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TMI Blog2014 (6) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirming the addition/disallowance – Decided against Assessee. Date of investment in new property - Whether the date of agreement i.e., 26.05.2006 or the date of payments has to be taken into account for the purpose of calculating the time frame prescribed u/s 54 of the Act – Held that:- The flat in Presidency Co-operative Housing Society, JVPD, Mumbai has been sold by the assessee on 11.09.2008 - the subsequent payments made in the year 2008 is to be considered for the purposes of section 54 – Following ITO, Ward-II, Gurgaon Versus Dr. Smita Swarup, D/o Shri Shanti Swarup [2014 (6) TMI 559 - ITAT DELHI] - the assessee is eligible to claim the deduction u/s 54 of the Act for the payments made towards the purchase of the property within the permissible time period of limitation though on the date of agreement of purchase, the assessee is not eligible to claim the deduction by virtue of the time limitation provided under the section - thus, the claim of deduction in respect of the payments made within the period of limitation prescribed u/s 54, irrespective of the date of agreement, is to be allowed – Decided partly in favour of Assessee. Claim of interest on housing loan cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the take over was Rs.4,63,95,814/- and the assessee s capital account in the capacity of the proprietor had the credit balance of Rs.1,16,05,939/-. The AO further found that the OPML allotted the assessee 33,59,064 equity shares of Rs.10 each representing share capital of Rs.3,35,90,640/-. According to the AO, since the assessee s capital account had credit balance of Rs.1,16,05,939/- only, in order to comply the accounting entries, a good will of Rs.2,29,89,701/- was created in the books of OPMIL and the equal amount was credited to the capital account of the assessee in his personal balance sheet. According to the assessee, the excess credit namely the difference between the agreed consideration and the capital balance was accounted as good will in the books of M/s. OPMIL and such good will arising on succession is a fictitious and notional entry which has no impact on the income computation of any assessee hence its creation is neither treated as income nor allotted as expenses. Therefore, the transfer of the good will is covered by the exemption u/s 47(xiv) of the Act as the assessee did not receive any direct benefit other than the allotment of shares in lieu of transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,64/- shares of Rs.10 each paid in share capital of the assignee. Though the general wordings contained in the recitals of the said agreement in para 5 as reproduced above covers good will for the transfer of which negotiation has taken place between the assignor and assignee, the assignment deed does not evidence that a good will, valued at Rs.2,29,89,701/- is transferred to the assignee. Moreover, it is not disputed that the alleged good will has never been created in the books of the propriety concern of the assessee. Therefore, the allotment of shares worth exceeding Rs.1,16,05,939/- is in the form of excess assets over the assets and liabilities of the assignor. In the light of the aforementioned discussions, after considering that the assessee s capital account in the OPM had the credit balance of Rs.1,16,05,939/- only and the assessee has been allotted fully paid up share capital worth Rs.3,35,90,640/-, we are of the considered opinion that the assessee has got the additional share capital allotment of Rs.2,29,84,701/- without bringing anything to the assignee. Therefore, the pre-requisite laid down in section 47(xiv) has not been complied with. It is also pertinent to men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, the assesseee in the personal balance sheet filed on November 28, 2011 had shown the value of the Poona Bungalow at Rs.61,06,772/-. Therefore, according to the AO, even if the argument of the assessee is accepted he would be entitled to deduction u/s 54 of only Rs.34,26120/- as against the original claim of Rs.98,20,083/-. Further, the AO noted that the assessee had allegedly purchased the new property for Rs.73,00,000/- but claimed deduction of Rs.98,20,083/-. When enquired into the above difference, the assessee produced certain bills to show that the amount was spent on the acquisition of the new property. The AO verified the bills and found the same to be for petrol refilling and acquisition of personal assets like Refrigerator, washing machines, etc. These personal expenses do not qualify for cost of improvement of the new property. Some of the expense, the AO, held that can be claimed at the time of the sale of the new property, but the said expenses do not qualify for deduction u/s 54 and hence the same were disallowed. On appeal, the Ld.CIT(A) rejected the claim of deduction u/s 54 and upheld the findings of the AO that the new property has not been purchased wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the impugned disallowance made by the AO. 5.1 Having heard both the sides and perused the material on record, it is pertinent to mention that clause (b) to sec.24 of the Income Tax Act, 1961 reads as where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, amount of any interest payable on such capital.. Further, explanation 1 to section 24(1)(b) reads where the property has been acquired or constructed with borrowed capital In the said provisions, the word used is acquired or constructed and nowhere in the section, the word possession is used by the legislature. Therefore, the authorities below are not justified in not allowing the claim of deduction on the ground that the assessee has taken possession of the property only during the FY 2008-09. However, the AO is directed to ascertain the date of completion of construction for the purposes of the said provisions and accordingly allow the claim of the assessee. We direct and order accordingly. Resultantly, Ground No 3 is allowed for statistical purpose. 6. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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