2021 (11) TMI 79 - AT - Income Tax

Deduction u/s 54F - Denial of deduction assessee was owner of multiple houses as on date of purchase of new asset - assessee owned 6 residential units and that effective ownership was held by assessee - scope of amendment - HELD THAT - As perused the joint development agreement wherein, the sale consideration determined as against the transfer of right title and interest in the land by assessee for the purposes of development was 42% of the constructed premises being 24 residential units. In the Assessment Year under consideration, assessee is owner of 6 flats that are unsold under the JDA. No infirmity in the view taken by the Ld.CIT(A) that assessee owned multiple flats as on date of purchase of new asset. The relevant assessment year being 2013-14, the amendment would be applicable to the present facts and assessee won t be entitled to the benefit u/s. 54F. - Decided against assessee.

Issues:
1. Denial of exemption claimed under section 54F
2. Failure to meet mandatory conditions of "transferee being in possession" and "willingness to perform"
3. Error in treating the appellant as the owner of six flats
4. Failure to appreciate incomplete construction and non-adherence to contract conditions
5. Dispute regarding interest levy under sections 234B and 234C

Issue 1 - Denial of exemption claimed under section 54F:
The appellant contested the denial of exemption under section 54F based on the possession of six flats and the ownership of multiple houses. The Ld.AO and Ld.CIT(A) upheld the denial, emphasizing the substantial ownership of the appellant in more than one flat, exceeding the requirement under section 54F. The appellant argued against this decision, stating that possession of the new flats was not handed over to them, thus section 53A of the Transfer of Property Act did not apply. The Tribunal reviewed the joint development agreement, confirming the appellant's ownership of six unsold flats and other residential properties, leading to the dismissal of the appeal.

Issue 2 - Failure to meet mandatory conditions of "transferee being in possession" and "willingness to perform":
The appellant argued that the mandatory conditions of "transferee being in possession" and "willingness to perform" under section 53A of the Transfer of Property Act were not satisfied, thus challenging the deemed ownership of the flats. The Ld.AO and Ld.CIT(A) disagreed, asserting that possession of the flats, even if directly handed over to buyers, did not alter ownership. The Tribunal examined the developer's submissions regarding possession and completion of construction, ultimately affirming the lower authorities' decision.

Issue 3 - Error in treating the appellant as the owner of six flats:
The appellant contended that being treated as the owner of six flats was erroneous, given the lack of possession or registered conveyance in their favor. The Ld.AO concluded that completion of development work in 2011 vested ownership rights in the appellant, leading to the denial of exemption under section 54F. The Tribunal upheld this decision, stating that unsold flats constituted self-occupied property, violating section 54F provisions.

Issue 4 - Failure to appreciate incomplete construction and non-adherence to contract conditions:
The appellant raised concerns about incomplete construction and the developer's failure to adhere to contract conditions, impacting the applicability of section 53A of the Transfer of Property Act. The Ld.AO and Ld.CIT(A) did not find merit in these arguments, emphasizing the completion of development work and the appellant's substantial ownership in multiple flats. The Tribunal reviewed the agreement and income statement, confirming the appellant's ownership status and dismissing the appeal.

Issue 5 - Dispute regarding interest levy under sections 234B and 234C:
The appellant disputed the levy of interest under sections 234B and 234C, citing lack of provided computation details and non-compliance with the Act's provisions. The Tribunal did not delve into this issue explicitly in the judgment, focusing primarily on the denial of exemption under section 54F and related ownership matters.

In conclusion, the Tribunal dismissed the appeal, upholding the denial of exemption under section 54F based on the appellant's ownership of multiple flats and failure to meet statutory conditions. The judgment extensively analyzed the appellant's contentions, the contractual agreements, and the relevant legal provisions, providing a comprehensive overview of the case.

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