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TMI Blog2014 (9) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer. In the instant case, the assessee has constructed a house prior to the date of transfer of original house, in which case, the assessee is not entitled to claim deduction under section 54 of the Act in respect of the cost of new flat. - Decided against assessee. - I.T.A. No.5169/Mum/2010 - - - Dated:- 12-9-2014 - S/SHRI H.L. KARWA AND B.R.BASKARAN, JJ. For the Appellant : Shri Chetan A Karia For the Respondent : Shri Rajneesh K Arvind ORDER B. R. Baskaran (Accountant Member).- The appeal of the assessee is directed against the order dated March 29, 2010 passed by the learned Commissioner of Income-tax (Appeals)-25, Mumbai and it relates to the assessment year 2006-07. The assessee is aggrieved by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer placed strong reliance on the decision of the jurisdictional High Court rendered in the case of CIT v. Mrs. Hilla J. B. Wadia [1995] 216 ITR 376 (Bom) with the following observations : As stated in the aforesaid paragraphs the Bombay High Court in the case of CIT v. Mrs. Hilla J. B. Wadia [1995] 216 ITR 376 (Bom) has held that, what one has to see is whether the assessee has acquired a right to a specific flat in such a building which is being constructed by the society and whether she has made a substantial investment within the prescribed period which will entitle her to obtain possession of that flat so constructed. The Board has stated in the circular that when an allotment letter is issued to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement through registration and not from the date of possession as claimed by the appellant. Therefore, Ido not find any infirmity in the action of the Assessing Officer in disallowing exemption under section 54 of the Income-tax Act on capital gains on the sale of another property made much beyond the prescribed period of time as per the provisions of section 54 of the Income-tax Act. Aggrieved, the assessee has filed this appeal before us. 5. We have heard the rival contentions and perused the record. The learned authorised representative reiterated the contentions that were made before the tax authorities, viz., the date of possession should be considered as the date of purchase of new house, since the assessee obtained a habitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. As per the agreement, the builder constructed the residential apartments and finally handed over the possession on December 4, 2004. The moot question is whether the transaction of entering into an agreement with a builder for purchase of a flat that is going to be constructed is a case of purchase or construction . 7. In this regard, we may gainfully refer to the decision rendered by the hon'ble Bombay High Court in the case of CIT v. Mrs. Hilla J. B. Wadia [1995] 216 ITR 376 (Bom), wherein the hon'ble High Court has held that it is a case of Construction . Following observations made by the High Court are relevant here (page 380) : In the present case, the assessee had transferred the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her it is a purchase or a construction in the above case. Vide Board's Circular No. 471, dated October 15, 1986 it has been explained that to qualify investment for construction under section 54F the crucial date is the date of allotment of flat by DDA and payment of instalment was only a follow-up action and taking possession of the flat is only a formality, of course, instalments have to be paid by the allottee as per the schedule fixed by the DDA. As per Board's Circular No. 672, dated December 16, 1993 the Board after referring to the abovementioned Circular No. 471 extended the facility of exemption under sections 54 and 54F in respect of allotment of flats/house by co-operative societies and other institutions, and the allotme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad fulfilled the conditions of section 54 of the Act so as to make him eligible for claim of exemption under section 54 of the Act. The first condition is that the capital gain should have been invested in the purchase of new residential house within a period of two years from the date of transfer or for construction of new resi dential house within a period of three years from the date of transfer. In the present case, the assessee had booked the new flat with the builder and as per agreement, the assessee was to make payment in instalments and the builder was to handover the possession of the flat after construction. It has therefore to be considered as a case of construction of new residential house and not purchase of flat. This positio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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