TaxTMI 
TaxTMI 
2024 (6) TMI 534
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....3. The learned Commissioner of Income Tax (Appeals) has erred in holding that date of possession of the new property is not relevant and only the date of actual registration of the property is relevant for claiming deduction w/S.54 of the Income Tax Act 1961. 4. The learned Commissioner of Income Tax (Appeals) ought to have noted that though the registration of the new property was done (registration done on 21.6.2014) beyond one year from the date of sale of the old property (date of sale of old property-22.7.2015), the construction of the new property was completed on 10.7.2015 and actual possession was handed over to your appellant only on 16.11.2015. The possession was handed over within 4 months from the sale of the old property. 5. The learned Commissioner of Income Tax (Appeals) has failed to appreciate that provisions of Section 54 is a beneficial provision which has been interpreted in the most lenient manner in favour of the assesses by various Tribunals and Courts in India. The learned Commissioner of Income tax (Appeals) has disregarded the various judicial decisions including that of jurisdictional Tribunal in favour of your appellant. A gist of the legal decisions....
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.... the agreement to purchase the new asset was entered into on 21st June, 2014, the Appellant was not entitled to claim exemption u/s. 54 of the Act inasmuch as the section requires an assessee to purchase a new asset either within one year prior or two years after the date of sale, which took place on 22nd July, 2015. Further, even if this was considered a case of construction, the Appellant would still not be eligible as the same had to be done within a period of three years after the date of sale, whereas in the case of the Appellant, the construction had started prior to the date of sale. Reliance was placed on Circular no. 471/1986, judgement of the Hon'ble Bombay High Court in the case of Rasiklal Parikh vs. ACIT (2017) (393 ITR 536) and the judgement of the Hon'ble Supreme Court in the case of Sanjeev Lal (2014) (365 ITR 389). Submissions of the Appellant- 4. At the outset, the relevant provisions of section 54 are reproduced- "54. (1) Subject to the provisions of sub-section (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 appur....
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....17 ITR 363) (Bom)- In this case, the assessee sold the original asset on 23rd July, 1987. Her agreement to purchase an under construction property was registered on 27th October, 1985 (i.e., outside the permissible period), however, the possession was given on 30th July, 1988 (i.e., within the permissible period) after consideration was paid on 29th July, 1988. It was held by the Tribunal that as the date of grant of possession was within the permissible period, the assessee would be entitled to exemption u/s. 54F, even though the agreement to purchase the new asset was outside the permissible period. Upholding the decision of the Tribunal, the HC held as under- "In our view the Tribunal has rightly negatived this contention and has held that the new residential house had been purchased by the assessee within two years after the sale of the capital asset which resulted in long- term capital gains. The Tribunal has held that the relevant date in this connection is 29-7- 1988 when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained possession of the flat. This has been taken by the Tribunal as the date of purchase. The Tribun....
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....ly, in this case what the department is harping upon is merely the agreement dated 21-12-2016 when the building itself was not constructed and the assessee has only acquired his right to get a flat in the said building. When actually therefore, can it be said that the new property was purchased? It is only when the assessee received the possession through letter of possession on 24-12-2018. This is when all the three ingredients as enumerated in the decision of Hon'ble Jurisdictional High Court for claiming deduction u/s 54 had been complied with by the assessee." To the same effect are the following decisions- * Reji Easow vs. ITO (2022) (194 ITD 384) (Mum) * ITO vs. Shiv Sunil Khanna (2018) (ITA 5857/Mum/2016) (Mum) * Ayushi Patni vs. DCIT (supra) 7. It is submitted that in case it is held that the subject transaction is not one of purchase of a residential house, but construction of a residential house, in that event as well, all the relevant events, ie., payment of the final installment, obtaining the occupation certification and grant of possession have happened within a period of three years from the date of sale of the original asset. Accordingly, even in that ....
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....ete variance with the facts of the Appellant's case. In that case the original asset was transferred on 13th September, 2005. The agreement for the purchase of the new asset was signed on 24th November, 2008 and the approval for construction was received by the builder on 7th September, 2010. Since both the events were outside the permissible period specified under section 54, it was held that the assessee was not entitled to the benefit of that section. It was specifically noted in para 34 of the judgement that Thus, according to us there is no question of assessee establishing the title over the property which was not been approved for construction at the material time'. It was further held in para 35 'that we are of the view that the issue pertaining to incomplete construction and that of contiguity of flats need not be gone at this stage since on very first issue we are not satisfied with the eligibility of the Appellant assessee to claim exemption under section 54F. Therefore, the facts of Rasiklal (supra) are completely different from that of the Appellant's case inasmuch as in the facts of that case, even the approval for construction had not been received within....
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....5 earned by him. 5. Ld. DR, on the other hand, relied on the orders of lower authorities. He also placed reliance on the decision of the Hon'ble Bombay High Court in the case of Rasiklal M Parikh Vs ACIT-19(2) (2017) 393 ITR 536 wherein it was held that where the assessee invested consideration received on surrender of tenancy rights towards construction cost of new flats, but construction of new flats have not been completed so could not obtain allotment letter from developer within period of 3 years. He was not entitled to exemption u/s 54F. 6. We have heard both the parties, and after carefully consideration of facts of this case, following conclusion can be arrived at: a. It is an admitted fact that the agreement to purchase the new asset was made on 21.06.2014 i.e. more than 1 year before the date of agreement to sell the original asset i.e. 22.07.2015. It is on this ground that the AO has denied the deduction u/s 54 to the assessee as the date of agreement to purchase is beyond the prescribed time period of 'one year prior and 2 years after the sale of original asset'. It is the contention of the assessee that even though the new asset had been booked and the agreement to....