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2017 (9) TMI 1220 - AT - Income TaxDenying the deduction u/s 54 - whether date of final possession given by the builder has to be taken as the date of acquisition of new property for computing the capital gains u/s 54? - Held that - The date of final occupation of the property should be considered for calculation the period of eligibility for deduction u/s 54 of the Act. If the date of possession i.e. March 2009 is taken as date of purchase of new flat as contended by the assessee in its case the assessee is entitled to deduction u/s 54 of the Act as assessee has sold residential flat on 11.09.2009 and satisfied the requirement to purchase the new residential property within the period of one year before the date of transfer of the asset sold. Thus, we allow the claim of the assessee for deduction u/s 54 of the Act. - Decided in favour of assessee.
Issues Involved:
1. Denial of deduction under Section 54 of the Income Tax Act. 2. Determination of the relevant date for the acquisition of new property for the purpose of Section 54. Issue-wise Detailed Analysis: 1. Denial of deduction under Section 54 of the Income Tax Act: The primary issue in this appeal concerns the denial of deduction under Section 54 of the Income Tax Act by the Commissioner of Income Tax (Appeals). The assessee sold a residential property and claimed a deduction under Section 54, which allows for exemption from capital gains tax if a new residential property is purchased within a specified time frame. The Assessing Officer denied this deduction, stating that the new property was not purchased within one year prior to the sale of the old property. The Commissioner of Income Tax (Appeals) upheld this decision. 2. Determination of the relevant date for the acquisition of new property for the purpose of Section 54: The crux of the matter lies in determining the relevant date for the acquisition of the new property. The assessee argued that the date of final possession of the new property (March 2009) should be considered as the date of acquisition, not the date of the purchase agreement (18.08.2007). The assessee relied on the decision of the Hon'ble Jurisdictional High Court in CIT v. Smt. Beena K. Jain [217 ITR 363], which held that the date of possession should be considered as the date of acquisition for the purpose of Section 54. The Tribunal referred to the decision of the Hon'ble Jurisdictional High Court, which stated that the relevant date for Section 54F is when the full consideration is paid, and possession is obtained, not merely the date of the purchase agreement. This decision was supported by the Tribunal's earlier ruling in Bastimal K Jain v. ITO, where it was held that the possession date is crucial for determining the acquisition date for Section 54 benefits. The Tribunal noted that the assessee had paid the full purchase consideration by 11.07.2008 and received possession in March 2009. Thus, the possession date should be considered for calculating the eligibility period for the deduction under Section 54. The Tribunal concluded that if the possession date (March 2009) is considered, the assessee meets the requirement of purchasing the new property within one year before the sale of the old property (11.09.2009). Hence, the assessee is entitled to the deduction under Section 54. Conclusion: The Tribunal allowed the appeal, holding that the date of final possession of the new property should be considered for calculating the eligibility period for the deduction under Section 54. Consequently, the assessee's claim for the deduction was allowed, and the appeal was decided in favor of the assessee. The order was pronounced in the open court on 13th September 2017.
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