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TMI Blog2022 (2) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Amarjit Singh (JM) For the Assessee : Satyaprakash Singh For the Department : S.N.Kabra ORDER PER SHAMIM YAHYA (AM) :- This appeal by the revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-34 dated 19.09.2019 and pertains to assessment year 2015-16. 2. Grounds of appeal read as under:- 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in interpreting the provisions of section 54 of the Income Tax Act 1961 thereby allowing the claim of the assesee made under section 54 of the Act. 2. On the facts and in the circumstances of the case and in law the Ld CIT (A) erred in interpreting the legislative intent behind the plain reading of the section implies that the assessee should have purchased or within three years from the year in which the capital gains arise as is was what the legislative intent would read . 3. On the facts and in the circumstances of the case and in law, the CIT{A) erred in not following the legislative intent , which has to be read as it is and has to be applied as it is meant rather than liberally. 4. On the facts and in the circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance purchases consideration paid before the date of agreement of purchase of new assets date 19.12.2014 should be considered as made on 19.12.2014 being appropriation of advance. b) The new asset (purchased under construction) is completed in June 2017 but demand of final payment on possession is not made by builder upon non receipt of occupation certificate, should be treated as sufficient compliance of provisions of section 54 c) Exemption provisions i.e. section 54 is beneficial in nature should be construed liberally. 5. The AO was not satisfied, he held as under:- i. Even though the appellant had submitted a letter from Developer stating that the construction is complete, there is no specific date mentioned in the letter; ii. The letter of the Developer is contradictory to the fact that the Developer itself hasupdated status on RERA site on 02.11.2017 as On-going project and revised date of completion is mentioned as 31.08.2018; iii The assessee is yet to make the final payment in respect of the investment transaction. iv Occupation Certificate is not yet received. v The assessee has not got possession of the property. ,' vi The circular no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under; 1. Girish L Ragha. Panaji vs Department Of Income Tax [ITA NO. 116/PNJ/2014 -Tax Appeal no.66 of 2015 Bombay High Court] Section 54 of the Income-tax Act, 1961 - Capital gains - Profit on sale of property used for residence (Time period for Investment) - Assessee sold residential property - He entered into an agreement with a builder for purchase of a flat and invested sale proceeds in it within prescribed period of two years - He was required to get house and occupancy certificate within two years - After purchase of property, there was a civil suit filed by other parties and assessee could not complete construction and licence for constructing house was accordingly issued after 4 years - Whether since assessee had invested money within stipulated period and delay in obtaining occupancy certificate was beyond control of assessee, assessee would be entitled for deduction under section 54 - Held, yes [Para 3] [In favour of assessee]. Kishore H. Galaiyas V/s ITO f20121 24 taxmann.com 11 (Mum.) (Page... to page... of the paper book) If the 'assessee -had made investment within period of three years, exemption under section 54 could not be denied for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2 The old flat had been sold on 7.3.2006 and therefore the assessee was required to construct a new residential house by 6.3.2009. The purpose of section 54 is to allow exemption to the assessee of long term capital gain arising from sale of residential house if the capital gain is invested in construction of new residential house within a period of three years from the date of transfer apd, therefore, in case, the assessee had invested the capital gains in construction of a new residential house within a period of three years, this should be treated as sufficient compliance of the provisions, of the flat It is not necessary that the possession of the flat should also be taken within the period of three years. The taking of the possession may be delayed because of many factors not under the control of the assessee due to default on the part of the builder and therefore merely because the possession had not been taken within the period of three years, the exemption cannot be denied. This aspect had also been considered by the Hon'ble High Court of Bombay in the case of Mrs. Hilla J.B.Wadia (supra) in which the Hon'ble High Court held that in case the assessee entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lower authorities. As a matter of passing, we may also mention here the reliance placed by Ld. Representative of the assessee on the decision of our Co- ordinate Bench in the case of Shri KhemchandFagwani vs. ITO, ITA No.7876/M/10 order dated 10/09/2014, wherein also claim o1 exemption under section 54 of the Act was allowed under similar circumstances. In the light of the precedent, we find no reason to deny tin under section 54 of the Act. We direct accordingly. 4. Commissioner Of Income Tax vs Mrs. Hilla J.B. Wadia [ Bombay High Court] For the reasons which we have set out above, in our view, the present case falls within the provisions of s. 54 in view of the fact that the assessee had acquired substantial domain over the flat in question under the agreement with the Society coupled with the payment of almost the entire cost of construction within a-period of two years. 4.6 Further, the appellant has also relied on the decision of the Hon ble ITAT, Mumbai dated 12.03.2019 (ITA No.6814/Mum/20l6) in the case of Rajendra Pal Verma vs. ACIT 35(2), Mumbai wherein the relevant issues are decided in favour of the appellant. 4.7 In the instant case, I find that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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