2022 (10) TMI 490 - AT - Income Tax

Deduction under section 54 and 54F - exemption has been denied to the assessee by observing that it has booked the flat with the builder in earlier year but ultimately took the possession in subsequent years - HELD THAT - The case of the assessee is covered by Circular No. 471 and 672 of the CBDT, because the assessee has booked the flat, which has not been disputed by the Revenue. The dispute is that deduction ought to be claimed in the year when flat was booked and not in the year when possession was taken. The case of the assessee is that capital gain has been arose in the year in which he took the possession of the flat and, therefore, this capital gain be set off against price of the flat, which ultimately came to his possession. CIT(Appeals) failed to take cognizance of the judgments referred by him in paragraph 5 (extracted supra). The assessee has utilized the capital gain arose within one year from taking possession of the new flat and, therefore, on the basis of the Circulars and the judgments referred by CIT(Appeals), is entitled for the deduction. Accordingly, we allow the claim of the assessee and direct AO to grant deduction under section 54 and 54F - Accordingly, the appeal of the assessee is allowed exparte.

Summary

Issues involved:
1. Disallowance of deduction under sections 54 and 54F of the Income Tax Act.
2. Levying of interest under sections 234A and 234B.

Issue 1: Disallowance of deduction under sections 54 and 54F of the Income Tax Act:
The assessee appealed against the order disallowing the claim for deduction under sections 54 and 54F of the Act. The Assessing Officer denied the exemption as the flat was booked with the builder before the transfer of capital assets. The CIT(A) upheld this decision. The appellant argued that the date of possession should be considered for exemption, not the date of booking. Various case laws were cited to support this argument. The CBDT circulars and case laws indicated that the booking of a flat with a builder is considered construction, making the assessee eligible for deduction under sections 54 and 54F. The Tribunal allowed the claim, stating that the capital gain arose within one year of taking possession, entitling the assessee to the deduction.

Issue 2: Levying of interest under sections 234A and 234B:
The Assessing Officer had levied interest under sections 234A and 234B, and the assessee contended that the calculation of tax and interest was incorrect. However, the judgment did not provide further details or analysis regarding this issue.

In conclusion, the Tribunal allowed the appeal of the assessee concerning the disallowance of deduction under sections 54 and 54F of the Income Tax Act based on the argument that the booking of a flat with a builder is considered construction. The judgment did not delve into the issue of levying interest under sections 234A and 234B, as no detailed analysis or decision was provided on this matter.