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TMI Blog2023 (7) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... hahasildar [ 2017 (12) TMI 1060 - ITAT MUMBAI] has held that where the assessee has acquired a flat in a building under construction, it would be a case of construction and not purchase of property. Co-ordinate Bench dehors the fact that the assessee had booked a new flat prior to one year from the date of transfer of old flat, since, the building in which new flat was booked was under construction, the assessee fulfils the condition ie. the assessee within a period of three years after the date of transfer of old flat constructed a residential house in India. In the instant case the assessee acquired possession of new flat on 26/11/2014 and old residential property was sold on 04/08/2012. The construction of flat completed within 3 years from the date of transfer of old residential asset. The section is silent about commencement of construction. The section only mandates that a residential house is constructed within three years after the date of transfer. In the case of CIT vs. Hilla J B Wadia [ 1993 (3) TMI 7 - BOMBAY HIGH COURT] has held that where an assessee has utilized capital gains from transfer of old residential asset towards purchase of flat in a building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals germinate from same set of facts, these appeals are taken up together for adjudication and are decided by this common order. ITA NO.267/MUM/2022-A.Y. 2013-14: 2. The facts of the case in brief as emanating from records are: The assessee in its return of income claimed exemption of Rs. 45,46,285/- u/s. 54 of the Act on long term capital gains from sale of a residential house. The assessee had sold a flat on 04/08/2012. The flat sold by the assessee was jointly owned by the assessee with his wife. The assessee booked two flats in the joint name with his wife on 18/4/2011. The possession of the flats was received by the assessee on 26/11/2014 (possession letters at page 315 and 318 of the paper book). The assessee claimed that since assessee has utilized long term capital gain arising from sale of residential house towards purchase of new residential house within the time specified u/s. 54(1) of the Act, the assessee is eligible to claim exemption u/s. 54 of the Act. The Assessing Officer held that the assessee had booked the residential flats, beyond one year before the date of transfer of a residential house and the possession of flat was received after two years fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of exemption. 5. We have heard the submissions made by rival sides and have examined the orders of authorities below. The solitary issue raised by the assessee in appeal by the assessee is against disallowance of claim of exemption u/s. 54 of the Act. Before proceeding further to decide the issue it would be relevant to refer to the sequence of events. Date Events. 18/04/2011 The assessee along with his wife Mrs. Rituja Hemanth Phatak enters into a registered agreement for sale with Rahejha Universal Ltd. for purchase of Flat No.1303 1304, 13th Floor, B-Wing at Raheja Reflection Serenity, Mumbai. 04/08/2012 The assessee and his wife sold Flat No.905, 9th Floor, B-Wing, DSK Madhuban Co-operative Housing Society. 26/11/2014 The possession letter of Flat No.1303 1304 at Raheja Reflection Serenity received by the assessee. The contention of the assessee is that flats were booked by the assessee in a building under construction and the possession of the flats were received by the assessee within three years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was required to pay specified percentage of the total consideration. The final installment was to be paid at the time of handing over of possession of the Flat. The assessee received possession of completed flats within three years from the date of transfer of old residential house. 7. The Tribunal in the case of Mustansir I Thahasildar vs. ITO(supra) has held that where the assessee has acquired a flat in a building under construction, it would be a case of construction and not purchase of property. The relevant extract of decision setting out the facts and conclusion is as under: 5. We heard the parties on this issue and perused the record. We have earlier noticed that the assessee has booked a flat, which was under construction, and made payments over the year. The final payments were made subsequent to the date of sale of old flat. The Ld A.R submitted that the final payment was made on 22-10- 2014 and possession of new flat was obtained on 11-12-2014. 6. xxxxxxx 7.xxxxxxx 8.xxxxxxx 9.xxxxxxx 10. Section 54 of the Act provides the condition that the construction of new residential house should be completed within 3 years from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT vs. Hilla J B Wadia, 216 ITR 376 (Bom), the Hon ble Jurisdictional High Court has held that where an assessee has utilized capital gains from transfer of old residential asset towards purchase of flat in a building under construction, this must also be viewed as a method of constructing residential tenement. The only other condition that has to be satisfied is that the assessee must have acquired a right to a specific flat in such a building under construction. 8. No contrary decision is brought to the notice of the Bench. In light of facts of the case and decisions referred above, we accept the appeal of assessee. The assessee is eligible to claim exemption u/s. 54 of the Act as the construction of residential house completed within three years from the relevant date. Consequently, the impugned order is set-aside and appeal of the assessee is allowed. ITA NO.268/MUM/2022 -A.Y. 2013-14: 9. The ld. Authorized Representative of the assessee submitted that the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act after disallowing assessee s claim of exemption u/s. 54 of the Act. The Assessing Officer vide order dated 27/09/2016 levied pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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