai on 13-1-1997. Therefore, the assessee had fulfilled the conditions prescribed in section 54(1) for claiming exemption. [Para 10] Therefore, the order of the Commissioner (Appeals) was in consonance with the provisions of th....