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Issues:
- Disallowance of deduction claimed under section 54 of the Income-tax Act, 1961. Analysis: The appeal was filed by the assessee against the order of the CIT (Appeals) disallowing the deduction claimed under section 54 of the Income-tax Act, 1961 for the assessment year 1981-82. The assessee sold a residential house in Rajasthan and claimed deduction under section 54 for the purchase of a new house in Delhi. The Assessing Officer disallowed the deduction stating that the new house was purchased in Delhi after the required one-year period. The CIT (Appeals) upheld this decision. The counsel for the assessee argued that section 54(1) requires the "purchase" of a residential house within a year of the transfer of the earlier property, not necessarily the ownership. The assessee purchased a new house in Delhi within the stipulated time frame, even though the sale deed was registered later. The possession of the house was received at the time of execution of the sale deed. The counsel relied on a decision of the Andhra Pradesh High Court and a Tribunal case to support the argument that possession and control of the property, not just legal ownership, are crucial for claiming exemption under section 54(1). Section 54(1) mandates that the transferred property should have been used for residential purposes, and the assessee should have either purchased a house within one year or constructed one within two years of the transfer. The assessee fulfilled all requirements, but the CIT (Appeals) contended that ownership had not transferred until the sale deed was registered. The counsel argued against this interpretation, citing relevant case law and emphasizing that the physical possession and control of the property were sufficient for claiming the deduction under section 54(1). The Tribunal, after considering the facts and legal arguments, concluded that the assessee had indeed "purchased" a new residential accommodation within the required timeframe and was entitled to the deduction under section 54(1) of the IT Act, 1961. The Tribunal agreed with the counsel for the assessee and referenced the supportive views of the Andhra Pradesh High Court and an earlier Tribunal case. Consequently, the appeal was accepted, and the orders of the AC and CIT (Appeals) were set aside.
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