TaxTMI 
TaxTMI 
2024 (5) TMI 1094
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....he action of Ld. AO in denying exemption claimed by the appellant u/s 54 and making addition of Rs. 99,35,840/- as long term capital gains in the hands of the appellant. 4. Without prejudice, the Ld. CIT(A) has erred in law and in facts in not allowing exemption to the extent of Rs. 5086,472/- being amount paid for new residential flat by the appellant." 3. The only grievance of the assessee, in the present appeal, is against the denial of exemption claimed u/s 54 of the Act. 4. The brief facts of the case, as emanating from the record, are: The assessee is an individual and for the year under consideration filed her original return of income on 25/07/2019 declaring a total income of Rs. 6,26,210/-. During the assessment proceedings, in the case of the assessee for assessment year 2013-14, it was observed that the assessee had sold a residential property, Flat No. 504, Tower No. 4, Raheja Tipco House CHS Ltd, on 31/07/2012 for a sale consideration of Rs. 1,80,00,000/-, which was purchased by assessee on 26/06/2008 for a purchase consideration of Rs. 54,73,095/-. It was observed that the assessee, in her return of income for the assessment year 2013-14, had not offered the Long ....
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....sessee was under no doubt that the expected time period for completion of the project is 30 months, i.e. much beyond the time of three years permitted u/s 54 of the Act from the sale of original asset. Being aggrieved, the assessee is in appeal before us. 6. During the hearing, the learned Authorised Representative ("learned AR") submitted that the assessee had booked an under-construction residential flat within a period of three years from the date of transfer of the original asset and also made a payment of Rs. 50,86,475/- to the builder against the same. It was further submitted that for reasons beyond the control of the assessee the construction of the property got delayed, and due to the same, the assessee should not denied exemption for which she is rightly eligible u/s 54 of the Act. The learned AR submitted that the assessee had deposited the entire amount of capital gain under the Capital Gains Account Scheme within the prescribed time limit as mentioned u/s 54 of the Act and therefore, the amount can be withdrawn from the bank only for the purpose of purchase of the residential flat. It was further submitted that out of the aforesaid deposit under the Capital Gains Acco....
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....2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (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], then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in ....
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....tial house is either purchased within one year before or within two years after the date on which the transfer took place, or the assessee has within the period of three years after that date constructed a residential house. Section 54(2) of the Act further requires that the amount of capital gain that is not appropriated or utilised by the assessee for the purchase or construction of the new residential house before the date of furnishing the return of income u/s 139 of the Act shall be deposited in the Capital Gains Scheme Account before furnishing such return. It is further pertinent to note that the proviso to section 54(2) of the Act provides that if the amount deposited under the Capital Gains Account Scheme is not utilized for the purchase or construction of the new asset then the amount not so utilized shall be charged u/s 45 of the Act as the income of the previous year in which the period of three years from the date of transfer of original asset expires. 11. Thus, in the present case, in order to claim the exemption u/s 54 of the Act, the assessee was required to invest the Long Term Capital Gain of Rs. 99,35,840/- either for the purchase of a residential house within t....
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....cular No.471 dated 15/10/1986 and Circular No.672 dated 16/12/1993, held that booking of a flat with a builder is to be considered as construction of the residential flat and not a purchase of a residential flat. Further, in CIT v/s Smt. Bharati C. Kothari, [2000] 244 ITR 352 (Cal.), the Hon'ble Calcutta High Court after analyzing the provisions of section 54 of the Act, observed as under: "The purpose behind the exemption under section 54(1) is that if any assessee sells his residential house and purchases a new house against those sale considerations, then capital gain tax arising out of the sale of the earlier house should not be taxed. Whether assessee himself constructs the house or he gets it constructed by a contractor or 3rd party that does not make any difference. The basic requirement for purpose of relief under section 54(1) is that the assessee should invest the sale proceeds in the construction of residential house, which has been constructed for assessee." 13. Thus, in view of the aforesaid judicial pronouncements, we are of the considered view that the purchase of an under-construction flat by the assessee will tantamount to investing the money in the construction....
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....necessarily be complete 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, construction 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. Therefore, the view taken by the Tribunal is not correct. Hence, we answer the question in favour of the assessee and against the Revenue." 15. The learned AR further relied upon the decision of the Hon'ble Delhi High Court in CIT v/s Kuldeep Singh, (2014) 270 CTR 561 (Del.), wherein the Hon'ble Delhi High Court held that intention behind section 54 of the Act is to give relief to a person who has transferred his residential house and has purchased or constructed another residential house. The Hon'ble High Court further held that it is only the exces....