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TMI Blog2018 (12) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be made prior to the due date of filing of return u/s 139. Hence when the new residential house was neither acquired or constructed within the time period prescribed under section 54(1) of the Act, then the assessee is not eligible for deduction under section 54 and shifting of the assessment year for making the addition on this account would not achieve any purpose rather it will defeat the purpose of provisions of section 54 - AO was justified in not allowing deduction u/s 54, hence, the action of the AO is hereby upheld - decided against assessee. - ITA No. 975/JP/2016 - - - Dated:- 31-10-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Siddharth Ranka (Advocate) For The Revenue : Shri A.S. Nehra (JCIT) ORDER PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 4th August, 2016 of ld. CIT (A)-1, Jaipur for the assessment year 2011-12. The assessee has raised the following grounds :- 1. That on the facts and in the circumstances of the case, the ld. Lower authorities grossly erred in computing Long Term Capital Gain at ₹ 7,25,681/- instead of ₹ 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure on improvement at ₹ 1,07,505/-. Since the assessee did not furnish any evidence, accordingly, the AO has denied the claim in para 5 as under :- 5. The assessee was asked to furnish his reply, if any, on this by 10.01.2014. However, till the passing of assessment order, assessee did not furnish any supporting evidence with regard to indexed cost of construction claimed at ₹ 1,07,505/- nor said anything in this regard. Therefore, it has been established on record that the cost of construction and indexed cost claimed accordingly has been done wrongly. In these circumstances, the Long Term Capital Gain on assessee s share of sale consideration is re-worked out as under :- Sale consideration ₹ 35,00,000/- Less : Indexed cost of acquisition as Claimed by the assessee ₹ 27,74,319/- Long Term Capital Gain ₹ 7,25,681/- Though the assessee challenged the said action of the AO, however, even during the proceedings before the ld. CIT (A), the assessee did not file any documentary evidence and consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation prescribed under section 54 of the IT Act. 7. Before us, the ld. A/R of the assessee has submitted that there is no dispute that the assessee has invested ₹ 10,00,000/- as an advance for purchase of new residential house being flat in Mumbai to be developed by M/s. Ornate Spaces Pvt. Ltd. then the conditions as stipulated in section 54 of the Act are satisfied. He has further contended that if there is a delay on the part of the developer to develop the property and handover the flat to the assessee, the same cannot be a ground for denial of deduction under section 54 of the Act. The ld. A/R has referred to the provisions of section 54(2) of the Act and submitted that once the assessee has made the payment of ₹ 10,00,000/-, then even if the said flat was not acquired within the period prescribed under section 54, the addition cannot be made for the year under consideration but it has to be made only in the year in which the time period for acquiring the new residential house expires. In support of his contention, he has relied upon the following decisions :- Bhavna Cuccria vs. ITO (2017) 82 taxmann.com 306 (ITAT Chandigarh) R.S. Sharma vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lat within the time period as prescribed under section 54 of the Act. The AO has conducted the enquiry and found that the builder presented the plans for approval only in the month of October, 2013 and consequently the plans were expected to be approved only by the month of May, 2014 as responded by the said builder to the notice issued the AO. Hence the AO held that the assessee has failed to comply with the condition of acquiring the new residential house within the period of limitation provided under section 54 of the Act. There is no quarrel that if the assessee has made an investment for acquisition of the new residential house within the prescribed period as per section 54 of the Act, then if there is a delay in the actual possession to be handed over to the assessee and the said delay is not attributable to the assessee then having regard to the satisfaction of the substantial and primary condition of investment the deduction under section 54 cannot be disallowed. However, in the case in hand, the assessee has given an advance of ₹ 10,00,000/- and that too prior to the sale of existing immovable property. It is not the case of the assessee that at the time of making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso refers to the situation where the assessee has made a deposit in the Capital Gain Account Scheme as notified by the Government before the due date of filing of the return of income under section 139(1) and further if the assessee not utilized wholly or partly the said amount deposited in the Capital Gain Account for purchase or construction of new asset within the period specified under section 54(1) of the Act, then the amount not so utilized shall be charged to Capital Gain tax in the previous year in which the period of 3 years from the date of transfer of original asset expires. Therefore, once the assessee satisfies the condition of depositing the amount in the Capital Gain Account Scheme, only then the proviso to section 54(2) can be pressed into service. In case the assessee has not deposited the amount in the Capital Gain Account Scheme, then the investment is required to be made prior to the due date of filing of return under section 139 of the Act. Hence when the new residential house was neither acquired or constructed within the time period prescribed under section 54(1) of the Act, then the assessee is not eligible for deduction under section 54 of the Act and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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