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TMI Blog2019 (6) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant had established its bonafide. 4. That, on the facts and in the circumstances of the case the Learned AO erred in ignoring the fact that the possession and title deeds of the Okhla property was handed over to the buyer on 5.10.2013 itself in part performance of the Moll, while the purchase deed for the Lucknow house was entered on 10.10.2013. 5. That, on the facts and in the circumstances of the case the Learned AO erred in ignoring the fact that the house property purchased at Lucknow required additional construction for which permission was sought from the local authorities on 23.12.2013, and the construction was completed on 30.03.2015. 6. That, on the facts and in the circumstances of the case, the Learned AO erred in holding that the investment in the house at Lucknow was made beyond the period permissible under Section 54F. 7. That the Learned AO erred in initiating penalty proceeding U/s 271(l)(c) even though the Appellant had disclosed all material facts and furnished all information sought by the AO. 3. The assessee filed the return of income on 08.09.2015 declaring total income of Rs. 42,63,600/-. The case was selected for scrutiny under CASS. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 31.05.2013 and 20.08.2013) 05.10.2013 Conversion of leasehold title to freehold title by DSIDC 19.03.2015 Sale deed for Okhla property registered 26.03.2015 (iii) Purchase and construction of new residential house at Lucknow: Event Date/Amount Purchase deed for Lucknow property executed on 10.10.2013 Purchase consideration paid by Appellant: (Rs. 10,00,000/- on 01.08.2013, Rs. 69,20,000/- on 7/10/2013, and TDS Rs. 80,000/- on 10.10.2013) 80,00,000/- Total Purchase consideration including Stamp duty & expenses 87,23,200/- Expenditure on construction of additional floor between 23.12.2013 and 30.03.2015 21,35,460/- Total investment in new property 1,08,58,660/- Relief claimed u/s 54F (rejected by AO) 1,08,58,660/- The Ld. AR submitted that construction of the new residence at Lucknow by the assessee is within the time permitted u/s 54F(1) of the Act. The Ld. AR submitted that Section 54F(1) gives two options to an assessee, namely, to: * Purchase a new residential house within a period of one year before or two years after the date on which the transfer took; OR * Construct a residential house in India within a period of three years after that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also purchase of Lucknow property on 10.10.2013 and construction of an additional floor thereupon till 30.03.2015 was within the time limit permitted u/s 54F(1) read with Section 2(47)(v). 6. The Ld. DR submitted that the Assessing Officer in assessment order observed that during the year under consideration the assessee has shown the gross total income of Rs. 42,63,000/- comprising of income from capital gains at Rs. 27,25,191/- at income from other sources at Rs. 15,38,409/-. Further, the assessee claimed deduction under Chapter VIA of the Act at Rs. 27,880/- and declared total income at Rs. 42,63,600/-. The assessee sold an industrial property at Okhla Industrial Area for Rs. 2,60,000/- vide sale deed executed on 26/3/2015. The assessee claimed the deduction u/s 54F for capital gain received on sale of property. A new residential property was purchased at Lucknow for Rs. 87,23,200/- vide sale deed executed on 10/10/2013. The cost of improvement incurred for the Lucknow Property amounts to Rs. 2,35,460/-. The Ld. DR further submitted that the original capital asset was transferred through a registered sale deed only on 26/5/2015. The conveyance deed was executed on 21/3/2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is within the period of three years from the date on sale deed. It is further contended that the appellant had purchased a residential house on 10.10.2013 for Rs. 87,23,200/- and had subsequently, constructed a floor by making an investment of Rs. 21,35,460/- and the said construction is claimed to be completed on 30.03.2015. " 5.3.1. On perusal of the documents furnished by the AR, it is observed that the appellant had entered into an MOU for sale of property on 31.05.2013 as per which the appellant was required to get the leasehold property converted into freehold before transfer of the rights in property to the buyer. Subsequently, on 05.10.2013, the appellant had handed over the physical possession to the buyer with the condition that the balance payment of Rs. 85 lakhs was to be paid to the appellant at the time of registration of the sale deed and vide this document (and as per the terms of MOU), the buyer was entitled to use/lease the said property. However, it is to be observed that complete rights in the property were not transferred to the buyer as the buyer was entitled to only use/lease the said property but was not given the right to transfer/ sell the property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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