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TMI Blog2015 (12) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... DER Per B. R. Baskaran ( AM ) The revenue has filed this appeal challenging the decision of Ld CIT(A) in holding that the assessee is entitled for deduction u/s 54 of the Act. 2. We heard the parties. The facts that are relevant to the issue under consideration are that the assessee sold a flat located at Fionika on 27.03.2008 and generated Long term capital gain of ₹ 1.55 crores thereon. The assessee claimed deduction u/s 54 of the Act pertaining to the cost of another flat. The assessee had booked the flat with M/s Life Style Property Venture in the year 2004 and the agreement was registered on 01-12-2004. He paid the consideration in instalments as per the agreement. He finally got the possession on 30th June, 2007. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took place or (b) is constructed within a period of three years after the date on which the transfer took place. Thus, it is seen that the Statute has prescribed different time limits for Purchase of a new house and for Construction of a new house . There should not be any dispute that the expressions Purchase and Construction denotes two different kinds of actions. The deduction is available only if a new house is purchased within one year before the date of transfer of the original residential house. Thus, if a new house is constructed within one year prior to the date of transfer of the original residential house, the deduction u/s 54 is not available. 4. In the instant case, the assessee has entered into an agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructing a building in which flats are allotted to the members. This must also be viewed as a method of constructing residential tenements. 6. An identical question, i.e., whether the booking of flat with a builder is to be considered as a case of 'purchase' or 'construction' was examined by the Mumbai bench of Tribunal in the case of ACIT Vs. Sunder Kaur Sujan Singh (3 SOT 206) and the bench came to the conclusion that it was a case of Construction . The relevant observations are extracted below:- The condition laid down in the case of purchase of the residential house is that the house must have been purchased one year prior to the sale of the capital asset or two years subsequent thereto. In the case of a reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal has also considered an identical question in the case of Kishore H Galaiya Vs. ITO (137 ITD 229) and has expressed identical view. The relevant observations are extracted below:- 6.1. In the present case, the assessee sold the old residential house on 7.3.1996 and the long term capital gain arising on this account was ₹ 9,98,411/-. The assessee had booked a new residential flat with the builder jointly with his wife for a sum of ₹ 35,00,000/-. The assessee had paid booking amount of ₹ 1,00,000/- to the builder before the due date of filing of the return of income u/s 139(1) for the assessment year 2006-07 and the balance amount had been paid in installments after the said date. The total amount paid by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case, the period of three years would apply for construction of new house from the date of transfer of the old flat. 8. The ratio laid down in the above said cases clearly show that the booking of a flat which is going to be constructed by a builder has to be considered as a case of Construction of flat . We have already noticed that the deduction u/s 54 is available only if the assessee constructs a new house within three years after the date of transfer. 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 u/s 54 of the Act in respect of the cost of new flat. 9. Before us, the Ld A.R placed reliance on certain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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