TaxTMI 
TaxTMI 
2016 (12) TMI 1865
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....ef facts leading to the impugned addition are as under: i. The assessee along with other co-owners sold the immovable property situated at survey No. 54/1, 54/2 and 54/3, Kalenagrahara Village, Begur Hobli, Bangalore South Taluk for a sale consideration of Rs. 5,35,00,000/- vide sale deed dated 27.10.2007. ii. The share of appellant was Rs. 1,60,50,000/-. After deduction, the selling expenses and indexing the cost of acquisition, the long term capital gain of Rs. 1,56,85,225/- was arrived at by the appellant. In respect of this capital gain, the appellant has claimed exemption under section 54F to the extent of Rs. 1,56,33,870/- and offered balance of long term capital gain of Rs. 51,355/- to tax. The appellant had claimed exemption under section 54F in respect of properties supposed to have been acquired for purchase of flat bearing No.3092 in Level 9 of Block No.3 at "Prestige Nottinghill" Survey No. 9, Kalena Agrahara Village, Begur Hobli, Bangalore South Taluk (hereinafter called new house). iii. According to the appellant, the following payments were made from the financial year 2007-08 to 2010-11 towards the consideration for acquisition of ne....
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....of original receipt. However, the relief under section 54F is not admissible and for the reason that the assessee is already owning 50% in the new asset. On the other hand, the learned AR argued that the release of the share of interest in the property i.e., new asset by the husband in favour of the assessee for a consideration constitutes a purchase within the ambit and scope of provisions of section 54F and in this connection, he relied on the decision of Hon'ble Supreme Court in the case of CIT vs. T.N. Aravinda Reddy (2 taxman 541). He further submitted that any expenditure incurred to make the house habitable constitutes the cost of the new asset which is eligible for relief under section 54F and in this regard he placed reliance on the decision of Hon'ble Karnataka High Court in the case of Mrs. Rahana Siraj Vs. CIT-I, Bangalore, 58 taxmann.com 333. 11. He further submitted that the assessee was not owning more than two houses on the relevant date as the assessee was owning only one house on the date of acquisition of new asset. 12. We heard the rival submissions and perused the material on record. The issue that comes up for consideration before us in the present ap....
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....are dismissed. 13. In the result, the appeal filed by the revenue is allowed and the appeal filed by the assessee is dismissed. Order pronounced in the open court on this 2nd day of December, 2016 ============= Document 1 The new asset that is claimed to have been purchased is a residential property at Plot No.8, Prestige Ozone, Varthur, Bangalore on 24.02.2007 by making an investment of Rs. 1,72,29,993/- which comprises of the following as per assessee's letter dt 17th December, 2010. Cost of land as per agreement dt 5.5.04 Cost of Construction as per agreement dt 5.5.2004 Common Maintenance Charges as per clause 8(b) Common Maintenance Charges as per clause 8(d) Payment made to Prestige and other structural changes Payment made to Morph Design vide letter dt 6.3.07 for Changes in the villa Material purchased and supplied by the assessee Cost of registration of land on 24.02.2007 Other costs Rs. 39,69,933.00 Rs. 46,35,210.00 Rs. Rs. 87,500.00 87,500.00 Rs. 34,17,560.00 Rs. 30,66,252.00 Rs. 7,89,677.00 Rs. 3,77,540.00 Rs. 8,98,421.00 Total cost Rs.1,72,29,993.00 Document 2 8. H....
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....ee has paid an advance of Rs.3,17,363/- on 08.06.2007 at the time of booking the flat and hence the condition as per proviso () of Sec.54F might also not have been satisfied. 8.2. The assessee was already the owner of the immovable property which is termed as the 'new eligible asset by virtue of sale deed executed on 24.02.2007. 8.3.The benefit of deduction u/s.54F is claimed on the ground that the husband of the assessee has executed a deed of relinquishment in favour of the assessee with reference to the 'new asset,' but the right in this asset was already vested in the assessee since the sale deed was executed much earlier i.e., on 24.02.2007, ie, prior to the sale of the capital asset. Document 4 8.4. The exemption u/s.54F is based purely on the deed of relinquishment which under the circumstances is a 'colourable device' of tax avoidance. Reference is made to the decision of the Hon'ble Supreme Court in CIT Vs. Macdowell Ltd., 154 ITR 148. 8.6. The purported investment is only an afterthought and only by a paper transaction which is strengthened by the fact that the assessee had received part payment of Rs.40 lakhs towards the sale of t....
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....the property, out of funds provided by assessee. At least no investment is proven within one year before transfer of the original asset on 27.10.2007. The assessee was having 50% share in the property irrespective of the payments made to her husband subsequent to this date. What has been subsequently acquired by way of release is the remaining 50% share. It is also a fact that payments were made to her husband within three years of the date of transfer i.e. 27.10.2007, and hence irrespective of the fact that no amount or consideration is mentioned in the release deed, the assesse shall be eligible for deduction u/s 54F. It has been judicially held that it is the investment or construction which is important (251 CTR (Karnataka) 317). 9.5 Therefore, it is held that the assessee is entitled to claim deduction u/s 54F to the extent of 50% of cost of acquisition of the property (Rs.91,58,083/-), which comes to Rs.45,79,042/-. Document 6 1. The Order of the CIT (A) is opposed to facts of the case. 2. The CIT (A) ought to have appreciated the fact, that the assessee is not eligible to claim deduction u/s 54F to the extent of 50% of investmen....