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TMI Blog2022 (7) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as business income. With respect to the objection of the AO that the possession of the property was not handed over and the sale has not been registered, he has given a finding that as per the provision of Section 54(2) of the Act, the important condition for claiming of exemption is the utilization of capital gain arising from the sale of old asset in the purchase of new residential house on or before the due date of filing of return of income. In case the assessee is unable to purchase the residential house before the due date of filing of return then the amount needs to be invested in Capital Gain Account Scheme and has to be utilized within the period stipulated therein. He thus while deciding the issue in favour of the assessee has given a finding that assessee has fulfilled the required conditions for claiming exemption u/s 54 of the Act, as the sale proceeds of the property sold were utilized for purchase of another property for which the entire required amount (capital gains) was invested and paid to the seller - further given a finding that the registration of the purchase transaction was also not mandatory for claiming exemption u/s 54 of the Act. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of business income and not income from long term capital gains as claimed by the assessee HUF. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made by the AO to the tune of Rs.3,00,14,134/- without considering the fact that the notice issued u/s 133(6) of the Act to M/s. AA Walker Estate Private Chandiok is one of the Directors remained uncomplied and no cognizance of this fact was taken even during the appellate proceedings. 4. On the facts and circumstances of the case, Ld CIT(A) has erred in deleting the addition made by the AO to the tune of Rs.3,00,14,134/- inspite of the fact that the assessee had declared rental income from the six flats (original asset) under the head income from house property from A.Y. 2009-10 onwards only, whereas the occupation certificate was obtained by the assessee HUF on 06.05.2005. 4. Before us, at the outset, Learned DR submitted that though the Revenue has raised various grounds but the sole controversy is with respect to the deletion of addition of Rs.3,00,14,134/- that was made by AO but deleted by CIT(A). 5. During the course of assessment proceedings, AO noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only for earning income or profit. Further, that the payment for investments/purchase of new property (Asset) was made to M/s. A.A. Walker Estate Pvt. Ltd. in which the Karta's Son (Mr. Ashwin Chandet Chandiok) was director and that neither possession of the new house property was handed over nor the registry of the new property was done. It was also stated that notice u/s. 133(6) dated 22.01.2016 which was sent to M/s. A.A. Walker Estate Pvt. Ltd, remained uncomplied with. Accordingly, the AO treated the difference in sale and cost of acquisition of property (original asset) (Rs.4,10,00,000 - Rs. 1,09,85,866) i.e Rs.3,00,14,134/- as Business Income. 4.6 It is noted that the objection that it was not for self use is not a pre-condition as far as provisions of Section 54 of the Act are concerned. What is relevant is whether the asset was in the nature of stock in trade or an investment. Considering the long holding period of the property from 1986 till 2012 (28 years), it cannot be treated as stock in trade as there would be no commercial prudence in holding on to 2 plots of land for nearly 3 decades. It was also not established by the AO that the transaction was adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase transaction is also not mandatory for claiming exemption u/s 54 of the Act as has been held by various higher Judicial Authorities. In fact the appellant was asked to furnish the proof of investment by way of receipts issued by the seller (M/s. A.A. Walker Estate Pvt. Ltd.). The appellant has produced a receipt dated 19.04.2016 for sum of Rs.6,74,15,000/- from the appellant as an initial deposits, towards allotment purchase of four Bedroom Villa at Baale Private Villas and Spa, Arpora, North Goa, GOA-403516 received between 20.01.2012 to 18.04.2016 by way of RTGS. A copy of letter dated 18.10.2016 by the seller has been issued to confirm soft possession of Villa no. B-3 referring to a completion order dated 10.10.2016 (reference no.TPBZ/2964/ARP/JCP-16/2930 issued by office of the Sr. Town Planner, Town and Company Planning Department, North Goa district office, 302, Govt. Building Complex, Mapusa-Goa with reference to the above property. Hence, it is satisfactorily established that the investment in the new asset had been made as per provisions of Section 54(2) of the Act. Accordingly, the addition of Rs.3,00,14,134/- under the head Business Income is hereby deleted and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period stipulated therein. He thus while deciding the issue in favour of the assessee has given a finding that assessee has fulfilled the required conditions for claiming exemption u/s 54 of the Act, as the sale proceeds of the property sold were utilized for purchase of another property for which the entire required amount (capital gains) was invested and paid to the seller. He has further noted that the purchase made from the company in which the Karta s son was a director was apparently not a violation as far as eligibility of section 54 is concerned. He has further given a finding that the registration of the purchase transaction was also not mandatory for claiming exemption u/s 54 of the Act. He has further noted that assessee had produced the proof of investment by producing the receipts issued by the seller towards the purchase of the flats, assessee had also produced the copy of the letter issued by the seller to confirm the soft possession of the property. Considering the aforesaid facts, he deleted the addition made by AO. 11. Before us, Learned DR has not pointed any fallacy in the findings of CIT(A). We therefore find no reason to interfere in the order of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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