TaxTMI 
TaxTMI 
2022 (2) TMI 486
X X X X Extracts X X X X
X X X X Extracts X X X X
....e facts and in the circumstances of the case and in law, the CIT{A) erred in not following the legislative intent , which has to be read as it is and has to be applied as it is meant rather than liberally. 4. "On the facts and in the circumstances of the case and in law, the CIT{A) erred in appreciating the fact that the assessee has by his own admission vouched for the fact that he was not able to obtain gainful possession of the property for availing the deduction of section 54 of the Income Tax Act 1961within the time limits prescribed by the instant section". 5. "On the facts and in the circumstances of the case and in law, the CIT(A) erred holding that the assessee has fulfilled all the statutory requirement for availing deduction under section 54 of the Act and as such, the disallowance of deduction is unjustified and unreasonable". 6. The appellant prays that the order of the CIT(A) on the above ground be reversed and that of the Assessing Officer be restored. 3. Brief facts of the case are as under:- The appellant had e-filed his return of income on 26.08.2015 declaring total income at Rs. 2,00,07390/-. During the year, the appellant h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atus on RERA site on 02.11.2017 as "On-going project and revised date of completion is mentioned as 31.08.2018; iii The assessee is yet to make the final payment in respect of the investment transaction. iv Occupation Certificate is not yet received. v The assessee has not got possession of the property. ,' vi The circular no. 471 & 972 referred by the assessee were for specific schemes. Circular 471 is about reckoning of holding period. The Central Board of Direct Taxes (CBDT) issued a circular (No.471, dated 15th October, 1986), where it has clarified that for flats under self-financing schemes of the DDA; the holding period shall begin from date of the allotment letter. During the assessment proceedings, the appellant had requested the AO to take liberal view with regard to deduction u/s.54. In this regard AO held that though liberal view can be taken while allowing deduction u/s.54 as it a beneficial section, however, the decisions cannot be applied mechanically. Considering the facts of the case in light of the legal position, it was held by the AO that the appellant does not fit into the scheme of the things envisaged ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in obtaining occupancy certificate was beyond control of assessee, assessee would be entitled for deduction under section 54 - Held, yes [Para 3] [In favour of assessee]. Kishore H. Galaiyas V/s ITO f20121 24 taxmann.com 11 (Mum.) (Page... to page... of the paper book) If the 'assessee -had made investment within period of three years, exemption under section 54 could not be denied for the reason that possession had not been taken-. There may be delay in taking of possession because of many factors not under control of assessee, merely because of this exemption could not be denied. "6.1............In the present case, the assessee sold the old residential house on 7.3.2006 and the long term capital gain arising on this account was Rs. 9,98,411/-. The assessee had booked a new residential flat with the builder jointly with his wife for a sum of Rs,35,00,000/-. The assessee had paid booking amount ofRs. 1,00,000/- to the builder before the due date of filing of the return of income u/s 139(1) for the assessment year 2006-07 and the balance amount had been paid in installments after the said date. The total amount paid by the assessee to the builder was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs not under the control of the assessee due to default on the part of the builder and therefore merely because the possession had not been taken within the period of three years, the exemption cannot be denied. This aspect had also been considered by the Hon'ble High Court of Bombay in the case of Mrs. Hilla J.B.Wadia (supra) in which the Hon'ble High Court held that in case the assessee entered into an agreement with the society for purchase of flat and paid almost the entire consideration within a period of 2 years, the assessee would be entitled to exemption u/s 54 of the Act. The Hon'ble High Court also held that the material test was the domain over the property and the investment and, therefore, in case, the assessee had made substantial investment within the prescribed period which entitled the assessee to take possession of the flat, the claim of the exemption u/s 54 had to be admitted. In the present case, within the period of three years, the assessee had invested Rs. 14,62,500/- which was more than the amount of capital gain in the construction of new residential house within the period of three years and the possession of the house had also been ultimately ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under the agreement with the Society coupled with the payment of almost the entire cost of construction within a-period of two years." 4.6 Further, the appellant has also relied on the decision of the Hon'ble ITAT, Mumbai dated 12.03.2019 (ITA No.6814/Mum/20l6) in the case of Rajendra Pal Verma vs. ACIT 35(2), Mumbai wherein the relevant issues are decided in favour of the appellant. 4.7 In the instant case, I find that the assessing officer has applied section 54 of the Income Tax Act, 1961 in a mechanical manner. I find that appellant has made compliance, of all the conditions as per the section 54 and is eligible to claim the deduction. Therefore, in view of the facts and circumstances of the case and the ratio of various judicial pronouncements as mentioned above, the assessing officer is directed to delete disallowance of Rs. 3,42,58,350/- made u/s 54 of the Income Tax Act, 1961. This ground of appeal is allowed. 8. Against the above order, revenue is in appeal before us. 9. We have heard both the parties and perused the records. Ld. DR supported the order of the AO. On the other hand, Ld. Counsel of the assessee supported the order of Ld.CIT(A). He s....