2023 (7) TMI 1038 - AT - Income Tax

Deduction u/s 54 - new flat was purchased beyond a period of one year from the date of transfer of the old flat - relevant date for the purpose of section 54F - HELD THAT - As per section 54 of the Act, if the assessee within a period of one year before or two years after the date of transfer of a original residential house purchases a new residential house, or within a period of three years after such date constructs a new residential house then the benefit of section 54 will be available to the assessee on the capital gains so arisen on the transfer of the original residential house. We find that the Hon ble jurisdictional High Court in CIT v/s Smt. Beena K. Jain 1993 (11) TMI 7 - BOMBAY HIGH COURT in a similar factual matrix affirmed the findings of the Tribunal that the relevant date for the purpose of section 54F of the Act is the date when the assessee paid the full consideration amount and obtained the possession of the new flat Since in the present case also upon payment of full agreed consideration, the possession of the new flat was handed over to the assessee along with his wife on 07/04/2016, which falls within a period of two years from the date of sale of the old flat, i.e. 11/02/2016, therefore assessee is entitled to claim deduction under section 54 in respect of capital gains from the sale of old flat. Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Claim of deduction under section 54 of the Income Tax Act, 1961.
3. Addition under section 23(4) of the Income Tax Act, 1961.

Condonation of Delay:
The appeal was delayed by 159 days. The assessee argued that the delay was unintentional, as he missed the email notification regarding the order's availability on the e-filing portal. The Tribunal, referencing the Supreme Court's decision in Collector Land Acquisition, Anantnag Vs. MST Katiji, condoned the delay, emphasizing that substantial justice should prevail over technicalities.

Deduction under Section 54:
The assessee contested the denial of exemption under section 54F of the Act. The Assessing Officer (AO) had denied the exemption on the grounds that the new flat was purchased beyond one year from the sale of the old flat. The Tribunal, however, noted that the possession of the new flat was handed over on 07/04/2016, which is within two years from the sale date of the old flat (11/02/2016). Citing the Bombay High Court decision in CIT v/s Smt. Beena K. Jain, the Tribunal held that the relevant date for section 54F is when the full consideration is paid, and possession is obtained. Thus, the assessee was entitled to the deduction under section 54.

Addition under Section 23(4):
The assessee chose not to press this ground during the hearing. Consequently, the Tribunal dismissed this ground as not pressed.

Conclusion:
The appeal by the assessee was partly allowed, with the Tribunal granting the deduction under section 54 and condoning the delay in filing the appeal. The addition under section 23(4) was dismissed as not pressed.