9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 261 - AT - Income TaxTreatment of LTCG u/s 54 - Whether the amount of the capital gain is equal to the cost of the new residential house and Capital Gains chargeable under the Act and Assessee is entitled for exemption u/s 54 of the Act or not - Assessee did not construct new house nor purchased a new house Held that - The Assessee has sold two properties, Flat at Lawande Manor for ₹ 81 lacs and Flat at Cabo Housing complex for ₹ 1.60 crore - The flat at Lawande Manor was owned by Shri Girish Ragha and sold to Shri Arjun Mangaldas by sale deed - The Assessee has invested ₹ 1,64,22,535/- to purchase a new residential house from M/s. Ashraya Real Estate Developers with the agreement that the house has to be handed over within two years - As per Sec. 54 of the Income Tax Act, Assessee has sold two residential properties; one on 17.9.2009 and other on 1.12.2009 - The last property was sold on 1.12.2009, the Assessee has to get the house and occupancy certificate from M/s. Ashraya Real Estate Developers before 1.12.2011 - the Assessee has sold the second property on 1.12.2009 - The Assessee has made the payment on 16.3.2010 - The Assessee was required to get the house and occupancy certificate on/before 1.12.2011 - the Assessee got occupancy certificate of the property on 17.1.2014 - As per Sec. 54 the Assessee is required to get the occupancy certificate within two years but the possession was handed over to the Assessee only on 17.1.2014 - The Assessee submitted documentary evidence before us to show that after purchasing the property there was a civil suit filed by the other parties and Assessee could not start construction and licence for constructing the house was obtained by the Assessee on 16.5.2011. The Assessee s construction was delayed, therefore, Assessee has taken the contention before CIT(A) that though the Assessee has made the payment but the Assessee could not get the possession within three years relying upon CIT vs. Sadarmal Kothari 2008 (6) TMI 15 - MADRAS HIGH COURT - in order to get the benefit u/s 54 of the Income Tax Act, the Assessee need not complete the construction of house and occupy the same - If the Assessee has invested the money and the occupancy certificate is got delayed which is beyond the control of the Assessee, then, the Assessee is entitled for deduction u/s 54 of the Act - if substantial amount is paid in terms of purchase agreement within the stipulated period, exemption u/s 54 is available even if the premises is handed over after the stipulated period - the Assessee has paid the amount within the time but Assessee got the occupancy certificate after three years - the Assessee is entitled for deduction u/s 54 of the Act - CIT(A) has rightly held that the Assessee is entitled for deduction u/s 54 of the Act Decided against revenue.
Issues Involved:
1. Validity of the CIT(A)'s order. 2. Deletion of additions of Rs. 1.64 crores on account of Long Term Capital Gains. 3. Granting of exemption under Section 54 without fulfilling prescribed conditions. 4. Non-consideration of property income from sold properties. Issue-wise Detailed Analysis: 1. Validity of the CIT(A)'s Order: The Revenue challenged the CIT(A)'s order, arguing that it was opposed to law and facts. The CIT(A) had allowed the appeal by the assessee, granting exemption under Section 54 of the Income Tax Act, 1961, despite the assessee not receiving the occupancy certificate within the stipulated period. The CIT(A) observed that the delay in construction was due to litigation and other circumstances beyond the assessee's control. 2. Deletion of Additions of Rs. 1.64 Crores on Account of Long Term Capital Gains: The assessee sold two residential properties and invested the proceeds in a new residential property from his own firm, M/s. Ashraya Real Estate Developers. The AO disallowed the exemption under Section 54, as the assessee did not receive the occupancy certificate within two years. The CIT(A) allowed the exemption, noting that the construction was delayed due to litigation and other issues beyond the assessee's control. The CIT(A) relied on judicial precedents, including CIT vs. Sardarmal Kothari (Madras High Court) and CIT vs. R.L. Sood (Delhi High Court), which held that substantial investment within the stipulated period suffices for exemption, even if possession is delayed. 3. Granting of Exemption Under Section 54 Without Fulfilling Prescribed Conditions: The AO argued that the assessee did not fulfill the conditions prescribed under Section 54, as the new house was not completed within the stipulated period. The CIT(A) countered this by stating that the delay was due to unforeseeable legal issues and that the assessee had made substantial payments within the required timeframe. The CIT(A) emphasized that the assessee should not be penalized for delays beyond his control. 4. Non-consideration of Property Income from Sold Properties: The AO noted that the assessee did not return any property income from the sold properties, questioning whether the properties were indeed residential. The CIT(A) did not address this issue directly but focused on the compliance with Section 54 conditions. The Tribunal upheld the CIT(A)'s decision, noting that the primary issue was the fulfillment of Section 54 conditions, which the assessee met by investing the sale proceeds within the stipulated period. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to grant exemption under Section 54. The Tribunal concurred with the CIT(A) that the delay in obtaining the occupancy certificate was due to circumstances beyond the assessee's control and that substantial investment within the stipulated period sufficed for the exemption. The Tribunal also noted that the CIT(A) had appropriately applied judicial precedents in favor of the assessee.
|
