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TMI Blog2013 (10) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... zada Begum [1988 (3) TMI 39 - ANDHRA PRADESH High Court] - Decided against Revenue. - ITA.No.273/PN/2012 - - - Dated:- 28-5-2013 - Shri Shailendra Kumar Yadav And Shri R. K. Panda,JJ. For the Petitioner : Shri Kishor Phadke For the Respondent : Shri S. P. Sarangi ORDER Per Shailendra Kumar Yadav, JM: This appeal has been filed by the assessee against the order of the CIT(A) on following grounds: 1. The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in directing the Assessing Officer to allow the assessee deduction u/s 54 of the Income-tax Act, 1961, instead of confirming the disallowance of the assessee's claim of the said deduction. 3. The learned Commissioner of Income-tax (Appeals) grossly erred in holding that the agreement entered into by the assessee was an agreement for construction of residential and other properties by the developer on behalf of the assessee. 4. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that the residential property allotted to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the, assessee has taken possessions after the period of 2 years from the date of the sale i.e., as evident from the telephone bill where the date of installation is 7.12.2006. The receipt of the Blue Date Express is dated 15.11.2007 and the date of issue of passport in the case of the assessee's nephew Shri Viquar Mohammad is 8.2.2007. The assessee has only established the fact that he has taken possession of the flat failed to prove that the flat was taken within 2 years from the date of sale. No other evidence is produced to prove possession of the said flat was taken within 2 years from the date of sale. Hence, exemption is denied and reliance is placed on the following case law CIT Vs. Mrs. Shahzada Begum (1988) 172 ITR 397 (AP) wherein it is held that the date of possession of the property purchased and not the date of registration of sale in favour of the assessee, in relevant for computing the prescribed time limit. 3. Matter was carried before the CIT(A) wherein the Ld. Authorised Representative has submitted that as per development agreement, she was to share the constructed area with developer. As such the understanding in substance between both the parties was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held, that, when the funds are invested for the new property under a contract for acquisition of the new house property, the assessee starts assuming domain over the property. Further, once the domain is so assumed, the conditions u/s 54 need to be considered as fulfilled. Copy of the said decision is enclosed herewith. c) CIT Vs. Shahzada Besum -- 172 ITR 397 (AP) -- The learned A O has relied on the said decision to refuse the claim of exemption u/s 54. As per the said decision, when the assessee has assumed possession of the new property within the prescribed time without conveyance/registration, the exemption u/s 54 was to be allowed. The Honorable AP High Court has held that when possession of the new property is taken within the prescribed period, domain and control is assumed and in such a case, registration need not be the touchstone for grant of exemption u/s 54 of the JTA, 1961. It is submitted; the true ratio of the said decision is against, the domain over the new properly. As clarified by the Honorable Bombay High Court, domain is assumed when substantial payments for the new property are made under an agreement. Principle underlying in both these decisions is the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of 3 years. Therefore, the claim of exemption under s. 54 is allowed subject to verification of above aspects by the AO after providing opportunity to the assessee. Conclusion : Exchange of old flat with new flat is transfer under s. 2(47) of the Act. The acquisition of a new flat to be constructed by the builder under development agreement in exchange of the old flat amounts to construction of new flat. Therefore, the provisions of s. 54 are applicable and assessee is entitled to exemption if the new flat had been constructed within a period of 3 years from the date of transfer." Accordingly, the Ld. Authorised Representative requested that the order of the CIT(A) be upheld. 5. After going through the above submissions and material on record, we find that the Assessing Officer disallowed claim of deduction u/s.54 on the ground that assessee failed to prove the fact that possession of the flat was taken within two years from date of sale has no evidence in this respect was brought before the Assessing Officer. The stand of the assessee has been that she acquired residential property in pursuance of development agreement dated 31.05.2004. As per this agreement, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse. It is apparent that assessee was in possession of this property before 31.05.2007 i.e., before a period of three years from date of transfer of property at H.No.4-3-540 as according to the assessment order, telephone got installed on 07.12.2006 and Passport to one of the assessee's nephew was issued on 08.02.2007, i.e., before three years from the date of transfer of original asset. Therefore, the assessee fulfilled the condition in respect of construction of residential house within a period of three years from date of transfer of the original asset. Thus, the CIT(A) rightly found assessee to be eligible for deduction u/s.54 of the Act. The Hon'ble Andhra Pradesh High Court in the case of CIT vs. Mrs.Shahzada Begum (1988) 172 ITR 397 (AP), wherein assessee acquired possession of new residential house within period of three years from the date of transfer of original asset. Accordingly, the Assessing Officer was rightly directed to allow the deduction u/s.54 of the Act. This view is fortified by the decision in the case of Jatinder Kumar Madan (supra), wherein the issue was of capital gain exemption and assessee exchanged old flat with new flat and claimed exemption u/s.54 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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