TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1298
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....ASS for examination of deduction/ exemption for capital gain/ loss on sale of property. Accordingly, the statutory notices along with questionnaire were issued, served and duly responded by the assessee. The ld. AO on perusal of the details and documents filed by the assessee observed that assessee has transferred property during the year which was purchased in F.Y. 2005-06 for Rs. 1,65,68,750/- the index cost of which worked out to 3,73,85,897/-. However, in the ITR filed for the current assessment year, the index cost was taken at Rs. 37,50,41,756/-, which is more by Rs. 1,18,819/-and has to be reduced accordingly. The ld. AO further noted that the assessee has claimed deduction of Rs. 1,06,07,936/- u/s 54 of the Act in respect of property/ sale of house / transferred on 03.06.2016, whereas the agreement for purchase of new property was entered into on 12.03.2014. According to the ld. AO, the new house property was to be purchased within one year before or two year after or to be constructed within three years after the date on which the transfer took place. However, in the instant case, new property was acquired on 12.03.2014, which is more than 1 year from the date of sale of t....
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....hase of new property on 12.03.2014 no payments were made under that agreement. The assessee claimed the benefit u/s 54F of the Act only in respect of those payments which were made within one year from the date of transfer of old property. In our opinion, the assessee has rightly made the claim u/s 54F of the Act. The case of the assessee find support from the decision of Hon'ble High Court in the case of CIT Vs. Smt. Beena K. Jain(1996) 217 ITR 363 (BOM) on 23.11.1993 (Bombay), the relevant Para of the decision is extracted below:- "2. Under section 54F of the Income-tax Act, in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not being a residential house, and the assessee has, within a period of one year before or two years after the date on which the transfer took place, purchased a residential house, the capital gain shall be dealt with as provided in that section. As per the section certain exemption has to be allowed in respect of the capital gains to be calculated as set out therein. The Department contends that the assessee did not purchase the residential house either one year prior to or two years after the sale o....
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....completion of construction. 22. Honourable Bombay high court in case of Beena K Jain [ 217 ITR 363 (Bombay) has held [ in question of section 54 F which is Pari Materia identical except computation] that :- "2. Under section 54F in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not being a residential house and the assessee has, within a period of one year before or two years after the date of which the transfer took place purchased a residential house, the capital gain shall be dealt with as provided in that section. As per the section certain exemption has to be allowed in respect of the capital gains to be calculated as set out therein. The department contends that the assessee did not purchase the residential house either one year prior to or two years after the sale of the capital asset which resulted in long-term capital gains. According to the department, the agreement for purchase of the new flat was entered into more than one year prior to the sale. Hence, the petitioner is not entitled to the benefit under section 54F. In our view the Tribunal has rightly negatived this contention and has held that the new reside....
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....l issue in the present case is that new residential house has not been constructed within a period of three years from the date of the transfer of the residential property which resulted in the long-term capital gain. On this issue, the assessee's contention has been that inspite of having made payment for the plot, the Jaypee (Developer) failed to offer possession and execute sale deed even up till the expiry of three years from the date of sale of property by him, because of reasons beyond his control which cannot be disputed. This vital fact assumes great significance as assessee had taken all the steps to make the investment for the purchase of house, and also assessee had deposited Rs. 25,10,000/- in the capital gain account with PNB so as to construct the house. This unequivocally demonstrate that assessee really intended to construct the new residential house thereon. It was based on this bonafide intention assessee had claimed exemption under section 54 of the Act. Without the purchase of land, house could not have been constructed. The first step was to purchase the land, which was done. Thereafter the developer was to handover the plot, so that assessee could have con....