TaxTMI 
TaxTMI 
2020 (6) TMI 28
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.... on facts in upholding the order of the learned assessing officer and in not allowing deduction under section 54F of the Act even for the amounts spent on construction of the residential house property after the date of long term capital gain/transfer of the original asset. 2. Briefly stated facts of the case are that the assessee filed return of income on 27/07/2012 declaring total income of Rs. 1,70,06,340/-. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices were issued and complied with. During the year under consideration, the assessee shown long-term capital gain of Rs. 2,18,91,720/- on sale of the shares on 02/09/2011, but same was claimed as not to be charged in terms of section 54F of the Act in view of the investment in purchase/construction of property bearing No.T- 204/08-03 in Common wealth Games, Village, Delhi. The assessee claimed that the property was purchased/constructed within the time period provided in the section 54F of the Act and thus, he is entitled for not charging of long-term capital gain to the extent of investment in purchase/construction of the residential house property. However, according to the....
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....ling the benefit of section 54F, the investment in purchase/construction of residential house has to be made as under: (a) Purchase of residential house within a period of one year before or two years after the date on which the transfer of the original asset took place, or (b) Construction of residential house within a period of three years from the date on which the transfer of the original assessee took place. 4.3 In the case of the assessee, the transfer of the shares has taken place on 17/08/2011 and therefore time period available to the assessee for purchase/construction for availing benefit of the section 54F works out as under: (a) Purchase within a period of one year before the transfer of shares (i.e. period between 17/08/2010 to 16.08.2011 or purchase within two years after the date of the transfer of shares (i.e. period between 17.08.2011 to 18.08.2013) or (b) Construction within a period of three years from the transfer of shares (i.e. period between 17.08.2011 to 18/8/2014) 4.4 Regarding the purchase/construction of the residential house the assessee provided following information: (i) The assessee entered into buyers a....
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....12 and it was within the period construction of three years after the sale of original asset ( i.e. 18/08/2014). He relied on the CBDT Circular No. 471 dated 15/10/1986 and Circular No. 672 dated 16/12/1993 and submitted that in terms of scheme of the allotment and construction of the flat/house by the co-operative societies or the other institution are similar to those mentioned in para 2 of CBDT circular No. 471/Dated 15/10/1986 and thus such cases might be treated as the construction of the flat for the purpose of section 54 and 54F of the Act. 4.8 The Ld. CIT(A) rejected the contention of the assessee and held as under: "4.2.8 Close reading of above circulars, nowhere mentioned that in order to get exemption construction could take place before the date of transfer of long term assets. On the other hand, section 54/54F makes it clear that the construction of house must complete within 3 years of the transfer. Further, circular makes it clear that the date of payment of first installment for the allotment of flats is to be seen as the date of obtaining the title of the property. The allottee gets title in the property on the issuance of the allotment letter and the p....
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....f flat. The said clause is reproduced herein below : "12. Nothing contained in this Agreement shall be construed to as to confer upon the Purchaser any right whatsoever into or over the said property or the said new building or any part thereof including the said premises on execution of this agreement. It is agreed by and between the parties that conferment of title in respect of the said premises shall take place in favour of the Purchasers only on the Purchaser's making full payment of consideration to the Developers and complying with the terms and conditions of this Agreement and on the Purchaser being admitted as a member of the said society as herein provided." The aforesaid clause makes it unambiguously evident that the assessee has no right whatsoever in the property on mere execution of agreement. The assessee shall be conferred title of property only on making full payment of consideration to the builder. In the instant case, full consideration has been paid by the assessee for purchase of residential flat within a period of one year before the date ITA Nos.1424 & 1707/PUN/2016 of transfer of capital asset. Thereafter, actual possession of the flat ....
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....unal has held that the relevant date in this connection is July 29, 1988, when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained possession of the flat. This has been taken by the Tribunal as the date of purchase. The Tribunal has looked at the substance of the transaction and come to the conclusion that the purchase was substantially effected when the agreement of purchase was carried out or completed by payment of full consideration on July 29, 1988, and handing over of possession of the flat on the next day." 10. The Mumbai Bench of the Tribunal in the case of Bastimal K. Jain Vs. ITO (supra) under similar set of facts had allowed the benefit of exemption u/s 54 to the assessee by following the ratio laid down in the case of CIT Vs. Smt. Beena K. Jain (supra). 11. Thus, in view of undisputed facts of the case and the decision rendered in the case of CIT Vs. Smt. Beena K. Jain (supra), we hold that the assessee is eligible for claiming exemption u/s 54F on the entire amount of capital gain utilized for purchase of residential property. Consequently, the appeal of the assessee is allowed and the appeal of Rev....