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TMI Blog2021 (10) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the view that the benefit available under section 54 of the Act cannot be denied to the assessee. AO during the course of assessment proceedings has conducted inquiries with respect to the claim of the assessee under section 54 as has framed the assessment under section 143(3) of the Act after necessary verification and application of mind. Therefore, it cannot be said that the order passed by the AO is erroneous insofar prejudicial to the interest of revenue on account of non-verification of the claim of the assessee under section 54 of the Act during the assessment proceedings - Decided in favour of assessee. - ITA No. 31/AHD/2021 (Asstt. Year: 2015-2016) - - - Dated:- 17-9-2021 - SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER Assessee by: Shri Chetan Agarwal, A.R Revenue by: Shri Vinod Tanwani, CIT.D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Principal Commissioner of Income Tax, Ahmedabad, dated 12/03/2021 arising in the matter of assessment order passed under s. 263 of the Income Tax Act, 1961 (here-in-afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143(3) of the Act as erroneous insofar prejudicial to the interest of revenue by issuing or show cause notice dated 3 February 2020. 3.2 The assessee in response to such show cause notice made a reply on 3 March 2020 and 13 March 2020 by contending that the provisions of section 54 of the Act requires purchase of the property/ construction of a new property within the specified time which was done vide agreement dated 31 March 2015. As such the provisions of section 54 of the Act does not require that the ownership of the new property should be registered in the name of the assessee or the possession should be held by the assessee. 3.3 The assessee also contended that the assessment was framed by the AO after conducting necessary enquiries and after due application of mind. Thus, the AO has allowed the exemption under section 54 of the Act under the provisions of law. 3.4 Furthermore, the AO has taken one of the possible view which is permissible under the provisions of law by granting the exemption under section 54 of the Act. In case the learned PCIT does not agree with the view adopted/taken by the AO, but the same view cannot be held as erroneous insofar prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k running from pages 1 to 165 and contended that the purchase of the property is sufficient enough for claiming the exemption under section 54 of the Act. As per the learned AR the property was purchased in pursuance to the agreement to sale dated 31 March 2015 which satisfied the conditions provided under section 54 of the Act. 5.1 The learned AR further contended that the AO has allowed the exemption under section 54 of the Act after carrying out necessary verification and applying his mind. For this purpose, the learned AR drew our attention on the notices issued under section 142(1) of the Act and the replies made by the assessee in response to such notices which are placed in the paper book. 6. On the other hand the learned DR contended that the possession of the property was not handed over to the assessee. Likewise, the conditions imposed in the agreement to sale dated 31st March 2015 i.e. conveyance deed shall be upon realizing the balance amount of ₹12 lakhs, were not satisfied in the given facts and circumstances. Accordingly, the assessee cannot be granted the benefit of exemption under section 54 of the Act. The learned DR vehemently supported the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, one residential house in India], 46 then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- 7.2 The above provision requires that the amount of capital gain should be invested in a house either by way of purchase or construction of the house. The\ word purchase has been interpreted in the case of CIT v. Mrs. Shakuntala Devi [2016] 389 ITR 366/ 75 taxmann.com 222 by the Hon ble Karnataka High Court by observing that the date of agreement to purchase should be taken as the date of purchase of the new property. As such if assessee has entered into the agreement to purchase and invested the capital gain, it is immaterial that part of the consideration is yet to be paid or registration has not been completed. Deduction u/s 54 should be allowed. 7.3 Likewise, the Karnataka High Court in the case of Pr. CIT v. C. Gopalaswamy [2016] 384 ITR 307/[2017] 81 taxmann.com 78 has observed that where the assessee has entered into an agreement with a builder and invested the capital gain for purchase of a residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO during the course of assessment proceedings has conducted inquiries with respect to the claim of the assessee under section 54 of the Act. This fact can be verified from the notice issued by the AO under section 142(1) of the Act on various dates. The relevant extract of the notices is reproduced below: a. Notice Dated 8-3-2017 File No.81 Date: 08/03/2017 PAN: ADAPA3016D To, Shri karan Rajebndrakumar Arya, 802, Saffron Building, Panchavati, Ambawadi, Ahmedabad-380015. Sir, Sub: Scrutiny asst. in your case for A.Y.2015016, notice u/s.142(1) of the Act, Reg Please refer to the notice u/s.143(2) dated 19/09/2016. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 10. Please furnish copy of registered deed of immovable property purchased Along with source of investment with corroborating documentary evidences. 11. Please furnish copy of purchase and sale deeds of immovable property sold during the year and computation of capital gains. 12. Please furnish details along with documentary evidence in respect of deduction Claimed u/s. 54B, 54C, 54D, 54G and 54GA. b. Notice Dated 24-7-2017 Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to above mentioned notice, we submit the following detail as called for by your good self:- 1. Since the assessee Karan Arya received the property under Will/Gift from his Grandmother, therefore the cost of Property to the Grandmother was considered as purchase price of the property by the Assessee. Document in respect of purchase of the property fay the Grandmother of the assessee as well as title to the assessee are attached herewith for your kind consideration. 2. The assessee purchased a flat for which he claimed deduction under section 54. Document in respect of the purchase of the flat along with the source of payment copy of bank statement is attached herewith. b. Reply dated 18-09-2017 However-assessee has claimed exemption under section 54 of Income Tax Act, 1961 in respect of tax on capital gain on sale of immovable property. As per section 54 there is no restriction on owning more than one property for claiming the said exemption. The text of section 54 of Income Tax Act, 1961 is produced as under: c. Reply dated 15-12-2017 Benefit of section 54 of Income Tax Act is allowed on the basis of investment in new house property. Assesse has made i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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