TaxTMI 
TaxTMI 
2026 (6) TMI 1027
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....ht not to be penalised for the builder's default. 2. The learned CIT(A) erred in distinguishing the Appellant's case from the decisions of the Hon'ble ITAT, Mumbai, in the cases of Mr. Vinay Somani and Mrs. Shrilekha Somani (ITA Nos. 3642 & 3888/Mum/2017, order dated 01.06.2021), despite identical share sale transactions and escrow arrangements. The rejection of the claim on the ground that the Appellant is a distinct juridical person is erroneous and contrary to judicial discipline. 3. The learned CIT(A) erred in denying deduction under Section 54F in respect of Rs. 8,50,00,000 deposited in the Capital Gains Accounts Scheme within the prescribed time limit. The deposit itself entitles the Appellant to exemption under Section 54F(4), and any withdrawal of exemption can arise only upon eventual non-utilisation, as provided in law. 4. The learned CIT(A) erred in not adjudicating upon and thereby implicitly upholding the Assessing Officer's baseless allegation that the transaction was a tax avoidance arrangement involving an artificial entity. Such allegation is unsupported by any material evidence and is legally untenable. 5. That t....
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....on u/s. 54F of the Act. 6. Without prejudice, he held that assessee's claim of the deduction under Section 54F of the Act is inadmissible as the assessee did not fulfill the condition of purchasing or constructing a residential house within the stipulated period. He observed, the assessee did not furnish any evidence to demonstrate that the residential flat was allotted to it. Accordingly, he disallowed assessee's claim of deduction under Section 54F of the Act and recomputed the capital gain accordingly. Against the assessment order so passed, the assessee preferred appeal before the learned First Appellate Authority. Vide order dated 28.07.2016, the First Appellate Authority dismissed assessee's appeal while upholding the decision of the Assessing Officer. 7. Being aggrieved, the assessee went in further appeal before the Income Tax Appellate Tribunal, (ITAT). 8. While deciding assessee's appeal in ITA No. 5661/MUM/2016, the Tribunal, in order dated 03-05-2017, held that the assessee, being a private non-discretionary trust having a sole beneficiary, is entitled to claim deduction under Section 54F of the Act. Having held so, ITAT directed the First Appellate Authority t....
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....rary to material on record. He submitted, once the assessee had made payment and an allotment letter has been issued, it remains entitled to claim deduction u/s. 54F of the Act. He submitted, merely because, the assessee did not get possession of the flat due to delay by the builder, claim of deduction under section 54F of the Act cannot be denied. In support of such contention, he relied upon the following decisions: (1) 'Rajiv B. Shah vs. Income Tax Officer' [2016] 71 taxmann.com 198 (Mumbai Trib). (2) 'PCIT vs. Dilip Ranjrekar' [2019] 101 taxmann.com 114 (Karnataka). (3) CIT vs. Girish L. Ragha [2016] 69 taxmann.com 95 (Bombay). 10. Without prejudice, learned counsel submitted, identical dispute relating to rejection of claim of deduction under Section 54F of the Act came up in case of trustees as well. He submitted, while deciding the issue, the ITAT has allowed the claim. He submitted, since, assessee's case is on identical facts, the decision of the ITAT squarely applies. Insofar as claim of deduction under section 54F of the Act in respect of deposits in Capital Gains Account Scheme, learned counsel submitted that in terms with the directions of....
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....06-06-2011. As per the terms of the escrow arrangement, the builder was to provide three pre-identified flats to the assessee and two trustees and in token thereof, must issue duly signed letters of allotment. In this context, following clauses of the escrow arrangement needs to be looked into:- "2. We Satguru send herewith the duly signed Letters of Allotment in respect of the following flats in Satguru's projects under construction at Bandra Kurla Complex, Bandra (East), Mumbai:- (a) Flat No.B-504 and 3 car parking spaces in Signature Island valued at Rs. 25,81,80,676/- in favour of Mr. Vinay Somani; (b) Flat No.702 and 3 car parking spaces in Signia Isles valued at Rs. 16,01,70,105/- in favour of Mrs. Shrilekha V.Somani (c) Flat No.301 and 3 car parking spaces in Signia Isles valued at Rs. 15,63,08,521/- in favour of Balgopal Trust, of which Mr. Vinay Somani is one of the Trustees. 3. It is agreed between Satguru and Vinay that you shall hold the said Letters of Allotment in Escrow and - (a) Release the Letter of Allotment in respect of Flat No.B-504 in Signature Island to Vinay on payment of 50% of the purchase price of ....
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....9,302/- in this Court. Learned Counsel for the Plaintiffs submits that the Plaintiffs have already set apart this amount in a Bank Fixed Deposit and that Deposit can be brought into the Court and transferred to the Prothonotary and Senior Master of this Court towards payment of this amount. This seems to be eminently reasonable. 15 Accordingly, pending the hearing and final disposal of the suits, the following order is passed: (i) The Defendants are restrained from disposing of the suit flat, namely, Flat No.B-504, described in prayer clause (a) of Suit No.150/2014; (ii) The Defendants are restrained from disposing of the suit flat, namely, Flat No.702, described in prayer clause (a) of Suit No.156/2014; (iii) The Defendants are restrained from disposing of the suit flat, namely, Flat No.301 described in prayer clause (a) of Suit No.161/2014 subject to the Plaintiff depositing with, and transferring in favour of, the Prothonotary and Senior Master of this Court a fixed deposit of the sum of Rs. 7,46,59,302 (together with accrued interest thereon). Such deposit and transfer shall be effected within a period of two weeks from today; (iv) A....
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....th the Prothonotary on 31.07.2004 falls within the prescribed period of three years. In any case of the matter, as per section 54F(4) of the Act in case of non13 utilization of amount kept in Capital Gain Account Scheme within the stipulated period, the taxable event would happen not in the year when the capital gain arises, but after expiry of period of three years. Thus, under no circumstances, the amount kept in Capital Gains Account Scheme can be taxed in the impugned assessment year. The decisions cited by learned counsel for the assessee also support the view expressed by us in foregoing paragraphs. Pertinently, in case of the trustees, identical dispute relating to denial of deduction claimed u/s. 54F of the Act for the very same assessment year came up for consideration before Coordinate Bench. While deciding the issue in ITA number 3642 & 3888/Mum/2017, the Coordinate Bench, vide order dated 01.06.2021 has held as under: "32. Considered the rival submissions and perused the material on record. We notice that the assessee has sold the residential land and entered into a separate deal with the buyer for allotment of a flat in the up-coming project. The part sale con....