2017 (9) TMI 1772 - AT - Income Tax

Revision u/s 263 - deduction u/s 54 - CIT-A considering 17.10.2008 as the date of sale of property instead of 07.10.2008 - The issue in the instant case is whether the assessee has purchased within one year before the date of transfer one residential house? - Held that - The CIT has not disputed 10.10.2007 i.e. the date on which possession was handed over to the assessee of the property at Poornima Building. We find that the sale of the flat at Runwal Towers took place on 07.10.2008 as per the Agreement for Sale . Thus following the judgment of the Hon ble Bombay High Court in Smt. Beena K. Jain 1993 (11) TMI 7 - BOMBAY HIGH COURT we hold that the assessee has fulfilled the condition laid down in section 54F of the Act. Accordingly we cancel the order u/s 263 passed by the CIT - Decided in favour of assessee

Summary

Issues:
1. Application of provisions of section 263 by CIT.
2. Date of sale of property for deduction u/s 54F.

Analysis:
1. The appeal involved a challenge to the CIT's order under section 263 of the Income Tax Act 1961. The CIT had held that the assessment order was erroneous due to the application of section 263. The primary contention was that the CIT erred in applying section 263 to the assessee's case. The second ground raised was regarding the date of sale of property for the purpose of claiming deduction under section 54 of the Act.

2. The facts of the case revealed that the assessee had declared Long Term Capital Gains (LTCG) on the sale of property for the assessment year 2009-10. The CIT found discrepancies in the dates of purchase and sale of the property, leading to the denial of exemption u/s 54F. The CIT directed the AO to reassess the case after disallowing the exemption claimed by the assessee.

3. The assessee argued that the sale agreement for the property was entered into on 07.10.2008, not 17.10.2008 as considered by the CIT. The assessee claimed exemption u/s 54 by purchasing properties at Poornima Building. The counsel referred to clauses of the agreement and highlighted the conditions related to payment and possession, supported by a judgment of the Bombay High Court.

4. The Tribunal examined the documents submitted by the assessee, which indicated the dates and amounts related to the purchase of the property at Poornima Building. The agreement for the sale of the flat at Runwal Towers was dated 07.10.2008, contrary to the date mentioned by the CIT. The Tribunal cited a similar case before the Bombay High Court to establish the relevant date for claiming exemption u/s 54F.

5. Relying on the Bombay High Court's judgment, the Tribunal concluded that the assessee had fulfilled the conditions of section 54F by purchasing the property within the stipulated time frame. Therefore, the Tribunal canceled the CIT's order under section 263, allowing the appeal in favor of the assessee.

6. The judgment highlighted the importance of the actual date of possession and full payment for the property purchase in determining eligibility for deductions under section 54F. By following the legal precedent and considering the specific dates and agreements presented, the Tribunal provided a detailed analysis to support its decision in favor of the assessee.