TaxTMI 
TaxTMI 
2017 (8) TMI 843
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....llowed the deduction claimed u/s.54 of the Income tax act on the ground that the intention of purchase of new residential house was not for residential purpose relying on subsequent events in the financial year 2013-14 i.e. development agreement entered into on 27.05.2013 with a builder for development of commercial complex. Therefore, the AO disallowed the total claim of deduction of Rs. 12,32,19,770/-. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. The CIT(A) after considering the submissions of the assessee, observed that it is seen from the fact that the assessee had purchased a residential house property bearing Municipal No 6-3-354, at Road No.1, Banjara Hills, admeasuring 2000 Sq Yards, vide Registration No.1511/2012 dated 5/7/2012 at SRO, S.R. Nagar, Hyderabad after disposing his property situated at MCH H.No. 8-2- 576, Road No.7, Banjara Hills, Hyderabad. Further, he observed that it is also seen that the assessee entered into a Development Agreement with M/s. Raichandani Construction Pvt Ltd for construction of commercial complex and got the said property which was purchased, thereby demolished for the said purpose. Since the dem....
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....es age is 60 years) and not to reside or let out which is clearly evident from the above facts and sequence of events. Therefore, the assessee's case is hit by the above provisions. He concluded that the action of the AO in denying deduction u/s 54 of the Act is very well justified which is in accordance with law and hence confirmed. 5. Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising the following grounds of appeal: "1. The order of the Ld. CIT (A) is wholly unsustainable both in law and in facts of I the case. 2. The Ld. CIT(A) erred sustaining the disallowance of claim of deduction under Section 54 of the Income Tax Act, 1961. 3. The Ld. CIT(A) failed to consider that the provisions of Section 54 unambiguously stipulates that a residential house should be purchased within the stipulated period by utilizing the sale proceeds of a residential house to claim exemption from capital gain tax which was compiled by the Appellant as evidenced by the sale deed on 5.7.2012 4. The Ld. CIT(A) erred in sustaining the interpretation of Section 54 of the Income Tax Act, 1961 placed by the Ld. Assessing Officer, that the residential house purchased, ....
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....13. 7. Ld. DR submitted that the assessee did not pass the test of compliance as assessee himself confirmed in the questionnaire, which is part of the assessment record in para 14 of the assessment order, as per which assessee has confirmed that assessee neither resided nor let out the property. She submitted that order of ITAT in the case of K.V. Vijayaraghavan Vs. DCIT, ITA Nos. 455 & 456/Mds/2014, dated 30/11/2016 supports the case of the revenue as the facts of the said case are similar to the assessee's case. Further, she relied on the orders of revenue authorities. 8. In the rejoinder, ld. AR submitted that the case relied on by the ld. DR does not contain full facts of the case, therefore, the same is distinguishable on the facts to the case of assessee. He relied on the decision of Hon'ble Madras High Court in the case of CIT Vs. Ms. Chhaya B. Parekh, ITA No. 1583 of 2012, vide judgment dated 24th January, 2013. He further submitted that mere demolition does not amount to transfer as per the decision of Hon'ble AP High Court in the case of Potla Nageswara Rao Vs. DCIT, 365 ITR 249 (AP) and as per the Hon'ble Madras High Court in the case of Neelamalai Agro Industries Ltd.....
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....sary consequence of destruction of the asset does not amount to transfer. In the case of Grace Collis (supra), there was transfer of shares in the scheme of amalgamation, old shares were replaced with new shares in the amalgamated company, it was held that destruction of right and exchange of new shares are amounts to transfer. However, at the same time, the coordinate bench has observed as below: "20. The law laid down in Vania Silk Mills (P) Ltd's case (supra) that extinguishment of rights in a capital asset as a necessary consequence of destruction of the asset does not amount to transfer, has not been overruled by the Apex Court in the case of Mrs. Grace Collis (supra). Since the coordinate bench has already analysed both the decisions of Hon'ble Apex court and also analysed the other decisions of Hon'ble Madras High Court in the case of Neelamalai Agro Industries (supra), came to conclusion that demolition of House without transferring of right is not amount to transfer. Ld. DR relied on the case law of K. V. Vijayaraghavan (supra) of the ITAT, Chennai "C" Bench to submit that it is similar to the case in hand, in which the case of V. Pradeep Kumar (supra) was also analyse....