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TMI Blog2019 (9) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) has erred in holding that the Appellant is not entitled for deduction u/s. 54F of the Act on the basis of an unregistered sale agreement dtd: 30-06-2012 and the same cannot be considered as transfer since the possession of the property was not obtained without appreciating the submission that a sum of Rs. 1,00,00,000/- was appropriated before the due date for filing the return of income as required u/s. 139(1) of the Act. Same as above 4. The Ld. CIT(A) has erred in rejecting the Appellant's claim for deduction u/s. 54F of the Act without appreciating the fact that the intended purchase of property was mortgaged to Bharath Co-operative Bank Ltd and the redemption of the mortgaged was beyond the reach and control of the Appellant. Same as above 5. The Ld. CIT(A) has erred in holding that the Appellant was not entitled for deduction u/s. 54F of the Act without appreciating the fact that the Mortgagee Bank has issued Mortgage Discharge Certificate on 07-06-2016 and thereafter a Registered Sale Deed was immediately executed on 24-06-2016. Same as above 6. The Ld. CIT(A) has erred in not appreciating the delay in purchasing the property since the delay was bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of the assessee. 4. We have considered the rival submissions. We find that in the present case, this is the only objection of the department that the execution of sale deed and possession by the assessee is much beyond the stipulated period. In this regard, we reproduce para nos. 4.1 to 4.9 of the order of ld. CIT(A) for ready reference. "4. FINDINGS 4.1 I have considered the assessment order, the statement of facts and grounds of appeal filed by the appellant as well as the written submissions made After considering the same, the following findings are given. 4.2 Grounds of appeal nos.1 and 5, being general in nature, no specific adjudication is called for. 4.3 Grounds of appeal nos.2, 3 and 4 relate to the disallowance made by the AO of the deduction of Rs. 70,84,063/- claimed by the appellant u/s 54F on the grounds that the investment in the new asset was beyond the time limit permitted under the section. In the assessment proceedings, the AR has also conceded that the purchase of the new asset was beyond the time limit prescribed u/s 54F. The relevant portion of the submission dated 28/06/2017 is extracted below: "The Sale Consideration of the Original Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stering the sale deed was because the property was mortgaged to the bank. The relevant portions of the sale agreement dated 30/06/2012 are reproduced below: "9. whereas the Vendor and the purchaser have mutually agreed that the Execution of the Sale. Deed and its Registration shall be made after redemption of the schedule property from the Mortgagee Bank as soon as the borrowed amount was discharged by the Vendor to the Mortgagee Bank. ........... 11. Whereas the Vendor has handed over the copies of this Documents of the schedule property to the purchaser and the Purchaser Acknowledged the said documents today the 30th June 2012 and the Vendor has assured that the Original documents of the Schedule property shall be delivered after obtaining the Original Documents from the Mortgagee Bank (The Bharath Co-operative Bank Limited) after redemption of the Registered Mortgage Deed dt: 09-10-2006 payment of the entire amount of loan borrowed from the Mortgagee Bank. ............. 12. Whereas the Vendor has assured the Purchaser that he would get the Schedule Property redeemed from the Mortgagee Bank as early as possible and thereafter he has assured that the Registered Sale Deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of a contract is the taking over of possession of the property by the transferee. In the instant case, as evident from the terms of the contract, no possession of the property was given to the appellant by the vendor nor has the appellant adduced any evidence that she had taken or was in possession of the said property. It was only when the sale deed was registered on 24/06/2016 that the transfer took place. The relevant paras of the above sale deed are reproduced below: "13. The Vendor has today relinquished all his rights, title, interest claims whatsoever in respect of the Schedule Property in favour of the Purchaser and the Purchaser herein afterwards shall possess and enjoy the Schedule Property as an absolute owner with the power of alienation and thereby paying all the future taxes, cesses ets., to the Competent Government authorities concerned and from this day onwards the Vendor or his Successors have no manner of any rights, title, interest and claims whatsoever in respect of the Schedule Property. ........... 16. The Vendor has this day delivered the peaceful and vacant possession of the Schedule Property along with the relevant original document to the Purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence that she had been given possession of the new property or that she had occupied the same. In CIT and Mr. vs Smt. B.S. Shanthakumari in ITA No.165/2014 , the Ho'ble High Court of Karnataka had placed reliance on its judgment in CIT and Anr. vs Sambandham Uday Kumar and allowed the claim of the assessee. Thus it is clear that the appellant's reliance on the above case laws is misplaced 4.9 In light of the above discussion, I uphold the disallowance made by the AO of the deduction claimed u/s 54F of Rs. 70,84,063/-." 5. From the above paras reproduced from the order of ld. CIT(A), it is seen that in para 4.7 of the order, this is the only objection noted by ld. CIT(A) that purchase of new asset was completed only on 24.06.2016 which is well beyond the time stipulated for claiming deduction u/s. 54F. In para 4.8 of his order, he has referred to certain judgments of Hon'ble Karnataka High Court. In the light of this factual position, we examine the applicability of the judgment of Hon'ble Karnataka High Court rendered in the case of CIT & Another Vs. Sambandam Udaykumar (supra). Para no. 11 of this judgment of Hon'ble Karnataka High Court is relevant and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee from the said benefit." 6. From the above para of the judgment of Hon'ble Karnataka High Court reproduced above, it is seen that as per this judgment of Hon'ble Karnataka High Court, it is held that once it is demonstrated that the consideration received on transfer has been invested either in purchasing a residential house or in construction of a residential house even though the transactions are not complete in all respects and as required under the law, that would not disentitle the assessee from the said benefit. In the present case, this is not in dispute that the assessee has made investment of Rs. 1 Crore for purchase of residential house and only the registered deed was executed after more than 4 years and the possession was also taken after more than 4 years but as per the judgment of Hon'ble Karnataka High Court, the assessee will not disentitled from claiming deduction u/s. 54F of the IT Act. Respectfully following this judgment of Hon'ble Karnataka High Court, we hold that assessee should be allowed deduction u/s. 54F to the extent of Rs. 70,84,063/- as claimed by the assessee because investment in purchase of a new residential house made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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