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2020 (2) TMI 1626 - AT - Income TaxRevision u/s 263 - claim of deduction under Sec. 54 - claim of the assessee of being the owner‟ of the mentioned property on the basis of the letter of allotment was absolutely incorrect - letter of allotment, dated 20.02.2010 did not vest any right with the assessee to acquire the aforesaid property, but only created an interest to acquire the same, and that too as per the terms and conditions as would be laid down in the agreement to purchase‟ the said property - HELD THAT - In compliance to the query so raised by the A.O, the assessee had vide his reply submitted before him that he had booked the aforesaid flats in February, 2010. Accordingly, the assessee substantiating his claim for deduction under Sec. 54 had furnished with the A.O the complete details as regards the mode and manner of acquisition of the property under consideration on the basis of the allotment letter, that was issued to him by the builder i.e M/s Oberoi Realty Limited on 20.02.2010. Also, documents supporting the aforesaid fact were also furnished alongwith the reply with the A.O y viz. (i). copies of the allotment letters; (ii). copies of the receipts issued by the builder i.e M/s Oberoi Realty Limited for the payments which were made by the assessee towards purchase consideration (in instalments) of the aforesaid property; and (iii). copy of the bank account of the assessee evidencing the making of the aforesaid payments by the assessee to the builder over the years. We find that the A.O after raising specific queries as regards the basis for treating the aforesaid property as a long term capital asset, and claiming of deduction under Sec. 54 of the Act by the assessee, had only after necessary deliberations accepted the claim of the assessee. Accordingly, we are of a strong conviction that the A.O only after making necessary verifications as regards the entitlement of the assessee towards claim of deduction under Sec. 54 of the Act, had accepted the same. As such, the observation of the Pr. CIT in the SCN‟, dated 23/03/2018 that the A.O had failed to make enquiries regarding the purchase and sale of the properties is misconceived, and is liable to be rejected. The view taken by the A.O that the period of holding of the aforesaid property viz. Flat Nos. 705 706, 7th Floor, at Oberoi Exquisite, Goregaon (East), Mumbai, was to be calculated on the basis of the allotment letter that was issued to the assessee by the builder i.e M/s Oberoi Realty Limited on 20.02.2010, can safely be held to be a possible and a plausible view that was found to be in conformity with the view taken by the jurisdictional Tribunal and also that of the non-jurisdictional High Court, on the date on which the assessment was framed by him. Accordingly, we are of the considered view, that the aforesaid conscious and a possible view arrived at by the A.O, could not have been dislodged by the Pr. CIT in exercise of her revisional jurisdiction under Sec. 263 - Appeal of assessee allowed.
Issues Involved:
1. Validity of the invocation of Section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (Pr. CIT). 2. Eligibility of the assessee's claim for deduction under Section 54 of the Income Tax Act. 3. Determination of the period of holding for the property sold by the assessee. 4. Whether the property sold was a long-term capital asset. 5. Whether the property sold was in a habitable condition and eligible for deduction under Section 54. Detailed Analysis: 1. Validity of the Invocation of Section 263 by Pr. CIT: The assessee challenged the order passed under Section 263 of the Income Tax Act by the Pr. CIT, arguing that the conditions precedent to invoke Section 263 were not satisfied. The Pr. CIT issued a show cause notice (SCN) to the assessee, questioning the assessment order passed by the Assessing Officer (A.O) under Section 143(3) and suggesting that it was erroneous and prejudicial to the interest of the revenue. The Pr. CIT believed that the A.O failed to make necessary verifications regarding the assessee's entitlement to claim deduction under Section 54, thus justifying the revision under Section 263. However, the Tribunal found that the A.O had indeed made specific inquiries and deliberations regarding the assessee's claim for deduction under Section 54, and hence, the Pr. CIT's invocation of Section 263 was not justified. 2. Eligibility of the Assessee's Claim for Deduction under Section 54: The Pr. CIT contended that the assessee was not eligible for the deduction under Section 54 as the property sold was still under construction and not in a habitable condition. The Pr. CIT also noted that the ownership of the property was based on agreements executed in 2013, not the allotment letter dated 20.02.2010. However, the Tribunal found that the A.O had accepted the assessee's claim after thorough verification, including the submission of allotment letters, payment receipts, and bank statements. The Tribunal also noted that the completion certificate for the property was issued on 12.01.2011, indicating that the property was indeed in a habitable condition. 3. Determination of the Period of Holding for the Property Sold: The Pr. CIT argued that the period of holding should be calculated from the date of the agreements executed in 2013, not the allotment letter in 2010. The Tribunal, however, supported the view that the period of holding should be reckoned from the date of the allotment letter, in line with the jurisdictional Tribunal's decisions and the Punjab & Haryana High Court's ruling in Madhu Kaul Vs. CIT & Anr. The Tribunal concluded that the A.O had taken a plausible view in accepting the allotment date for calculating the holding period. 4. Whether the Property Sold was a Long-Term Capital Asset: The Pr. CIT's position was that the property was not a long-term capital asset as the ownership was based on agreements executed in 2013. The Tribunal disagreed, stating that the property should be considered a long-term capital asset based on the allotment letter dated 20.02.2010. The Tribunal emphasized that the A.O's acceptance of the allotment date for determining the holding period was a plausible view supported by legal precedents. 5. Whether the Property Sold was in a Habitable Condition and Eligible for Deduction under Section 54: The Pr. CIT contended that the property was not in a habitable condition and thus not eligible for deduction under Section 54. The Tribunal found no basis for this argument, noting that the completion certificate issued by the architects confirmed the completion of the 7th floor slab. The Tribunal also highlighted that the agreements for purchase and sale clearly referred to the residential flats, indicating their habitable condition. Conclusion: The Tribunal concluded that the A.O had made necessary verifications and accepted the assessee's claim for deduction under Section 54 based on a plausible view. The Pr. CIT's invocation of Section 263 was deemed unjustified, and the order passed under Section 263 was set aside. The appeal filed by the assessee was allowed, restoring the original assessment order passed by the A.O.
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