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TMI Blog2020 (11) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... s; and (ii) it is prejudicial to the interests of the revenue. If one of the conditions is absent- if the order of the Assessing Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue- recourse cannot be had to section 263(1) of the Act. Thus the order of the Pr. CIT u/s 263 of the Act is hereby quashed. - Decided in favour of assessee. - ITA No. 216/MUM/2020 - - - Dated:- 23-11-2020 - SHRI SAKTIJIT DEY ( JUDICIAL MEMBER ) AND SHRI N. K. PRADHAN ( ACCOUNTANT MEMBER ) Assessee by : Mr. K. Gopal, AR Revenue by : Mr. A. Mohan, DR ORDER PER N. K. PRADHAN, A. M. This is an appeal filed by the assessee. The relevant assessment year is 2015-16. The appeal is directed against the order passed by the Pr. Commissioner of Income Tax-25 Mumbai [in short Pr. CIT ] u/s 263 of the Income Tax Act 1961, (the Act ). 2. The grounds of appeal filed by the assessee read as under : 1. The Pr. CIT erred in invoking the provisions of section 263 of the Act without appreciating that the jurisdiction to invoke the provisions of section 263 of the Act is not satisfied. Thus, the order passed u/s263 is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 02.11.2015, the date of cheque for ₹ 3,50,00,000/- is shown as 04.02.2015. In the absence of bank statement on record, it is not possible to verify the correctness of the same. (c) Further as per letter dt. 24.08.2017 of M/s. Ganesh Rajendra Associates, C.As, it was submitted that as per information provided by the builder to the assessee, the occupation certificate has been received by the builder for the said building and the possession would be given of the residential flat shortly which only means that till F.Y. 2017-18 relevant to A.Y. 2018-19, the assessee has not received the possession of the property. As the new property in which capital gain is invested is not purchased/constructed before one year and within the period of three years, the capital gain claimed needs to be disallowed as the property is sold during the F.Y. 2014-15 relevant to A.Y. 2015-16 and till F.Y. 2017-18, possession is not received which is beyond three years. 3.1 The assessee filed a reply to the above notice and submitted that all the necessary details to justify the claim u/s 54 had duly been submitted before the AO. It was also explained that section 54 requires the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment of ₹ 3,50,00,000/- made through cheque No. 000124 dated 04.02.2015 drawn on HDFC Bank was also furnished to the AO and from the agreement it is apparent that the assessee had made investment within the time period prescribed u/s 54 of the Act. Stating that the assessment order is neither erroneous nor prejudicial to the interest of revenue, the Ld. counsel relies on the decision of the Hon ble Bombay High Court in CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom), CIT v. Nirav Modi [2017] 390 ITR 292 (Bom) and the decision of the Hon ble Supreme Court in Malabar Industries Co. Ltd. v. CIT [2000] 243 83 (SC). 4.1 The Ld. counsel further submits that as per section 54 of the Act, the time limit for purchasing a new residential unit is one year or two years after the date of transfer and in case of construction it is three years from the date of transfer ; in the present case since the transfer was done on 19.11.2014, the two years completed on 19.11.2016 in case of purchase and three years completed on 19.11.2017 in case of construction. Thus it is stated by him that as the assessee booked a residential flat in the under construction project, the time limit avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015, along with the allotment letter dated 05.02.2015; the said agreement contains details of payment, wherein it is mentioned that the assessee had paid a sum of ₹ 3,50,00,000/- by cheque No. 000124 dated 04.02.2015 drawn on HDFC Bank in favour of the developer. Thus the AO has made necessary inquiries/verification before making the order u/s 143(3) of the Act. 6.1 The capital gain arising on the transfer of a residential house is exempt u/s 54 in the following circumstances: i. the asset transferred is a residential house, the income of which is chargeable under the head income from house property ; ii. the asset transferred is a long-term capital asset and hence there is a long-term capital gain; iii. the asset has been transferred by an individual or a Hindu Undivided Family ; iv. the assessee has, purchased one residential house property in Indian within one year before or two years after the date on which transfer took place or constructed the same within the 3 years after the date of such transfer. If all these four conditions are satisfied then the assessee can claim the exemption under section 54. 6.2 In the instant case, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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