TaxTMI 
TaxTMI 
2021 (10) TMI 863
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....y from the source of salary, long-term capital gain and mutual fund. Subsequently the assessment was completed under section 143(3) of the Act at the income declared in the return of income vide order dated 18 December 2017. However the learned PCIT on perusal of the assessment records found that assessee has sold a property for a consideration of Rs. 4,11,00,000.00 only and computed the long-term capital gain of Rs. 3,43,65,898/- only after deducting the indexation cost and indexation cost of improvement. The impugned amount of long-term capital gain was claimed as exempted under section 54 of the Act on account of purchase of a new property vide notarized agreement dated 31 March 2015 at Rs. 3,61,00,000/- only. However, the learned PCIT was of the view that the transaction for the purchase of the property was not completed for the reasons as detailed below: i. As per the agreement the assessee made the payment of Rs. 3,49,00,000/- before 31st of March 2015 and it was agreed that the balance amount of Rs.12 lakhs shall be paid within 6 months from the date of agreement. ii. As per the agreement the sale deed will be registered in the name of the assessee only aft....
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....at the possession of the property was not handed over to the assessee and therefore the transaction for the purchase of the property was not completed within the meaning of the provisions of section 54 of the Act. Likewise, there was a clause in the agreement that the property shall be transferred in the name of the assessee only after realizing the balance payment of Rs.12 lakhs but the same was not paid to the vendor. 3.7 The learned PCIT also found that there was no evidence available on record suggesting that the civil suit has been filed by the assessee as there was no acknowledgement or case number or order no. of the suit. 3.8 In view of the above, the learned PCIT held that the order framed by the AO under section 143(3) of the Act as erroneous insofar prejudicial to the interest of revenue by observing as under: 4. In the light of the aforementioned discussions and bearing in mind the entirety of the case, I am of the opinion that the assessment order passed by the A.O. 143(3) of the I.T. Act, 1961 on 18.12.2017 is erroneous insofar as prejudicial to the interest of the revenue, as discussed in preceding paras, since the order has been passed Without making ....
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....ditions as specified under section 54 of the Act for claiming the exemption of the long-term capital gain have not been satisfied. But the AO without examining/verification of the conditions as specified under section 54 of the Act has allowed the same to the assessee. Accordingly the learned PCIT was of the view that the assessment framed under section 143(3) of the Act is erroneous insofar prejudicial to the interest of revenue. The reasons for holding the order as erroneous insofar prejudicial to the interest of revenue by the learned PCIT have already been elaborated in the preceding paragraph. Therefore, for the sake of brevity and convenience, we are not inclined to repeat the same. 7.1 Now the 1st controversy on merit before us arises whether the conditions as specified under the provisions of section 54 of the Act for claiming the deduction have been satisfied in the given facts and circumstances. The assessee can claim an exemption under section 54 of Act, 1961 while computing long term capital gain arising on transfer of house property and investing in purchase/construction of the house property subject to the conditions specified under section 54 of Act. The relevant ....
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....ase of Smt. Shashi Varma v. CIT [1997] 224 ITR 106, the Hon'ble MP high court held that section 54 of the Act only says that within two years, the assessee should have constructed the house but that does not mean that the construction of house should necessarily be completed within two years. What it means is that the construction of house should be completed as far as possible within two years. In the modern days, it is not easy to construct a house within the time-limit of two years and under the Government schemes, it takes years and years. Therefore, confining to two years' period for construction and handing over possession thereof is impossible and unworkable under section 54 of the Act. If substantial investment is made in the construction of house, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of section 54 of the Act. 7.6 In view of the above, we are of the opinion that the assessee cannot be denied the benefit of deduction provided under section 54 of the Act in the given facts and circumstances merely on the reasoning that the property was not registered as well as the possession was not handed over to the asses....
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.... also requested to furnish proof of cost of acquisition/ copy of purchase deed of property as well as cost of improvement in respect of property sold during the year. 2. Please furnish proof of claim under section 54 of the Act. c. Notice Dated 8-8-2017 On going through the bank account in respect of Naroda Co-Op bank Ltd. it is seen that the said bank account reflects large amounts of credits out of which you have made investment in new property on which exemption u/s.54 was claimed. In this regard, you are requested to explain the credits of Rs. 1 lacs and above in the said bank account alongwith supporting documentary evidences. d. Notice Dated 8-12-2017 File No.81 Date: 08/12/2017 Email [email protected] PAN: ADAPA3016D To, Shri karan Rajebndrakumar Arya, 802, Saffron Building, Panchavati, Ambawadi, Ahmedabad-380015. 1. During the year, you have claimed deduction u/s. 54 in respect of LTCG derived on sale of immovable property, in this connection, you are requested to please give details as to whether property income in respect of the immovable property ....