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2016 (6) TMI 1243 - AT - Income TaxClaim of deduction u/s. 54F - Disallowing deduction on account of Long Term Capital Gains as new residential house was not purchased within the time limit prescribed u/s 54 - Held that - Referring to the case law of V M Dujodwala (1990 (10) TMI 122 - ITAT BOMBAY-D ) coordinate bench of this Tribunal and also Smt. Beena K Jain, 1993 (11) TMI 7 - BOMBAY High Court , we are of the view that the assessee s claim of deduction u/s. 54 of the Act is to be reckoned from the date of handing over of the possession of the flat by the builder to the assessee i.e. 11.09.2009, and if we take that date, the assessee is entitled to deduction u/s. 54 of the Act because the assessee has sold his residential flat on 24.02.2010. We allow the assessee s claim and order accordingly.
Issues Involved:
1. Whether the assessee is entitled to deduction under Section 54 of the Income Tax Act, 1961, for the purchase of a new residential house within the prescribed time limit. Detailed Analysis: Issue 1: Deduction under Section 54 of the Income Tax Act, 1961 The only issue in this appeal is whether the assessee is entitled to deduction under Section 54 of the Income Tax Act, 1961, for the purchase of a new residential house within the prescribed time limit. The assessee sold a flat for ?55 lacs on 24.02.2010, resulting in a long-term capital gain of ?50,94,568 after taking the indexed cost of acquisition at ?3,79,832. The assessee claimed deduction under Section 54 based on the purchase of a flat from M/s. Sharpmind Developers, with the agreement dated 28.12.2007 and registration on 28.02.2008. The Assessing Officer (AO) denied the deduction, stating that the purchase was made more than one year before the sale of the property. The CIT(A) upheld the AO’s decision, noting that the registration date was beyond the one-year limit prescribed under Section 54. Facts and Arguments: The assessee argued that the flat was not constructed at the time of the agreement on 28.12.2007 and that possession was given only on 11.09.2009, after the builder received the occupancy certificate on 31.03.2009. The assessee contended that the acquisition should be considered from the possession date, which falls within the prescribed time limit under Section 54. The Tribunal examined the facts and found that the possession date of 11.09.2009 should be considered for the purpose of deduction under Section 54, as supported by the decision in V M Dujodwala vs. ITO 36 ITD 130 (Mum). Relevant Case Law: 1. V M Dujodwala vs. ITO 36 ITD 130 (Mum): The Tribunal held that the date of possession is crucial for determining ownership for Section 54 deduction, especially in cases where the property is under construction. 2. CIT vs. Smt. Beena K Jain 217 ITR 363 (Bom): The Bombay High Court ruled that the date of possession and payment of full consideration should be considered as the purchase date for Section 54 purposes. 3. Purushottam Govind Bhat v. First ITO [1985] 13 ITD 939 (Bom.): The Tribunal emphasized that the date of occupation and allotment is relevant for Section 54, not merely the agreement date. Conclusion: The Tribunal concluded that the assessee’s claim for deduction under Section 54 should be reckoned from the date of possession, i.e., 11.09.2009. Since this date falls within one year before the sale of the original property on 24.02.2010, the assessee is entitled to the deduction. The Tribunal allowed the appeal, overturning the decisions of the AO and CIT(A). Order: The assessee’s appeal is allowed, and the order was pronounced in the open court on 8th June 2016.
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