TaxTMI 
TaxTMI 
2021 (2) TMI 632
X X X X Extracts X X X X
X X X X Extracts X X X X
....01,327/- on sale of these properties after deducting indexed cost of acquisition, indexed cost of improvement expenses and claiming an exemption, details of which are summarised in the assessment order as under: 3.1. The A.O. in respect of property at 380 Ramnagar, Delhi, has taken indexed cost of acquisition at Rs. 3,97,917/- and in respect of property at 80 Shanti Vihar, Delhi taken the indexed cost of acquisition at Rs. 12,31,475/-. The assessee claimed transfer expenses and cost of improvement also which were disallowed by the A.O. The assessee also filed revised computation of capital gains which is reproduced in the assessment order as under: 3.2. The A.O, however, rejected the revised computation of capital gains because no revised return have been filed under section 139(5) of the I.T. Act by relying upon the Judgment of the Hon'ble Supreme Court in the case of Goetz India P. Ltd., vs., Commissioner of Income Tax 284 ITR 323 (SC). The A.O. did not rely upon the Judgment of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs., Jai Parabolic Springs Ltd., [2008] 306 ITR 42 (Del.). Therefore, revised computation was rejected. The A.O. noted that assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellant has raised four grounds of appeal. 5.1. In Ground No.1, the appellant has contended that the addition u/s. 54 of the Act of Rs. 8018525/- has been made on surmise basis without considering the facts on record. The long term capital gain claimed by the assessee is in terms of the Act. Thus the addition made is unjustified illegal & void and therefore be deleted for justice. 4. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has submitted that though the sale deed of the property D-50 Ground Floor, Kushambi, Ghaziabad was registered on 19.02.2013, copy of which is filed at Pages 11 to 98 of the PB, but, it is specifically noted in the Sale Deed that at the time of registration of the Sale Deed the property was incomplete and further construction and renovation was required. He has submitted that due to this reason the seller M/s. Mahalakshmi Buildcon entered into a Supplementary Agreement on the same day i.e., 19.02.2013 mentioning the same facts and also mentioned in the Supplementary Agreement that the Seller [First Party] had taken back the physical possession of the above said property from the Assessee [Second Part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase of residential house within one year before the date on which transfer of capital asset took place. The facts noted above are not in dispute that assessee sold/transferred property No. 80 Shanti Vihar, Delhi on 24.02.2014 and purchased another residential house D-50 Ground Floor, Kushambi, Ghaziabad, Uttar Pradesh on 19.02.2013. The A.O, therefore, noted that assessee purchased the residential house at Kushambi, Ghaziabad more than one year before the date of transfer of capital asset and as such assessee is not entitled for any deduction under section 54 of the I.T. Act, 1961. Learned Counsel for the Assessee referred to Supplementary Agreement Dated 13.02.2013 i.e., on the day when Sale Deed was executed. Copy of the Supplementary Agreement is filed at Pages 99-100 of the PB. In the Supplementary Agreement it is specifically mentioned that the Seller [First Party] has taken back the physical possession of the property in question from the Assessee [Second Party] from Dated 19.02.2013 to 19.04.2013 for finishing and completion of the pending work of the above said property and after completion of the entire work First Party will handover the physical possession of the property....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h resulted in long-term capital gains of Rs. 24,05,050. Prior to the sale she had entered into an agreement for purchase of a residential flat which agreement was dated September 4, 1985. The agreement was for purchase of a flat for a total consideration of Rs. 12,26,751 On the date of the agreement of sale, the assessee paid a sum of Rs. 1,35,000 as earnest money. This agreement was registered on October 27, 1985. The construction of the flat was finally completed in July, 1988. The assessee paid the consideration amount of Rs. 10,44,375 plus Rs. 47,376 on July 29, 1988, and she was put in possession of the said flat on July 30, 1988. The assessee claimed the benefit of exemption under section 54F of the Income-tax Act, 1961. She has accordingly been granted by the Tribunal exemption of Rs. 11,04,423 under section 54F of the Income-tax Act. The Department has made this application under section 54F of the Income-tax Act for raising the following question: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing exemption of Rs. 11,04,423 under section 54F of the Income-tax Act, 1961, considering the date of possession of the new residential....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us the learned counsel for the assessee argued that the assessee entered into an agreement with M/s. Sharpmind Developers on 28.12.2007. The flat intended to be purchased by the assessee was not at all constructed on 28.12.2007 and though the agreement for purchase was entered into is just a right for purchase of flat in the proposed construction and eventually property's possession was given to the assessee by the builder only on 11.09.2009 because the flat got ready and occupancy certificate was received by the builder from the BMC only on 31.03.2009. In such facts, the learned counsel for the assessee stated that acquisition of property is to be considered as and when the possession of the flat was given to the assessee by the builder and that date falls as on 11.09.2009. According to the learned counsel for the assessee the vital conditions of section 54 of the Act are fulfilled when the property's possession was handed over to the assessee by the builder on 11.09.2009 i.e. within the time limit prescribed u/s. 54 of the Act for claiming deduction u/s 54 of the Act. We find from the arguments of the learned counsel for the assessee as well as the learned DR that these facts are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t date the ownership is to be considered for the purpose of deduction u/s. 54 of the Act. Tribunal held as under: "6. We have carefully gone through the facts of the case and the rival contentions. The question before us, though it is simple, raises problems of importance in metropolitan cities where there exists lot of problems for meeting basis human needs 'house'. Just to encourage assessee, Section 54 is enacted to give relief of exemption from capital gains in the case of assessee selling existing residential units and acquiring any other residential unit. This has to be done within a period of one year either before or after the date of sale of the first house property. If that is done so, capital gains arising on transfer of the first house property will be exempt to the extent of investment in the second house property as stipulated in Section 54. The flat in cities is the most common and a peculiar feature. The builder has to take plans of construction in his own name and sometimes in the names of his vendors and start construction. He invites prospective customers, enters into agreement for sale of flats proposed to be constructed by him and at times, demands th....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The Tribunal held, joining the society and paying the amounts cannot really amount to purchase of a house. On the contrary, allotment of the flat would certainly give the assessee certain specific obligations and rights. The manner in which the amounts are paid and the period over which they are paid may not be of much relevance. Considering the peculiar circumstances of that case, it was held that the benefit of Section 54 should be extended by taking the date of allotment and occupation as the relevant date of purchase. Following the said decision, we are inclined to hold that in this case also, the assessee has, though, entered into agreement for purchase of flat on 22-10-77, paid the money during 1977 to 1979, but the relevant date to be taken for the purpose of applying of Section 54 should be the date on which the flat was ready for occupation by the assessee. Taking that date as the date of purchase, is within the period of one year and therefore the capital gains are clearly exempt from tax applying the provisions of Section 54." 6. The learned counsel for the assessee also relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Smt. Beena K Jain 217 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bay High Court in the case of Smt. Beena K Jain, supra, we are of the view that the assessee's claim of deduction u/s. 54 of the Act is to be reckoned from the date of handing over of the possession of the flat by the builder to the assessee i.e. 11.09.2009, and if we take that date, the assessee is entitled to deduction u/s. 54 of the Act because the assessee has sold his residential flat on 24.02.2010. We allow the assessee's claim and order accordingly. 10. Therefore, respectfully following the above decision of the Hon'ble Jurisdictional High Court and the Coordinate Bench, we hold that the date of final occupation of the property should be considered for calculation the period of eligibility for deduction u/s 54 of the Act. If the date of possession i.e. March 2009 is taken as date of purchase of new flat as contended by the assessee in its case the assessee is entitled to deduction u/s 54 of the Act as assessee has sold residential flat on 11.09.2009 and satisfied the requirement to purchase the new residential property within the period of one year before the date of transfer of the asset sold. Thus, we allow the claim of the assessee for deduction u/s 54 of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es 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 was delivered to assessee on 17.09.2010 i.e., within a period of one year prior to the date of transfer of capital asset. It is an un-rebutted fact that at the time of execution of agreement, the residential property was not in existence. Therefore, taking into consideration facts of the case, the date of possession of flat is the date of actual purchase for the purpose of claiming exemption u/s 54F of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 Revenue is dismissed." 4.12. In the instant case before us also, the assessee has brought of attention to clause 46.0 of the buyers agreement (which is available on page 41 of the paper book), which is identical to clause 12 in the case of Ayushi Patni (supra) reproduced in para 8 of the decision. The relevant clause 46.0 of the buyer's agreement is reproduced as under: "46.0 The Allottee understands and confirms that the execution of this Agreement ....