2021 (9) TMI 344 - AT - Income Tax

Exemption u/s 54 - computation of capital gain - as new asset was purchased more than one year prior to the date on which the transfer in respect of the residential house had been effect AO disallowed the claim of exemption whether valid transfer took place within the meaning of section 2(47)? - assessee has intentionally projected the date of agreement of purchase of new asset, being May 2016/August, 2016 instead of the actual date of signing of Memorandum of Understanding only for the purpose of claiming exemption under section 54 - CIT-A allowed the deduction - HELD THAT - CIT(A) has not discussed anything to hold that the sale of Bangalore flat by the assessee in March, 2017 was well within the permissible period of one year from the date of purchase of the new flat in question. S. No. 4 in the table given in the assessment order in page 3 shows that the assessee has paid a sum on account payee cheque on 18.02.2016 to M/s. DLF Home Developers Ltd., whereas, the DLF has issued allotment letter dated 05.04.2016. However, the ld. CIT(A) has not discussed anything about the above variation. Subsequent to DLF allotment letter dated 05.04.2016, M/s. DLF Home Developers Ltd. executed registered conveyance deed only on 16.08.2016, but in his written submission dated 06.03.2019 filed before the Assessing Officer, the assessee has claimed that physical possession of the flat was given to him sometime in May, 2016. CIT(A) has not considered the above facts in his appellate order. Therefore, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) and the ld. CIT(A) should examine the nature of entire payments and decide exact date of valid sale transaction of the new flat by passing an elaborate speaking order in accordance with law. Ground raised by the Revenue is allowed for statistical purposes.

Summary

Issues:
1. Exemption under section 54 of the Income Tax Act, 1961.
2. Validity of the date of purchase of property for claiming exemption.
3. Interpretation of section 54(1) of the Act regarding the timeline for availing exemption.
4. Consideration of possession and allotment letter dates for determining the date of purchase.
5. Adequacy of the appellate order in addressing the relevant facts and circumstances.
6. Dismissal of Cross Objection due to the set-aside of the appellate order.

Analysis:
1. The appeal involved a challenge by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) regarding the allowance of exemption amounting to a specific sum under section 54 of the Income Tax Act, 1961. The primary contention was whether the exemption should be granted based on the provisions of the Act.

2. The case revolved around the date of purchase of a property for claiming exemption under section 54 of the Act. The Assessing Officer disallowed the claim of exemption as the new asset was purchased more than one year before the transfer of the original asset. The dispute centered on the interpretation of the timeline requirements for availing the exemption.

3. The Revenue argued that the assessee intentionally projected a false date of agreement to claim exemption under section 54. Reference was made to section 2(47)(v) of the Act regarding transfer in relation to a capital asset, emphasizing the significance of the actual transfer date for determining eligibility for exemption.

4. The assessee contended that the date of the conveyance deed should be deemed the date of purchase of the property, emphasizing the provisions of the Transfer of Property Act, 1882. The possession and allotment letter dates were highlighted to support the claim for exemption under section 54 of the Act.

5. The appellate order was scrutinized for its adequacy in addressing the factual aspects and circumstances of the case. The Tribunal found the order to be vague and lacking in detailed analysis. Consequently, the matter was remitted back to the ld. CIT(A) for a more comprehensive examination and a well-reasoned decision in accordance with the law.

6. The Cross Objection filed by the assessee was dismissed as a result of setting aside the appellate order, rendering it academically irrelevant. The final decision allowed the appeal of the Revenue for statistical purposes and dismissed the Cross Objection filed by the assessee.

This detailed analysis encapsulates the key legal issues, arguments presented by both parties, and the Tribunal's decision in the context of the exemption claim under section 54 of the Income Tax Act, 1961.