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2024 (8) TMI 625 - AT - Income TaxExemption u/s 54F/54 - possession date of the New Asset i.e house property versus date of registered document - HELD THAT - It is settled position of law that the crucial date for the purpose of determination is when the property is purchased for the purpose of section 54 and the date when the possession and control of the property is given to the purchaser s hands. Reliance can be made to the decision of Hon ble Andhra Pradesh High Court in the case of CIT Vs. Shahzada begum 1988 (3) TMI 456 - ANDHRA PRADESH HIGH COURT and also the decision of Dr. Laxmichand Narpal Nagda (deceased) 1991 (12) TMI 3 - BOMBAY HIGH COURT wherein the Hon ble High Court after referring to the decision of CIT Vs. T.N.Aravinda Reddy 1979 (10) TMI 1 - SUPREME COURT and the decision of Mrs. Shahzada Begum 1988 (3) TMI 456 - ANDHRA PRADESH HIGH COURT held that the term purchase employed in sub-section (2) of section 54, is not used in the sense of legal transfer and therefore, the holding of a legal title within a period of one year is not a condition precedent for availing deduction u/s. 54. The recital of the sale deed clearly says that possession of the property was taken on 31.03.2015 which is within the period of one year before the date of sale of original asset. The covenants in the sale deed executed and registered are conclusive in the absence of any evidence to the contrary. The finding of the CIT(A) that it is a fabricated document is a mere bald allegation and cannot be sustained in the eyes of law. We are of the considered opinion that the appellant is entitled for deduction u/s. 54/54F as claimed by the assessee.
Issues:
- Disallowance of exemption u/s 54F and 54 by AO - Denial of deductions u/s 54 and 54F for the same transaction - Claiming deductions u/s 54 and 54F simultaneously - Eligibility of cash payment for exemption u/s 54 and 54F - Treatment of non-existent flats in Joint Development Agreement Analysis: The appellant filed an appeal against the CIT(A)'s order for the assessment year 2016-17, challenging the disallowance of exemption u/s 54F and 54 by the Assessing Officer (AO). The AO denied the claim for deductions amounting to Rs. 98,97,654 and Rs. 63,60,146 under sections 54F and 54, respectively. The appellant sold two properties and claimed deductions for the capital gains on the sale by purchasing a new residential bungalow. The AO disallowed the claim based on the timing of the purchase and possession of the new property. The main contention revolved around the possession date of the new property, crucial for determining eligibility for deductions u/s 54 and 54F. The AO argued that the property was purchased before one year prior to the sale of the original asset, thus disallowing the deductions. The CIT(A) upheld the AO's decision, considering the possession agreement as fabricated based on a statement made by the appellant under section 132(4) of the Act. The appellant argued that possession of the new property was taken on 31.03.2015, and there was no legal bar to claiming deductions u/s 54 and 54F simultaneously for the same asset. The appellant emphasized the covenants of the sale deed and the timing of payments to support their claim for deductions. The Tribunal analyzed relevant legal precedents, including decisions from the High Courts, to determine the eligibility for deductions u/s 54 and 54F. It was established that the crucial date for determining eligibility is when the property is purchased and possession is transferred to the purchaser. The Tribunal found in favor of the appellant, stating that the possession agreement was valid, and the appellant was entitled to deductions u/s 54 and 54F as claimed. As a result of allowing the appeal, the additional grounds raised by the appellant were deemed redundant, and the appeal filed by the assessee was allowed on the 7th day of August 2024.
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