TaxTMI 
TaxTMI 
2022 (9) TMI 1246
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....fied in deleting the disallowance of deduction u/s 54F amounting to Rs.2,59,08,966/- ignoring the fact that the impugned acquisition of the new asset was merely supported by an unregistered sale agreement without mentioning the vital details of the asset including area of land, market value, built up area of building, date of transfer etc.? 3. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the disallowance of deduction u/s 54F amounting to Rs.2,59,08,966/- ignoring the fact that possession of the new asset was not handed over to the assessee by the agreement and hence the transaction cannot be treated as a part performance of the contract as referred to in section 53A of Transfer of Property Act and hence not eligible for deduction u/s 54F of the I.T. Act? 4. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the disallowance of cost of improvement amounting to Rs.18,77,602/- out of total amount claimed at Rs. 31,62,386/- ignoring the fact that the assessee failed to produce satisfactory evidence in support of his claim? 5. Any other ground as may be raised during the course of appeal." ....
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....9 of the Indian Registration Act, 1908 had also been amended, therein clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of section 53A of 1882 of the Act) is registered, it shall not have any effect in law other than being received as evidence of a contract in a suit for specific performance' or as an evidence of any collateral transaction not required to be effected by a registered instrument. In sum and substance, it was observed by the A.O that pursuant to the amendment if the document transferring the immovable property is not registered then, the said transfer would be invalid and have no value in the eyes of law. In support of his aforesaid conviction the A.O had relied on the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Balbir Singh Maini (2017) 398 ITR 531 (SC). 4. Also, it was observed by the A.O that the assessee while computing the capital gain on the transfer of the aforesaid property had claimed deduction of indexed cost of improvement of Rs.31,62,386/-. It was observed by the A.O that the assesee had over the years claimed to have incurred expenses....
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.... 399096 Total 12,84,784 5. Accordingly, the A.O on the basis of his aforesaid observations vide his order passed u/s.143(3), dated 27.12.2017 assessed the LTCG in the hands of the assessee at Rs.3,01,62,118/-. 6. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) after deliberating on the contentions advanced by the assessee was inclined to concur with the same. As regards the assessee's claim for deduction u/s.54F of the Act, it was observed by the CIT(Appeals) that the assessee had admittedly made the full payment of the purchase consideration of Rs. 2.91 crore (approx.) as well as taken the possession of the new residential property during the year under consideration. It was further observed by the CIT(Appeals) that the registered sale deed of the new residential house was subsequently executed in favor of the assessee on 29th March, 2019 for a total consideration of Rs. 2.91 crore. It was further observed by the CIT(Appeals) that the entire amount of purchase consideration of Rs.2.91 crore (after deduction of tax at source a/w. interest of Rs.3,21,555/-) was paid by the assessee vide an online payment from his ....
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....ate proceedings, the CIT(Appeals) was of the view that as the assessee had filed payment bills/vouchers pertaining to purchase of steel and iron, therefore it could safely be inferred that there would have been purchase of other building material, viz. sand, cement and incurring of expenses on labour without which the construction of new residential house would not have been possible. It was observed by the CIT(Appeals) that merely because some bills/vouchers towards labour expenses or building material were not produced by the assessee, then, the said fact on a standalone basis could not have been used for drawing of adverse inferences as regards the assessee's claim of having incurred expenditure on construction of the property, as the same would be otherwise in clear conflict with the recitals of the registered sale deed which clearly spelt out that construction was carried out by the assessee on the 1st and 2nd floor of the aforesaid property. It was further observed by the CIT(Appeals) that now when the registered deed clearly referred to the construction of a double storied house and if that would have not been so, the Registration Authority would have declined from executing....
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....sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in th....
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.... appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under subsection (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new ....
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....owner upon him in the eyes of law. Undeniably as the assessee before us had pursuant to the sale of the property purchased a new residential house, though vide an unregistered purchase agreement, dated 30.03.2015 i.e. within the prescribed time period contemplated in sub-section (1) of section 54F of the Act, therefore, he had claimed deduction under the aforesaid statutory provision. Controversy involved in the present appeal hinges around the solitary aspect as to whether or not the assessee's claim for deduction under Sec. 54F would by any means be hindered, for the reason that he had purchased the new residential house vide an unregistered purchase agreement, dated 30.03.2015, which as per the mandate of Section 17 r.w.s. 49 of the Indian Registration Act, 1908 though did not confer a valid title of the property purchased on him. 14. In our considered view, the observation of the A.O that as the assessee had purchased the new residential house vide an unregistered purchase agreement, dated 30.03.2015, therefore, de hors the purchase of the same vide a registered instrument, the assessee would be not eligible for claiming deduction u/s.54F of the Act, based on a misconceived ....
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....to use for dwelling within four months, as a result exemption contemplated under section 54 was clearly attracted. Our pointed attention was drawn by the Revenue to the decision of the Supreme Court in the case of Alapati Venkataramiah v. CIT wherein the word "transfer" as found in section 12(b) of the Indian Income-tax Act, 1922, is interpreted as meaning "passing of title". Since the word interpreted as well as its context are different, the ratio of that decision will have no application to the instant case." Also, a similar view had been taken by the Hon'ble High Court of Madhya Pradesh in the case of CIT Vs. Ajit Singh Khajanchi (2008) 297 ITR 95 (MP.HC). It was observed by the Hon'ble High Court that in order to claim benefit of the provision of section 54F, it is not necessary that the new house should be registered in the name of the assessee, for the reason that the section only speaks of purchase and registration is not imperative. Relying on the judgment of the Hon'ble High Court of Delhi in the case of Balraj Vs. CIT (2002) 254 ITR 22 (Del.), it was observed by the Hon'ble High Court as under: "Insofar as the question No. 2 is concerned, the learned....
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....hased" would undoubtedly connote the domain and control of the property given into the assessee's hands. From the facts on record, it is clear that, apart from the payment of substantial purchase consideration, the assessee secured possession of the property on August 10, 1976, which is within the period of one year specified under section 54(1) of the Act. There might have been some procedural delay in obtaining formal registration of the sale deed. But, that, in our opinion, is immaterial. In the facts and circumstances, the Tribunal was right in coming to the conclusion that the assessee purchased another residential house within the period of one year as stipulated under section 54(1) of the Act. The house property purchased by the assessee had come into the full domain and control of the assessee within the period of one year. Also, a similar view had been taken by the Hon'ble High Court of Delhi in the case of CIT Vs, Kuldeep Singh (2014) 226 Taxman 133 (Delhi) and that of in the case of Balraj Vs. CIT, (2002) 254 ITR 22. 15. Adopting a similar view a co-ordinate bench of the Tribunal i.e. ITAT, Delhi Bench "B" in the case of Elegant Infraworld Pvt. Ltd. Vs. ITO (20....
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....amounting to Rs.8,52,584/- pertaining to F.Y.2009-10, AY 2011-12. As the assesee could not support his claim of having incurred expenses towards development/improvement of the property sold as was claimed by him in his return of income, therefore, the A.O as a consequence thereto had restricted his entitlement for deduction of indexed cost of improvement to an amount of Rs.12,84,784/-. 19. On appeal, we find that it was claim of the assessee that as the recitals of the sale deed clearly revealed that the property which was sold was a double storied house, therefore, it could safely be concluded that as he had carried out construction on the land that was purchased by him at Pandri, Raipur. Concurring with the aforesaid claim of the assessee, the CIT(Appeals) was of the view that now when the recitals of the sale deed clearly revealed that the property sold by the assessee was a double storeyed house, therefore, it could be safely concluded hat the assessee had incurred expenses towards construction i.e. labour expenses, sand and cement etc. It was observed by the CIT(Appeals) that as the consumption of sand, cement and incurring of labour expenses a/w. iron and steel would unden....