9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (1) TMI 1282 - AT - Income TaxLTCG - Denial of deduction u/s 54F - assessee failed to furnish the possession certificate electricity bill etc. in order to establish the fact of possession being taken within the prescribed statutory time limit - HELD THAT - Assessee made payment to the builders for the purchase of the new property even more than the capital gain earned. There was no delay on the part of the assessee who deposited the full amount of capital gain but the possession was not handed over by the builder which is an admitted delay on the part of the builder and because of such default of the builder in not completing the construction and handing over possession to the assessee within the time prescribed benefit of Section 54 to 54F cannot be attributed to the assessee particularly when the assessee has complied with all the statutory conditions in order to claim benefit u/s 54F. Most of the builders generally failed to complete their purchase in stipulated period and hardly any builder could complete their project within the promised time. In the event if the builders are not able to deliver the flats within the target period and if the assessee invested the requisite amounts in such projects within the prescribed time benefit of Section 54/54F cannot be denied to thousands of such cases. The provisions of section 54 are beneficial sections and therefore it is to be interpreted liberally. If the assessee has completed his part of the job in that case he is entitled to the deduction if the other part has not been completed because of the situation beyond the control of the assessee. Thus For claiming exemption u/s 54 it is not necessary that the Assessee should obtain possession of the new asset or become the owner of such new asset by way of registration of document within the time limit as specified therein as long as the Assessee has acquired substantial domain over the new asset and paid substantial amount of its cost within such specified time limits. Section 54 is a beneficial provision and it could never be the intention of the legislature to deny the benefit of such deduction in such bonafide deserving cases. Hon ble Apex Court in the case of Sanjeev Lal 2014 (7) TMI 99 - SUPREME COURT wherein it has been held that adverse inference against the assessee cannot be made in this regard. Decided in favour of assessee.
ISSUES PRESENTED and CONSIDERED
The core legal issue in this case is whether the assessee is entitled to a deduction under Section 54F of the Income Tax Act, 1961, despite not having received possession of the new residential property within the prescribed statutory time limit due to delays caused by the builder. The Tribunal also considered whether the delay in possession, which was beyond the assessee's control, should affect the eligibility for the deduction under the beneficial provisions of Section 54F. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 54F of the Income Tax Act provides for an exemption from capital gains tax if the assessee invests the capital gains in purchasing or constructing a residential house within a specified time frame. The provision is intended to encourage reinvestment in residential properties and is considered a beneficial provision. The Tribunal referenced several judicial precedents, including the Supreme Court's decision in Sanjeev Lal vs. CIT, which emphasized the beneficial nature of Section 54F and the importance of interpreting tax statutes in a manner that serves their purpose. The Tribunal also considered decisions from various High Courts and Tribunals that have held that delays in possession caused by factors beyond the assessee's control should not disqualify them from the benefit of Section 54F. Court's Interpretation and Reasoning The Tribunal interpreted Section 54F as a beneficial provision that should be liberally construed to achieve its purpose of encouraging reinvestment in residential properties. The Tribunal noted that the intention of the legislature was not to penalize assessees for delays caused by builders, which are beyond their control. The Tribunal emphasized that the assessee had fulfilled all statutory conditions for claiming the deduction, including making the necessary investment within the prescribed time frame. Key Evidence and Findings The assessee had made a substantial investment in the new property, exceeding the amount of capital gains earned. The delay in possession was attributed to the builder's failure to complete the construction on time, which was further complicated by ongoing litigation affecting the project. The Tribunal found that the assessee had fulfilled their obligations by investing the capital gains in a timely manner and that the delay was not due to any fault of the assessee. Application of Law to Facts The Tribunal applied the principles established in the cited precedents to the facts of the case, concluding that the assessee was entitled to the deduction under Section 54F. The Tribunal reasoned that since the assessee had complied with all statutory requirements and the delay was beyond their control, denying the deduction would be contrary to the purpose of the provision. Treatment of Competing Arguments The revenue argued that the deduction should be denied due to the failure to obtain possession within the statutory time limit. However, the Tribunal dismissed this argument, emphasizing the beneficial nature of Section 54F and the need to interpret it in a manner that does not penalize assessees for delays caused by third parties. The Tribunal found the assessee's arguments, supported by judicial precedents, to be more persuasive. Conclusions The Tribunal concluded that the assessee was entitled to the deduction under Section 54F, as they had complied with all necessary conditions and the delay in possession was beyond their control. The Tribunal upheld the decision of the CIT(A) to delete the addition made by the Assessing Officer. SIGNIFICANT HOLDINGS The Tribunal reiterated the importance of interpreting beneficial provisions like Section 54F liberally to achieve their intended purpose. The Tribunal held that delays caused by builders should not disqualify assessees from claiming deductions if they have otherwise complied with the statutory requirements. The Tribunal's decision reinforces the principle that tax statutes should be construed in a manner that aligns with their purpose and provides relief to taxpayers in deserving cases. The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s order to allow the deduction under Section 54F. The Tribunal emphasized that the assessee had made the required investment within the prescribed period and that the delay in possession was beyond their control, thus warranting the application of the beneficial provisions of the Act.
|
