TaxTMI 
TaxTMI 
2026 (5) TMI 728
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.... below have erred in law and on facts to held that investment of Rs 59,18,432/- made for purchase of new residential house after 31 July, 2013 i.e. due date of Income tax return u/s. 139 of the Income tax Act is not eligible deduction u/s. 54 of the Income tax Act. 4. The orders of the learned CIT(Appeals), NFAC, Delhi and authority below are contrary to facts, law and natural justice. 5. The appellant prays to be allowed to add, amend, modify, rectify, delete and raise any grounds of appeal at the time of hearing." 2. The facts of the case are that the assessee filed a return of income for the assessment year 2013-14, disclosing a total income of Rs. 1,03,88,500/- on 24.03.2014. The case was taken up for scrutiny and among the various additions made by the Assessing Officer, was an addition of Rs. 92,35,408/- on account of the disallowance of the claim of deduction under section 54 of the Income Tax Act. The ld. AO noted that the assessee sold a property at 703 Florida Estate, Pune for Rs. 1,95,00,000/- and that the capital gain on the same was Rs. 1,05,76,340/-. Of this amount, the assessee claimed that Rs. 92,35,408/- had been invested in Aamby Valley City D....
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.... section 54 of the Act. The assessee submitted that this legal position was supported by various judgments which were cited in the reply submitted by the assessee. In a subsequent reply furnished, the assessee submitted that section 54(1) of the Income Tax Act submits that a property should be purchased within a period of one year before or two years after the date on which the transfer took place or constructed within a period of three years after the date of transfer of the original asset. In the case of the assessee, having entered into an agreement on 22nd July, 2013 for consideration of Rs. 1,15,52,648/-, the assessee had purchased a new residential unit within the stipulated time period. It was pointed out that the Hon'ble Supreme Court in the case of CIT vs. T.N. Aravinda Reddy (1979) 1 taxman 40 (AP)(SC) had held that the word purchase in section 54 had to be interpreted as buying for a price or equivalent of price for payment in kind or adjustment towards and old debt or for other monetary consideration. There was no stress in the section on, 'cash and carry". Thus, it was argued that the purchase had been completed on 22.07.2013 i.e. before the due date of the filing of t....
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....ITR under section 139(1). The ld. AO pointed out that the Hon'ble Apex Court has held in the case of Prakash Nath Khanna & Anr vs. CIT (2004) 266 ITR 1 (SC), that the due date means a due date for filing of return under section 139(1) and not section 139(4). He pointed out that the Hon'ble Apex Court had held that had the intentions of the Legislature been to permit the assessee to file the return under section 139(4) also, the use of the expression, "section 139" alone would have sufficed. The Legislature would not have said that it should be filed under section 139(1) and once specific reference were made to section 139(1), it could not be the intention of the Legislature to permit the assessee to file the return under section 139(4) also. It also held that sub section (4) of section 139 cannot control the operation of sub section (1) wherein a fixed period for furnishing the return was stipulated. The ld. AO noted that even though the said observation of the Hon'ble Supreme Court had been rendered in a different context, it settled the argument regarding which was the due date for the filing of return under section 139. The ld. AO noticed that by 31.07.2013 only a sum of Rs. 33,....
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....f DDA wherein the CBDT had held that for the purpose of capital gains tax, the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to be paid in installment does not affect the legal position. Therefore, cases of allotment of flats under the selffinancing scheme of DDA should be treated as cases of construction for the purposes of capital gains. It had also stipulated those allotments of flats/household cooperative societies and other institutions, whose schemes of allotment and constructions was similar to those of DDA should be treated as cases of construction (Circular No. 672 dated 16.12.1993). In Circular No. 667 dated 18.10.1993, the CBDT had pointed out that if the amount of capital gains of section 54 and the net consideration for the purposes of section 54F, is appropriated towards the purchase of a plot and also towards construction of a residential house thereon, the aggregate cost had to be considered for determining the quantum of deduction under section 54/54F, provided that the acquisition of the plot and the construction thereon were completed within the period specified in these sections. The assessee submitted that ....
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....urisdictional Tribunal in the case of ITO-1(1), Lucknow vs. Smt. Arti Kumaria in ITA No. 97/LKW/2017 wherein vide its orders dated 14.03.2018, the Lucknow 'A' Bench had held that section 54(1) was the substantive provision and section 54(2) was the enabling provision which provides that the assessee should deposit the amount earned from capital gain in a scheme framed in this respect by the Central Government till the amount is invested/construction of residential house. The ITAT had held that the substantive provision promotes housing and leads us to assess the intention of the assessee and if the intention of the assessee was to purchase a new property which was fulfilled by the facts of the record, then the enabling provision of keeping the amounts in a particular scheme, whether fulfilled or not, should not destroy the ultimate bona fide intention of the assessee as enshrined in section 54(1). Thus, the procedural and enabling provision of sub section 2 of section 54 could not be strictly construed to impose strict limitations on the assessee and deny him the benefit of exemption under section 54(1), if the conditions of section 54(1) were fulfilled. The ld. AR also placed reli....
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.... activity in Village Kansal in the month of May, 2017, ITAT held that the assessee was prevented from constructing the residential house over the said plot for the reasons beyond his control. Under the circumstances, it could not be considered to be a case where the assessee had failed to construct the house/residence within a period of three years from the date of sale of his property. Rather the assessee had proceeded to purchase a plot and begin construction of residential house however, was prevented due to ban on construction by the Government which was a subsequent event. Hence, the non-construction of house over the said plots was due to reasons beyond the control of the assessee and therefore, considering the exceptional facts and circumstances of the case, it could not be said that there was default on the part of the assessee for not complying with the provisions of section 54 of the Act. Under the circumstances, the denial of deduction under section 54 was not justified and the ld. AR prayed that his case being similar, the assessee should be granted the benefit of deduction as he had substantially complied with the provisions of section 54. 7. On the other hand, Sh. ....
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.... 25.07.2013. In consideration thereof, the assessee was granted the lease and clause 2 of the said agreement states that the formal lease deed would be executed between the parties, subject to the lessee constructing structures on the said plot in accordance with agreement and full payment of the consideration as provided in clause 5. Clause 3 of the said agreement granted the assessee the permission to enter the plot as a licensee, for the purposes of constructing a Villa/ Timber Chalet thereon and the assessee was obliged to enter into a construction contract and finalize designs of the Villa within 90 days, from the execution of the agreement with the lessor. The lessor was thereafter to commence construction on the said plot and complete the same within 30 months from the date of execution of the construction contract. If the lessee desired, it could get the construction done through a third party, after payment of a fee and adherence to overall design of Aamby Valley. After the completion of such construction, the lessee would provide a completion certificate to the lessor. Thus, it is quite clear from the perusal of the agreement and the conditions laid down therein, that the....