2017 (12) TMI 1060

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.... relating to the issue are discussed in brief. The assessee held 1/3rd share in Flat No.2902 of an apartment named Planet Godrej located at Byculla, Mumbai. He sold the same on 05-12-2012 for a consideration of Rs. 126.83 lakhs and consequent thereto, the long term capital gain was computed at Rs. 78.36 lakhs. The assessee had earlier booked a flat at Elegant Tower, which was under construction; vide agreement dated 05-02- 2010. The assessee had made payments to the builder much earlier to the date of transfer of old flat as detailed below:- From 12.04.2007 to 03-11-2009 Rs.86,38,225/- On 21.04.2012 Rs. 7,28,525/- The assessee also made following payments subsequent to the date of transfer of old flat:- 14.06.2014 Rs. 3....

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....nts of Rs. 3,12,225/- and Rs. 7,28,525/- made on 14.6.2014 and 22.10.2014 respectively have violated the provisions of sec. 54 of the Act, since the assessee did not deposit them in Capital gains Account scheme. Accordingly the AO held that the above said two payments are not eligible for deduction u/s 54 of the Act. (c) the payment of Rs. 7,28,525/- made on 21.4.2012 was within the range of period mentioned by him. Accordingly he allowed deduction u/s 54 of the Act only to the extent of Rs. 7,28,525/-. Accordingly the AO computed the long term capital gain at Rs. 71.08 lakhs and assessed the same. 4. The assessee could not succeed in the appeal filed before Ld CIT(A). We notice that the Ld CIT(A) took the acquisition of new ....

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....sidential tenements. Accordingly, the co-ordinate bench has taken the view in the case of Sagar Nitin Parikh (supra) that booking of flat in an apartment under construction is a case of "Construction". In view of the above said decision of the Hon'ble Bombay High Court and Tribunal, the acquisition of new flat in an apartment under construction should be considered as a case of "Construction" and not "Purchase". Accordingly we set aside the view taken by the tax authorities and hold that the assessee has constructed a flat and the provisions of sec. 54 should be applied accordingly. 8. The Ld A.R submitted that the commencement of construction is not relevant for the purpose of sec. 54 of the Act. He submitted that the provisions of sec.....

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....m the date of transfer of old residential house. According to Ld A.R, section 54 is silent about commencement of construction and hence commencement of construction can precede the date of sale of old asset. In the instant case, the assessee had booked the flat much prior to the date of old flat. We notice that the Hon'ble Karnataka High Court has held in the case of CIT Vs. J.R.Subramanya Bhat (supra) that commencement of construction is not relevant for the purpose of sec. 54 and it is only the completion of construction. The above said ratio was followed in the case of Asst. CIT Vs. Subhash Sevaram Bhavnani (2012)(23 taxmann.com 94)(Ahd. Trib.). Both these cases support the contentions of the assessee. Accordingly, for the purpose of sec....