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TMI Blog2025 (1) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain earned for acquisition of the residential property of M/s Om Sai Infravision Pvt. Ltd. and M/s Om Sai Infrapromoters Pvt. Ltd. for purchase of residential house property. In fact, the same was more than the amount of capital gain earned by the assessee to the tune of Rs. 343,44, 059/-. The Ld.AO disallowed the claim made by the assessee under Section 54F of the Act as the assessee failed to furnish the possession certificate, electricity bill etc. in order to establish the fact of possession being taken within the prescribed statutory time limit. The Ld. AO, therefore, added the entire capital gain of Rs. 343,44,059/- in the hands of the assessee which was in turn deleted by the First Appellate Authority. Hence, the instant appeal before us. 3. Heard the parties and perused the materials available on record. The case of the assessee is this that during the Assessment Year 2014-15 he has earned long term capital gain of Rs. 343,44,059/-. The assessee claimed deduction under Section 54F by making payment of Rs. 353,50,000/- including TDS deduction of Rs. 2,30,000/- for the purchase of the new property. In fact, the assessee made payment to the builders for the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has stated that since March 2013, the developers have not been able to complete the project owning to litigation. 9. The AR submitted that this cannot be a reason to deny the exemption of section 54 as the circumstances were beyond the control of the appellant. The appellant could not get possession of the house within a reasonable time because of various litigations on the project despite the fact that the project was awarded to the builder by the Government body. 10. The appellant relied upon various decisions of the courts in support of the contentions that the deduction cannot be denied because there was delay on the part of the builder to hand over the possession. 11. The Hon'ble Supreme Court in the case of Sanjeev lal vs CIT in Civil Appeal Nos. 5899-5900 of 2014 ha held that adverse inference against the assessee cannot be made in this regard. In this case, the following was the fact of the case;- * The assessee acquired a residential house property in year 1993 in terms of will executed by his grandfather. * The assessee entered into an agreement to sell in respect of said property on 27-12-2002 and received certain amount by way of earnest money. * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, has taken place.[Para 17] * In the instant case, the following three dates are not in dispute. The residential house was transferred by the appellants and the sale deed had been registered on 24-9-2004. The sale deed had been executed in pursuance of an agreement to sell which had been executed on 27-12-2002 and out of the total consideration of Rs. 1.32 crores Rs. 15 lakhs had been received by the assessee by way of earnest money when the agreement to sell had been executed and a new residential house/new asset had been purchased by the appellants on 30-4-2003. It is also not in dispute that there was a litigation wherein the will had been challenged and the assessee had been restrained from dealing with the house in question by a judicial order and the said judicial order had been vacated only in the month of May, 2004 and therefore, the sale deed could not be executed before the said order was vacated though the agreement to sell had been executed on 27-9-2002. [Para 18] * If one considers the date on which it was decided to sell the property, i.e. 27-12-2002 as the date of transfer or sale, it cannot be disputed that the assessee would be entitled to the benefit under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the suit, the assessees were restrained from dealing with the said residential house and a law-abiding citizen cannot be expected to violate the direction of a court by executing a sale deed in favour of a third party while being restrained from doing SO. * In the circumstances, for a justifiable reason, which was not within the control of the assessee, he could not execute the sale deed and the sale deed had been registered only on 24-9-2004, after the suit filed challenging the validity of the will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term "transfer", one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the assessee had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the assessee to sell the property to someone else in accordance with law. * A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid Rs. 15 lakhs by way of earnest money. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property to another such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation one can say that some right, in respect of the said property, belonging to the assessee had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. [Para 23] * Thus, a right in respect of the capital asset, viz. the property in question had been transferred by the assessees in favour of the vendee/transferee on 27-12-2002. The sale deed could not be executed for the reason that the assessees had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. [Para 24] * In view of the aforesaid peculiar facts of the case and looking at the definition of the term 'transfer' as defined under section 2(47), it is opined that the assessee was entitled to relief under section 54 in respect of the long term capital gain which they had earned in pursuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble high Courts wherein it has been held that the provisions of section 54 are beneficial sections and therefore, it is to be interpreted liberally. If the assessee has completed his part of the job, in that case he is entitled to the deduction if the other part has not been completed because of the situation beyond the control of the assessee. Thus, For claiming exemption u/s 54, it is not necessary that the Assessee should obtain possession of the new asset or become the owner of such new asset by way of registration of document within the time limit as specified therein as long as the Assessee has acquired substantial domain over the new asset and paid substantial amount of its cost within such specified time limits. 15. The jurisdictional High Court in the case of CIT vs. Kuldeep Singh (Delhi H.C.) 270 CTR 561 has held as under: "It is accepted position and it is not disputed by the revenue that amount had been invested by the assessee for purchase of flat. However, legal title in the said property was not passed or transferred to the assessee within a period of two years from the date of sale of residential property. The flat was still under construction though the builde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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