9911796707
TMI Blog2019 (8) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore. The memo of understanding/ writing was also executed between builder and assessee on 07.01.2011. The payment was made in installment and possession of the same was to be delivered on 30th June, 2013 as per said writing. Thus, the assessee complied with all the requirement u/s 54 of IT Act and was entitled to exemption in the said section. The authority below was not justified in not allowing the exemption u/s 54 of Income tax Act to the assessee. 3. Because on account of unforeseen reasons beyond control of the assessee and builder, the NoC of the building allotted was cancelled by the HAL by the notice dtd. 16.08.13. The builder filed a writ petition no. 37571 before Hon'ble Karnataka High Court to set aside the cancellation of the NoC by the HAL. The Hon'ble High Court directed the Chalet Hotel Pvt. Ltd not to carry out construction above 40 mtr. And the construction already made was subject to decision of the writ petition. On account of the Court order, construction of building beyond 10th floor was stayed by the Hon'ble High Court. Thereafter the company by letter dtd. 25.04.14 made a mitigation program requesting the customers either to exit from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a residential flat bearing Flat No. E- 1601, 16th Floor in the building, Vivarea, at Koramangla Industrial Layout, Bangalore. 2.2 As per the case of the assessee, a Memorandum of Understanding (MOU) in respect of purchase of flat was entered between the assessee and the builder, Chalet Hotels Limited on 07.01.2011. However, the first payment of Rs. 26 lakhs was made on 01.12.2010. The assessee had made various payments over a period 01.12.2010 to 05.10.2011 for a total amount of Rs. 1.80 crores for the purchase of flat No. E- 1601, 16th Floor, Vivarea, at Koramangla Industrial Layout, Bangalore. As per the MOU, the builder was to deliver the possession of the flat by 30.07.2013. 2.3 After entering into the said agreement and after making the payments of Rs. 1,80,44,590/-, the assessee learnt that Hindustan Aeronautical Ltd. (HAL) earlier had issued a No Objection Certificate (NOC) on 28.10.2010. However, the said NOC was cancelled by the HAL vide their communication dated 16.08.2011. 2.4 Feeling aggrieved by the cancellation of NOC granted by HAL, the builder, namely, Chalet Hotels Pvt. Ltd. had preferred a writ petition before the Karnataka High Court at Bangalore vide W.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has to have the residential house constructed within a period of three years from the date of transfer which in the assessee's case falls on 15.04.2014. However, as observed, the appellant though upto the date of filing his return of income tax, has made the payment of Rs. 1,80,44,590/- to the builder but he has neither got the possession of the residential house nor he had got registered any agreement to sell. In this regard, I have gone through the CBDT Circular Nos.471 and 672 dated 15.10.1986 and 16.12.1993 which have been relied upon by the Ld.AR for the appellant. 7.1 The assessee can derive no benefit from the provisions of circular No. 672 dated 16th December, 1993 in as much as the scheme contemplated in paragraph 2 of circular no. 471 is not available to the appellant. The appellant has not filed any allotment letter during appeal proceedings which confer title until the agreement for sale is registered. In the present case, however, it is not in dispute that no agreement for sale is registered. In the present case, however, it is not at dispute that the no agreement for sale was entered into within the period of three year from the date of sale of old r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of section 54F of Act. Thus, in view of the foregoing, the AO's order in denying assessee's claim of exemption u/s 54F is sustained and the addition of Rs. 91,95,570/- made under head capital gain is confirmed. As a result, all the grounds taken by assessee are dismissed." Now, the assessee is in appeal before us on the grounds stated herein above. 4. Firstly, it was submitted by the assessee that after the long term capital gain arose in favour of the assessee, the assessee had invested whole of the long-term capital gain in purchase of residential flat pursuant to MOU entered between the assessee and the builder. There was no mistake on the part of the assessee for investing in the said tenement where specific flat was allotted to the assessee by the builder. It was submitted that the MOU may not be nomenclatured as agreement to sale or allotment letter, but all the pre-requisite of a binding agreement and allotment of flats were there in the MOU dated 07.01.2011. It was further submitted that the said MOU was legally enforceable and on account of interdiction by the Karnataka High Court, the possession of the flat was not handed over to the assessee by the bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MOU - PLAN NOT IN EXISTENCE. (c) The said Residential building Tower E is estimated to be completed by you by 30th June, 2013 (subject to the modified plans in respect of the amendments or modifications referred in clause 2(B)(c) being sanctioned by the concerned authorities1 subject to FORCE MAJEURE. Page 11 DOES NOT PURPORT TO BE AN AGREEMENT FOR SALE. (a) Possession of the captioned Apartment shall not be transferred and is not being transferred nor is it being agreed to be transferred to me/us on the basis of this writing. I/We further confirm that possession of the captioned Apartment shall be handed over to me/us only as provided in the proposed Agreement for Sale and simultaneous with the execution of the Deed of Apartment. ONLY AN OPTION - TO EXERCISE THE RIGHT. (b) This writing is not and does not purport to be and shall not be deemed to be an "Agreement for Sale" in as much as the purpose of this writing/arrangement contemplated herein is, to reserve the said premises for me/us as and by way of an option to be exercised by me/us exclusively prior to entering into and executing the Agreement for sale, as envisaged herein. Consequently, I/we shall unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision rendered in the case of Banaria Engineering Ltd. vs. ITO and has submitted that the allotment letter being not a titled document, cannot be acted. In the alternative, it was submitted that the MOU is neither a titled document nor sale agreement in favour of the assessee. It was submitted that the assessee is not entitled to any relief from this Tribunal. 7. We have heard the rival contentions and perused the record. The undisputed facts before us are as under : (i). The long term capital gain of Rs. 91,95,570/- was accrued to the assessee on account of sale of residential plot. (ii). It is also not in dispute that the assessee had entered into a MOU on 07.01.2011 with the builder Chalet Hotels Ltd. (iii). It is also not in dispute that by MOU, the assessee was given flat No. E- 1601, 16th Floor, Vivarea, at Koramangla Industrial Layout, Bangalore. (iv). It is also not disputed that pursuant to MOU, the assessee made huge investment of Rs. 1.80 crores in the said residential flat. (v). The NOC initially granted by HAL was recalled by it by subsequent letter dated 16.08.2013. (vi). The Karnataka High Court has granted stay (as recorded by the AO) for not al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lder failed to adhere to the timeline given in the MOU. The Assessing Officer has denied the benefit of section 54F. It was not the case of the Assessing Officer that the assessee has not booked the flat with the builder. It is also not the case of the Assessing Officer that he has not made the payment to the builder in time. It is also not the case of the Revenue that there was no stay by the High Court and the matter is not sub-judice before the High Court. The only reason given by the AO is that in case the writ petition is disallowed and the relief sought is declined then the assessee would not be entitled to flat. In our view what is required to be seen is intention of the assessee at the time of making the investment in the building project. If there was no inhibition or embargo at the time of investment, at that time the assessee was entitled to the title of the residential unit, then the assessee is entitled to benefit of section 54F. In our view the assessee cannot be denied benefit of section 54F on account of delay by the builder or on account of the reason for delay in allotment/construction of the flat, which are not attributable to the assessee. Undisputedly, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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