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TMI Blog2013 (7) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... on 54F(1) are amply met. For the deduction under the Section, nothing further is required. CIT (A) correctly held that Section 54F is a beneficial provision designed to promote re-investment of sale proceeds of long-term capital assets in residential house properties; that its purpose is to give impetus to the house building activity in order to meet the acute shortage of housing and for this purpose, providing an incentive to tax payers by exempting from tax long-term capital gains arising from the transfer of other assets where the net consideration is invested by the tax payer in residential house. In favour of assessee. - ITA No.4108/Del/2011 - - - Dated:- 26-4-2013 - A D Jain, and Shamim Yahya, JJ. For the Appellant : Shri A K Srivastava, CA For the Respondent : Smt Shumana Sen, Sr.DR ORDER:- Per: A D Jain: This is an appeal filed by the department for Assessment Year 2006-07 against the order dated 09.06.2011 passed by the CIT (A)- XXX, New Delhi, contending that the Ld. CIT (A) has erred in holding that the assessee had obtained substantial domain over the flat and that he was entitled to Exemption u/s 54F on the entire capital gain of Rs. 41,98,599/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery of possession is only a formality; (iv) that the assessee gets title to the property only after the company obtains Certificate of Occupation Use from the competent authority and hands over the possession to the assessee; (v) that the ownership of the apartment stands transferred only after (a) completion/occupation certificates are obtained by the company, and (b) the deed of declaration is registered and that both the conditions were not met; and (vi) that in order to obtain deduction u/s 54F of the Act, the assessee must own and have legal title over the property. 4. By virtue of the impugned order, the Ld. CIT (A) held the assessee entitled to exemption u/s 54F of the Act on the entire Capital Gain of Rs. 41,98,599/-. Aggrieved, the Department is in appeal. 5. Challenging the impugned order, the Ld. DR has contended that the Ld. CIT (A) has erred in holding that the assessee had obtained substantial domain over the flat and that he was entitled to Exemption u/s 54F on the entire capital gain of Rs. 41,98,599/- ignoring the facts that the agreement signed by the assessee with the company did not amount to transfer within the meaning of Section 54 (r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1983, as the said Act also has no application hereto; and that pertinently, the possession of the property was duly taken by the assessee from the builder in March, 2008. 7. We have heard the parties and have perused the material on record. The provisions of Section 54F(1) of the Act read as follows:- 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, 8. A bare perusal of Section 54F(1) (supra) shows that the requirement of the Section is, as relevant for the present case, purchase of a residential house in accordance with the said Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with the Society coupled with the payment of almost the entire cost within the specified period. IV. In Smt. Shashi Varma Vs. CIT (1997) 224 ITR 106 (MP) it was held that section 54 of the Act of 1961 only says that within two years, the assessee should have constructed the house but that does not mean that the construction of house should necessarily be completed within two years. What it means is that the construction of the house should be completed as far as possible within two years. In modern days, it is not easy to construct a house within the time limit of two years and under the Government schemes, construction takes years to years. Therefore, confining to two years period for construction and handing over possession thereof is impossible and unworkable under section 54 of the Act. If the substantial investment is made in the construction of house, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of section 54. V. In CIT vs. R L Sood (2000) 245 ITR 127 (Del.), the assessee had entered into an agreement of sale and made payments towards purchase consideration within one year of sale of his old flat. Relief u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer qua legal ownership were not relevant to decide the applicability of Section 54F of the Act. Here also, we do not find any error in the order of the Ld. CIT (A). The assessment order is based on the reasoning that the assessee did not have either legal ownership or possession of the flat purchased and towards this, the Assessing Officer made reference to the various clauses of the agreement, Section 2 (47) (iiia) of the Act, the schemes of allotment governing the DDA and co-operative societies, Certificate of Occupation and Use, completion/occupation certificates and registration of Deed of Declaration. However, this approach, evidently, was incorrect, in view of the plain requirement of the provisions of Section 54F(1), as discussed hereinabove. To reiterate, the condition of this Section was fully met by the assessee since he had purchased the residential flat on full payment even before the capital gain accrued to him. Hence, there was nothing barring the assessee from being entitled to the claim u/s 54F of the Act and the Ld. CIT (A) was perfectly justified in rectifying the error committed by the Assessing Officer. 14. In view of the above discussion, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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