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TMI Blog2022 (9) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the CIT(Appeals), who in our considered view had rightly vacated the disallowance of the assessee s claim for deduction u/s.54F uphold his order to the said extent. Thus, the Grounds of appeal No.(s) 1 to 3 raised by the revenue are dismissed in terms of our aforesaid observations. Whether CIT(Appeals) was right in allowing the assessee s claim of indexed cost of improvement, despite the fact that the same was not substantiated on the basis of supporting documentary evidence by the assessee before the lower authorities? - We finding no infirmity in the same are inclined to subscribe to the same. CIT(Appeals) in the backdrop of the ground realties i.e the purchase of sand, cement and incurring of labour expenses form part of an unorganized sector, had thus rightly observed that the fact that the assessee could not have obtained the purchase bills/receipts qua the incurring of the expenses could not be ruled out. As rightly observed by him that a conjoint perusal of the facts attending to the case of the assessee, viz. (i) that the assessee had vide a registered sale deed sold a double storied house; and (ii) that now when the assessee had placed on record the purchase b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act? 4. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the disallowance of cost of improvement amounting to Rs.18,77,602/- out of total amount claimed at Rs. 31,62,386/- ignoring the fact that the assessee failed to produce satisfactory evidence in support of his claim? 5. Any other ground as may be raised during the course of appeal. 2. Succinctly stated, the assessee had e-filed his return of income for the assessment year 2015-16 on 29.03.2016 declaring an income of Rs.23,75,550/-. Subsequently, the case of the assessee was selected for scrutiny assessment under CASS for two-fold reasons, viz. (i) large agricultural income; and (ii) large deductions claimed u/ss. 54B, 54C, 54D, 54G 54GA of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had in his return of income disclosed Long term capital gain (LTCG) of Rs,15,92,998/- (after claim of deduction u/s 54F of Rs. 2,59,08,966/-), as under: On being queried as regards the deduction that was claimed u/s.54F of the Act of Rs.2,59,08,966/-, it was the claim of the assessee that the same was with respect to purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Commissioner of Income Tax Vs. Balbir Singh Maini (2017) 398 ITR 531 (SC). 4. Also, it was observed by the A.O that the assessee while computing the capital gain on the transfer of the aforesaid property had claimed deduction of indexed cost of improvement of Rs.31,62,386/-. It was observed by the A.O that the assesee had over the years claimed to have incurred expenses towards improvement of the property in that was sold, viz. (i). A.Y. 2010-11: Rs.11,14,316/-; (ii).A.Y.2011-12: Rs.2,56,570/-; and (iii). A.Y. 2012-13 : Rs.3,60,181/-. On being called upon by the AO to justify the authenticity of his claim of having incurred the aforesaid expenditure the assessee filed with him bills of payment of Rs.8,52,584/-. On a perusal of the details filed by the assessee, it was observed by the A.O that the same comprised of, viz. (i) expenses incurred towards purchase of iron and steel in A.Y.2010-11: Rs.5,46,636/-; and (ii) expenditure incurred towards purchase of iron and steel in A.Y.2012-13: Rs. 3,05,948/-. The AO considering the fact that the assessee had substantiated his aforesaid claim of expenditure incurred on the improvement of the property in question only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls). The CIT(Appeals) after deliberating on the contentions advanced by the assessee was inclined to concur with the same. As regards the assessee s claim for deduction u/s.54F of the Act, it was observed by the CIT(Appeals) that the assessee had admittedly made the full payment of the purchase consideration of Rs. 2.91 crore (approx.) as well as taken the possession of the new residential property during the year under consideration. It was further observed by the CIT(Appeals) that the registered sale deed of the new residential house was subsequently executed in favor of the assessee on 29th March, 2019 for a total consideration of Rs. 2.91 crore. It was further observed by the CIT(Appeals) that the entire amount of purchase consideration of Rs.2.91 crore (after deduction of tax at source a/w. interest of Rs.3,21,555/-) was paid by the assessee vide an online payment from his bank account with IDBI Bank, Branch : Raipur at the time of executing the unregistered purchase agreement i.e on 31.03.2015. 7. Adverting to the applicability of the provisions of section 2(47) (v) of the Act r.w.s 53A of the Transfer of the Property Act, 1882, it was observed by the CIT(Appeals) that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the construction of new residential house would not have been possible. It was observed by the CIT(Appeals) that merely because some bills/vouchers towards labour expenses or building material were not produced by the assessee, then, the said fact on a standalone basis could not have been used for drawing of adverse inferences as regards the assessee s claim of having incurred expenditure on construction of the property, as the same would be otherwise in clear conflict with the recitals of the registered sale deed which clearly spelt out that construction was carried out by the assessee on the 1st and 2nd floor of the aforesaid property. It was further observed by the CIT(Appeals) that now when the registered deed clearly referred to the construction of a double storied house and if that would have not been so, the Registration Authority would have declined from executing the registered deed. The CIT(Appeals) concurred with the claim of the assessee that as in the unorganized sector which regulates labour payments, purchase of sand and other building material etc. the payments/expenses are in normal course made/incurred in cash and the bills/vouchers would either not be avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under subsection (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount by which- (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal hinges around the solitary aspect as to whether or not the assessee s claim for deduction under Sec. 54F would by any means be hindered, for the reason that he had purchased the new residential house vide an unregistered purchase agreement, dated 30.03.2015, which as per the mandate of Section 17 r.w.s. 49 of the Indian Registration Act, 1908 though did not confer a valid title of the property purchased on him. 14. In our considered view, the observation of the A.O that as the assessee had purchased the new residential house vide an unregistered purchase agreement, dated 30.03.2015, therefore, de hors the purchase of the same vide a registered instrument, the assessee would be not eligible for claiming deduction u/s.54F of the Act, based on a misconceived and misconstrued position of law cannot be subscribed on our part. On a careful perusal of the aforesaid statutory provision i.e. 54F of the Act, it transpires that the one of the twin conditions therein provided, which entitles the assessee for the concession therein provided is that the assessee should have after the date on which the transfer took place purchased the new residential property. Holding a legal title of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt are different, the ratio of that decision will have no application to the instant case. Also, a similar view had been taken by the Hon ble High Court of Madhya Pradesh in the case of CIT Vs. Ajit Singh Khajanchi (2008) 297 ITR 95 (MP.HC). It was observed by the Hon ble High Court that in order to claim benefit of the provision of section 54F, it is not necessary that the new house should be registered in the name of the assessee, for the reason that the section only speaks of purchase and registration is not imperative. Relying on the judgment of the Hon ble High Court of Delhi in the case of Balraj Vs. CIT (2002) 254 ITR 22 (Del.), it was observed by the Hon ble High Court as under: Insofar as the question No. 2 is concerned, the learned Counsel for respondent has relied on the decision of this Court in Smt. Shashi Varma v. CIT (1999) 152 CTR (MP) 227 : (1997) 224 TTR 106 (MP). In the said judgment, it was averred that the assessee sold her property at Jabalpur and realized capital of Rs. 31,980 out of which she invested a sum of Rs. 71,256 and purchased a house at Delhi. The exemption was claimed from the charge of tax on capital gain under Section 54F of the Act. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But, that, in our opinion, is immaterial. In the facts and circumstances, the Tribunal was right in coming to the conclusion that the assessee purchased another residential house within the period of one year as stipulated under section 54(1) of the Act. The house property purchased by the assessee had come into the full domain and control of the assessee within the period of one year. Also, a similar view had been taken by the Hon ble High Court of Delhi in the case of CIT Vs, Kuldeep Singh (2014) 226 Taxman 133 (Delhi) and that of in the case of Balraj Vs. CIT, (2002) 254 ITR 22. 15. Adopting a similar view a co-ordinate bench of the Tribunal i.e. ITAT, Delhi Bench B in the case of Elegant Infraworld Pvt. Ltd. Vs. ITO (2019) 55 CCH 0100 (Del-Trib), had held, that now when the assesee had entered into an sale agreement and handed over the possession of the impugned property to the purchaser then, the same would tantamount to parting with the asset a/w. all interests therein involved of the purchaser and as per Section 269UA of the Act, it would not be necessary that the said agreement should be registered. On the basis of its aforesaid observations, it was therein conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recitals of the sale deed clearly revealed that the property which was sold was a double storied house, therefore, it could safely be concluded that as he had carried out construction on the land that was purchased by him at Pandri, Raipur. Concurring with the aforesaid claim of the assessee, the CIT(Appeals) was of the view that now when the recitals of the sale deed clearly revealed that the property sold by the assessee was a double storeyed house, therefore, it could be safely concluded hat the assessee had incurred expenses towards construction i.e. labour expenses, sand and cement etc. It was observed by the CIT(Appeals) that as the consumption of sand, cement and incurring of labour expenses a/w. iron and steel would undeniably be involved in the construction of the aforesaid property, therefore, the claim of the assessee of having incurred the same could not have been summarily scrapped by the A.O. Also, the CIT(Appeals) was of the view that as the purchase of the certain building material such as sand, cement and incurring of labour expenses are made from an unorganized sector, therefore, the fact that the assessee could not obtain bills/vouchers in support of his clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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