TaxTMI 
TaxTMI 
1990 (10) TMI 122
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....mbay, purchased in 1952 for Rs. 38,000. He sold the said flat for Rs. 4,50,000 as per agreement dated 12-5-80. Possession was given on 15-5-80 to the buyer. The Income-tax Officer computed capital gains for the whole transaction at Rs. 4,12,800 and arrived assessee's share therein at Rs. 2,06,000 which was treated as the income under the head 'Long Term Capital gains' and allowed deduction under section 80-TT of the IT Act, 1961. The assessee submitted that he has purchased another house property being Flat No. 62, 'Rambha' at Petit Hall, Bombay, vide agreement dated 22-10-77 for Rs. 2,80,000. In this property, the assessee's share was 70% or Rs. 2,01,950. The assessee submitted his transactions in relation to purchase of new flat No. 62 in....
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....rchase of a flat, since this was done more than 12 months before the sale of the old flat section 54 exemption is not available to the assessee. His claim is therefore rejected. " The Commissioner of Income-tax(Appeals) also confirmed the order of the ITO. 4. We have heard the counsels on both side. The Departmental Representative vehemently argued that the exemption under section 54 is not applicable to the assessee as he failed to buy any residential house property within a period of one year before/after the date of sale of the first house property. He submitted the reasons given by the ITO and the CIT(A) in their orders in support of his plea. He relied on the Supreme Court decision in CIT v. T.N. Aravinda Reddy [1979] 120 ITR 46,....
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....able for residence to the assessee unless it is cleared by the municipal/corporation authorities. Therefore, he submitted that only when the flat construction was completed and available for residence and was actually allotted by the builder to the buyer in compliance with the agreement of sale entered upon by the builder earlier, it could be taken as ready for occupation and that was the date material for the purpose of counting period of one year within the meaning of section 54 of the IT Act, 1961. He finally submitted that 9-4-1980, on which date the builder agreed to give possession of the flat would be taken as the date on which the assessee has purchased the property for the purpose of residence within the meaning of section 54 of th....
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.... times, demands the payment of price in one or more instalment. He may sometimes to finance his own construction activity, gives discounts and accepts lesser payment. The price paid before construction is complete, will be different from the price demanded by the vendors after the flat is constructed. The buyers even after having the agreement for purchase of the flat cannot exercise any right of ownership or their right cannot be traced to any part of the construction till such time the builder actually gives the possession of a particular flat to the buyer. After the completion of structure, it has to be inspected and cleared by the municipal authorities. Then the flat is ready for occupation which the builder normally intimates to the bu....
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.... section 54. Even so, it would be against the very object and purpose of section 54 if such a flat owner is denied the benefit. Practically in every big town in this country, the ownership flats are in fashion. In applying the provisions of section 54 to such a contingency, it would not be, as claimed by the learned counsel for the department, proper to deny the assessee the benefit of section 54. With the increase in the cost of buildings, if the technical policy of denying the benefits of section 54 claimed by the learned departmental counsel is accepted, section 54 would almost be an unused section. Certainly that cannot be the purpose of the legislation especially when this covers a large number of assessees, in a peculiar transaction l....