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2020 (11) TMI 773 - AT - Income TaxRevision u/s 263 - reexamine the claim of deduction u/s 54 by construing the investment made in a new residential flat as the case of acquisition and not construction - HELD THAT - It is well-settled that immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession or the date of registration of document which is relevant. Once the executed documents are registered, the transfer will take place on the date of execution of documents and not on the date of registration of documents as held in Alapati Venkataramiah v. CIT 1965 (3) TMI 21 - SUPREME COURT , CIT v. Podar Cements Pvt. Ltd. 1997 (5) TMI 2 - SUPREME COURT and CIT v. Vishnu Trading Investment Co. 2002 (2) TMI 31 - RAJASTHAN HIGH COURT In Malabar Industrial Co. Ltd v 2000 (2) TMI 10 - SUPREME COURT it is held that the Commissioner has to be satisfied with the twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of the conditions is absent- if the order of the Assessing Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue- recourse cannot be had to section 263(1) of the Act. Thus the order of the Pr. CIT u/s 263 of the Act is hereby quashed. - Decided in favour of assessee.
Issues:
1. Jurisdiction to invoke provisions of section 263 of the Income Tax Act. 2. Validity of original assessment order under section 143(3). 3. Claim of deduction under section 54 of the Act. 4. Conditions to claim deduction under section 54 of the Act. Analysis: Issue 1: Jurisdiction to invoke provisions of section 263 of the Income Tax Act The appeal questioned the jurisdiction of invoking section 263 by the Pr. CIT without satisfying the conditions. The appellant argued that the original assessment order was passed after proper verification and application of mind. The Pr. CIT directed the AO to reexamine the claim of deduction under section 54, which the appellant deemed as a change of opinion. The appellant contended that all essential conditions for claiming the deduction under section 54 were met. Issue 2: Validity of original assessment order under section 143(3) The appellant's return of income for AY 2015-16 was accepted by the AO under section 143(3). However, the Pr. CIT found discrepancies in the assessment order, such as the cost of acquisition not properly documented and doubts regarding the investment in a residential property. The Pr. CIT issued a notice under section 263, deeming the original order erroneous and prejudicial to revenue. Issue 3: Claim of deduction under section 54 of the Act The appellant claimed deduction under section 54 for investing in a new residential flat. The Pr. CIT raised concerns about the timing of possession and completion of construction, leading to a dispute on the eligibility of the claim. The appellant provided documents to support the investment timeline and compliance with section 54 requirements. Issue 4: Conditions to claim deduction under section 54 of the Act The conditions for claiming deduction under section 54 were analyzed, including the timeline for purchase or construction of a residential property after the transfer of the old property. The appellant argued that the investment was made within the prescribed period, supported by legal precedents and interpretations of relevant provisions. The AO's inquiries and verifications were considered adequate before passing the original assessment order. In conclusion, the ITAT Mumbai allowed the appeal, quashing the order passed under section 263 of the Income Tax Act. The decision was based on the factual details provided by the appellant, compliance with section 54 requirements, and legal precedents supporting the claim for deduction. The judgment emphasized the importance of proper documentation, timelines for property transactions, and adherence to statutory provisions in income tax assessments.
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