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TMI Blog2016 (6) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, the assessee claimed deduction u/s. 54 and 54EC of the Act of Long Term Capital Gains arising out of sale of house property and claimed consequential deductions. The assessee sold his flat for a consideration of Rs. 55 lacs on 24.02.2010 resulting into Long term capital gain of Rs. 50,94,568/- after taking indexed cost of acquisition at Rs. 3,79,832/-. The assessee claimed that he has purchased a flat vide agreement dated 28.12.2007 for a consideration of Rs. 42.71 lacs from one M/s. Sharpmind Developers and the same was registered on 28.12.2007. According to the AO, the assessee has claimed deduction u/s. 54 of the Act on the basis of this purchase, which was made one year before the date of sale of the property. Accordingly, he denied deduction u/s. 54 of the Act. Aggrieved the assessee preferred appeal before the CIT(A), who also confirmed the action of AO by observing as under: "3.8. Therefore, applying the decision of the facts of the present case, it is hereby held that the assessee has become owner of the house on registration of the agreement i.e. on 28.02.2008, which is beyond a period of 12 months before the date of sale of the property. 3.9. Further, as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harpmind Developers on 28.12.2007. The flat intended to be purchased by the assessee was not at all constructed on 28.12.2007 and though the agreement for purchase was entered into is just a right for purchase of flat in the proposed construction and eventually property's possession was given to the assessee by the builder only on 11.09.2009 because the flat got ready and occupancy certificate was received by the builder from the BMC only on 31.03.2009. In such facts, the learned counsel for the assessee stated that acquisition of property is to be considered as and when the possession of the flat was given to the assessee by the builder and that date falls as on 11.09.2009. According to the learned counsel for the assessee the vital conditions of section 54 of the Act are fulfilled when the property's possession was handed over to the assessee by the builder on 11.09.2009 i.e. within the time limit prescribed u/s. 54 of the Act for claiming deduction u/s 54 of the Act. We find from the arguments of the learned counsel for the assessee as well as the learned DR that these facts are undisputed. The assessee from the very beginning has been claiming that the possession of the flat wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal held as under: "6. We have carefully gone through the facts of the case and the rival contentions. The question before us, though it is simple, raises problems of importance in metropolitan cities where there exists lot of problems for meeting basis human needs 'house'. Just to encourage assessee, Section 54 is enacted to give relief of exemption from capital gains in the case of assessee selling existing residential units and acquiring any other residential unit. This has to be done within a period of one year either before or after the date of sale of the first house property. If that is done so, capital gains arising on transfer of the first house property will be exempt to the extent of investment in the second house property as stipulated in Section 54. The flat in cities is the most common and a peculiar feature. The builder has to take plans of construction in his own name and sometimes in the names of his vendors and start construction. He invites prospective customers, enters into agreement for sale of flats proposed to be constructed by him and at times, demands the payment of price in one or more instalment. He may sometimes to finance his own constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to purchase of a house. On the contrary, allotment of the flat would certainly give the assessee certain specific obligations and rights. The manner in which the amounts are paid and the period over which they are paid may not be of much relevance. Considering the peculiar circumstances of that case, it was held that the benefit of Section 54 should be extended by taking the date of allotment and occupation as the relevant date of purchase. Following the said decision, we are inclined to hold that in this case also, the assessee has, though, entered into agreement for purchase of flat on 22-10-77, paid the money during 1977 to 1979, but the relevant date to be taken for the purpose of applying of Section 54 should be the date on which the flat was ready for occupation by the assessee. Taking that date as the date of purchase, is within the period of one year and therefore the capital gains are clearly exempt from tax applying the provisions of Section 54." 6. The learned counsel for the assessee also relied on the decision of Hon'ble Bombay High Court in the case of CIT vs. Smt. Beena K Jain 217 ITR 363 (Bom), wherein the Hon'ble Bombay High Court has taken similar view by observ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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