TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 140
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....re us: "1. The Ld. CIT(Appeals) erred both in law and on facts of the case in granting exemption u/s. 54F of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, and in law, whether the CIT(Appeals) is justified in granting exemption u/s. 54F of the Income Tax Act, 1961 without appreciating the fact that the new residential property was purchased and got registered on 07.12.2021 i.e beyond the period of 2 years as stipulated u/s. 54F of the Act. 3. On the facts and in the circumstances of the case, and in law, whether the CIT(Appeals) is justified in granting exemption u/s. 54F of the Income Tax Act, 1961 holding that the entire sale consideration received on sale of plots was reinvested in a residential property within the stipulated time even though the legal formalities of getting the property in assessee's name did not take place within the time stipulated u/s. 54F of the Act, or the extension provided by the Taxation & Other Laws (Relaxation and Amendment of certain provisions) Act, 2020. 4. On the facts and in the circumstances of the case, and in law, whether the CIT(Appeals) is justified in granting exemptio....
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.... of claiming deduction under Section 54F of the Act; and (ii) based on the examination of the SRO certificate, GST and Municipal Tax receipts to verify as to for what purpose the subject properties were approved by the municipal authorities; and (iii) that as the assessee who had paid more than 80% of the payment to the builder, had paid the balance amount of the consideration of more than Rs. 1 crore to the said builder beyond the time prescribed under the Act, therefore, the A.O. was directed to verify as to whether the assessee satisfied the statutory requirement of having purchased the new residential house within the four corners of Section 54F of the Act, specifically in the backdrop of the fact that the registration of the sale deed of the said new residential property was executed on 01.12.2021. 8. Thereafter, the A.O. vide his order passed under Section 143(3) r.w Section 144C(3) of the Act, dated 29.09.2024, i.e., on the matter having been set aside by the Tribunal, after necessary deliberations and perusal of the documents, observed that except for one property, i.e., the property situated at Ghatkeswar, Uppal, Medipally, Hyderabad, the remaining eight properties (out....
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....ict, vide Document No. 21093/ 2021, dated 07.12.2021, which was beyond the prescribed time limit of two years within which she was statutorily required to invest in the new residential house to claim exemption under Section 54F of the Act. It was observed by him that the assessee, who had claimed to have made payments to the tune of Rs. 4,10,85,000/- towards purchase of the new residential property before the filing of the return of income for the subject year, i.e., A.Y. 2019-20, had, based on her aforesaid investment raised the claim for exemption under Section 54F of the Act. It was further observed by him that though the assessee had filed her return of income for the A.Y. 2019-20 on 25.06.2019, but had received the possession letter from the builder on 24.08.2020. The A.O. further observed that the assessee had not submitted the occupancy certificate for the new residential house property issued by the GHMC. Accordingly, the A.O. based on his firm conviction that the assessee had failed to invest towards the purchase of new house property situated in 11th floor of the Tower "The First" in Survey No.66/2 at Raidurg, Panamaktha Village, Serlingampalli Mandal, Ranga Reddy Distric....
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....F of the Act, therefore, her claim for deduction under Section 54F of the Act was well in order. The CIT(A), based on his aforesaid observations, concluded that the assessee had rightly raised a claim for deduction under Section 54F of the Act. For the sake of clarity, the observations of the CIT(A) are culled out as under: "Now coming to the claim of the deduction u/s 54F of the Income Tax Act, 1961. The appellant had entered into an Agreement for purchase of an apartment at Raidurg, Gachibowli with the first payment made by Cheque on 23.04.2019 and enter into an Agreement of sale from the builder on 06.06.2019 and paid further amounts in instalments aggregating to Rs. 4,10,85,000/- till the date of filing of the return 22.07.2019. The due date of the builder on 24.08.2020 gave the possession of the flat to the appellant to take-up the interior works as the appellant had paid the full value of consideration. The property was ultimately registered on 07.12.2021 and the Occupancy Certificate of building was issued on 30.07.2022. The appellant sold the immovable Asset being plots located in Medipally and Bhongir in the FY 2018-19 and the capital gain accrued on the ....
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....he word "purchase" as buying for a price or equivalent of price by payment in kind or adjustment towards an old debt or for other monetary consideration from its legal meaning in section 54(1) of the Income Tax Act If you sell your house and make a profit, pay Caesar what is due to him. But if you buy or build another subject to the conditions of section 54(1) you are exempt. Further reliance is placed on the decision of Hon'ble jurisdictional ITAT in the case of Pradeep Kumar Chowdhry Vs Deputy Commissioner of Income-tax, Circle-1 (1), Hyderabad (2015) 55 taxmann.com 81 (Hyderabad Trib.) adjudicating based on reliance placed on the earlier decision of Narasimha Raju Rudra Raju v. Asst. CIT (2013) 143 ITD 586/35 taxmann.com 90 (Hyd.) wherein the co-ordinate Bench has decided as follows: • Provision contained under section 54F being a beneficial provision has to be construed liberally in various judicial precedents it has been held that the condition precedent for claiming benefit under section 54P is only that the capital gain realized from the sale of capital asset should be parted by the assessee and invested either in purchasing a residential h....
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....hand in the backdrop of the contentions advanced by the learned Authorized Representatives of both parties. 17. The controversy involved in the present appeal boils down to the solitary issue, i.e. whether or not the assessee, though having made payments aggregating to Rs. 4,10,85,000/- to M/s. DSR Builders & Developers (supra) for purchase of the new residential house, viz. flat/apartment bearing No. 1102, 11th floor of the Tower, "The First" in Survey No. 66/2, at Raidurg, Panamaktha, Serilingampalli Mandal, Ranga Reddy District, Telangana, i.e. upto the date of filing of her return of income for the subject year on 22.07.2019, was entitled for claim of deduction under Section 54F of the Act, though the possession letter was issued by the builder/developer on 24.08.2020, while for the registered sale deed of the said new residential property was executed on 07.12.2021, and the occupancy certificate issued on 30.07.2021. 18. We find that the issue in hand revolves around the adjudication of the term "purchase" as used in sub-section (2) of Section 54F of the Act. In our considered view, once it is proved that the assessee had within the prescribed period invested towards pur....
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....ased the new property within a period of one year before the sale of first property on 3rd June, 2005 or within two years from the date on which the transfer took place. The assessee had not constructed residential house within three years from 3rd June, 2005. Assessing Officer observed that legal ownership of the property never vested in the assessee within the aforesaid period and therefore, the purchase was not completed within two years which was the period stipulated and specified in Section 54 of the Act. He, accordingly, computed the long term capital gain, after granting benefit of indexation on cost of acquisition and cost of improvement, at Rs. 45,36,273/-. While examining the question of capital gains, the Assessing Officer also disallowed the claim of the assessee to the extent of Rs. 7,50,000/- as cost incurred for transfer. ....................................................xxxx............................................... 6. This brings us to the other question whether the assessee had "purchased" the second property and, therefore, payment made of Rs. 37,86,273/- was entitled to exemption under Section 54 of the Act. Section 54 of the Act as app....
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....m 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 sub-section (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 asset within the period specified in sub-section (1), then,-- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amoun....
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.... by payment of kind or adjustment of old debt or other monetary considerations. It was observed that if you sell a house and make profit, pay Caesar (State) but if you buy a house or build another and thereby satisfy the conditions of Section 54, you were exempt. The purpose was plain; the symmetry was simple; the language was plain. 9. Recently Supreme Court in Civil Appeal Nos. 5899-5900/2014 titled Sh. Sanjeev Lal Etc. Etc. vs. CIT, Chandigarh & Anr., decided on 01/07/2014, 2014 (8) SCALE 432 again examined Section 54 in a case where the assessee had entered into an agreement to sell a house to a third party on 27th December, 2002 and had received Rs. 15 lacs by way of earnest money and subsequently received the balance sale consideration of Rs. 1.17 crores (total being Rs. 1.32 crores) when the sale deed was executed on 24th September, 2004. In the meanwhile, the assessee had purchased another house on 30th April, 2003. Benefit under Section 54 was denied by the High Court observing that the new house had been purchased prior to execution of the sale and not within one year prior to sale of original asset i.e. new house has been purchased on 30th April, 2003 whereas th....
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....erved that Section 54 of the Act says that assessee could have constructed the house and not that the construction should have necessarily been completed. Noticing that it was not easy to construct a house within the time limit of three years and under the Government schemes, construction takes years. When substantial investment was made in the construction and it should be deemed that sufficient steps had been taken, and it satisfied requirement of Section 54. 11. What has been stated in the judgment of the Madhya Pradesh High Court in 1997, in practical terms and in reality still holds good. This is a matter of common knowledge that flats or apartments being constructed by builders take time. The Government Housing Boards also take time and seldom adhere to the promised date. Similar view has been taken in Bharati C. Kothari (supra) wherein reference was made to the decision of Andhra Pradesh High Court in CIT vs. Shahzada Begum (Mrs.) [1988] 173 ITR 397 and it was observed that assessee had entered into an agreement within two years for purchase of a flat which was under construction. Payment for the said flat was made within three years from the date of sale of the fir....
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....f a new asset before the date of furnishing of return, in a specified account. It further states that the amount, if already utilized for purchase or construction of the new asset with the amount so deposited will be deemed to be cost of a new asset subject to the proviso. The word "purchase" is used in sub-section (2) and indicates that the said word is not restricted or confined to registered sale deed or even possession but has a wider connotation. The proviso supports the aforesaid interpretation and stipulates that the amount deposited but not utilized wholly or partly for purchase or construction of new asset within the specified period will be charged to tax under Section 45 in the previous year in which the period of three years from the date of transfer of original asset expired. The period of three years is stipulated as this is the longer period specified in the sub-section (1) to Section 54. It is only the balance amount which is not utilized which is to be brought and charged to tax. The entire amount of sale consideration or the capital gains is not to be brought to tax, but the unspent amount/figure is taxed." (emphasis supplied by us) 20. We, thus, in the back....