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2024 (11) TMI 22 - AT - Income TaxDeduction u/s. 54 - Determination of the date of purchase - denial of deduction as time gap of more than 24 months between the date of transfer of capital asset and the date of purchase of the new house property - whether the assessee has purchased the house property within the stipulated time mentioned U/s. 54F of the Act or not? - HELD THAT - The assessee had paid the entire sale consideration on 14/11/2016 and the possession of the property was also given to the assessee on the same day itself. It is also an admitted fact that the assessee has let out the said house property and offered the rental income earned therefrom and also shown it in her return of income for the assessment year 2016-17. Therefore, merely because the registration of the house property (new) was delayed or done beyond the prescribed time limit of 24 months from the date of disposal of the capital asset, it cannot be a ground to deny the exemption claimed U/s. 54F. Hon ble Delhi High Court in the case of Balraj 2001 (12) TMI 51 - DELHI HIGH COURT held that since the assessee has paid the complete consideration to vendor of the land, which is duly acknowledged by the vendor, merely because of the registration is pending, we are of the view that deduction allowable U/s. 54 of the Act should not be rejected . The condition precedent for claiming benefit under the said provision is the capital gain realized from the sale of capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. If after making the entire payment, merely because a registered sale deed had not been executed and registered in favour of the assessee before the period stipulated it cannot be denied the benefit of section 54F of the Act - See Sambandam Udaykumar 2012 (3) TMI 80 - KARNATAKA HIGH COURT - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal by the Revenue. 2. Eligibility of the assessee to claim exemption under Section 54F of the Income Tax Act, 1961. 3. Determination of the date of "purchase" for the purpose of Section 54F exemption. 4. Consideration of rental income as evidence of ownership. 5. Legal interpretation of property transfer and ownership under the Transfer of Property Act. Detailed Analysis: 1. Condonation of Delay: The Revenue filed the appeal with a delay of 24 days. The delay was attributed to the new Assistant Commissioner of Income Tax (ACIT) taking charge and the time required for allocation of RSA token and role on the ITBA portal. The Tribunal found the explanation reasonable and sufficient, thus condoning the delay and allowing the appeal to be adjudicated on merits. 2. Eligibility for Exemption under Section 54F: The core issue was whether the assessee was eligible for exemption under Section 54F of the Income Tax Act, which allows exemption from capital gains tax if the proceeds are invested in a residential property within two years. The Assessing Officer (AO) disallowed the exemption, arguing that the property was registered beyond the stipulated period. However, the Commissioner of Income Tax (Appeals) [CIT(A)-NFAC] allowed the exemption, considering that the payment and possession occurred within the stipulated period. 3. Determination of Date of "Purchase": The Revenue contended that the "purchase" date should be the registration date (17/12/2019), which was beyond the two-year period. The assessee argued that the purchase was completed on 14/11/2016 when the payment was made and possession was taken. The Tribunal sided with the assessee, noting that the entire consideration was paid, and possession was taken within the stipulated period, thus qualifying for the exemption under Section 54F. 4. Consideration of Rental Income: The Revenue argued that mere submission of rental income should not be grounds for claiming ownership and exemption. The Tribunal noted that the assessee offered rental income in the return for AY 2017-18, supporting the claim that the property was effectively in possession and used, reinforcing the claim for exemption. 5. Legal Interpretation of Property Transfer: The Revenue cited legal precedents arguing that ownership is conferred only upon registration. However, the Tribunal differentiated the present case from the cited precedents, emphasizing that the critical factor for Section 54F is the investment of capital gains in a property, not necessarily the registration. The Tribunal referred to various judicial pronouncements, including the Delhi High Court and Karnataka High Court, which supported the view that payment and possession within the stipulated period suffice for exemption. Conclusion: The Tribunal upheld the decision of the CIT(A)-NFAC, allowing the exemption under Section 54F, and dismissed the Revenue's appeal. The Tribunal emphasized that the payment and possession within the stipulated period were sufficient for claiming the exemption, irrespective of the registration date. The Cross Objection raised by the assessee, being supportive of the CIT(A)-NFAC's decision, was dismissed as infructuous.
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