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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: HON’BLE SHRI MAHAVIR SINGH & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
सुनवाईकीतारीख/ : 06-12-2022 Date of Hearing घोषणाकीतारीख / : 18-01-2023 Date of Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member):
Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of the order of learned Commissioner of Income Tax (Appeals)-14, [CIT(A)] dated 10-09-2019 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) of the Act on 27-12- 2017. The grounds raised by the assessee read as under:-
“1. The Assessing Officer erred in disallowing part of the construction expenses incurred by the assessee in constructing house property under the facts & circumstances of the case.
2. The Assessing Officer erred in disallowing investment made by the assessee in purchasing adjacent property forming part of original property under the facts & circumstances of the case.
3. The Assessing Officer erred in making addition of Rs.75,56,398/- under capital gains and levying of tax Rs.22,73,720/- under the facts & circumstances of the case. ” Evidently, the sole grievance of the assessee arises out of computation of capital gains.
The Registry has noted delay of 7 days in the appeal, the condonation of which has been sought Ld. AR on the strength of affidavit of the assessee. Considering the period of delay and contents of affidavit, we condone the delay and admit the appeal for adjudication on merits.
During assessment proceedings, it transpired that the assessee sold certain property on 23.02.2015 for Rs.283 Lacs. Out of the advanced so received against the sale of property under unregistered sale agreement dated 15.05.2013, the assessee purchased land and building at Peerkankaranai village, Kamaraj Nagar for Rs.45 Lacs on 29.11.2013. The possession of the sold property was handed over by the assessee on 15.10.2014. Subsequently, the assessee purchased another land and building at Peerkankaranai Village adjacent to property purchased during 2013) on 29.04.2015 for Rs. 57.10 Lacs. The assessee stated to have constructed residential building for Rs.156.80 Lacs and accordingly, claimed deduction u/s 54F for aggregate amount Rs.269.11 Lacs including earlier property purchased for Rs.45 Lacs. The balance amount of Rs.13.88 Lacs was offered to tax as Long Term Capital Gains.
The Ld. AO held that unregistered document dated 15.05.2013 could not be considered. The assessee constructed residential house on plot purchased on 29.04.2015 and the construction was completed on 30.09.2017. The sale took place on 23.02.2015 and therefore, the assessee should have invested unutilized gains in Capital Gains Account Scheme by due date of filing of return of income i.e., by 31.07.2015 which was not done and accordingly, the deduction was to be restricted to the extent of investment made up-to that date. This was as per the decision of Hon’ble Bombay High Court in Humayun Suleman Merchant vs CIT (23 Taxmann.com). Since the property purchased on 29.11.2013 fall beyond one year from the date of sale i.e., 23.02.2015, no deduction would be available to the extent of Rs.45 Lacs. The amount spent on investment and construction up-to 31.07.2015 in second property purchased on 29.04.2015 aggregated to Rs.156.80 Lacs which alone would be eligible for deduction u/s 54F.
The relevant dates and chronology of events was tabulated by ld. CIT(A) as under: - No. Dates Events 1 18.08.2004 Appellant acquired vacant land at Shollinganallur by way of Settlement Deed from her father Appellant received Rs.45,00,000/- as advance for sale of 2 13.05.2013 said land from one Mr.G.Ramprasad 3 15.05.2013 Appellant entered into agreement for Sale of the land at Shollinganallur with Mr . Ramprasad for a total sale consideration of Rs.2,83,00,000/- 4 23.05.2013 Appellant received Rs.25,00,000/- towards sale consideration from G. Ramprasad Appellant received Rs.1,25,00,000/- towards sale 5 19.10.2013 consideration from G. Ramprasad 6 29.11.2013 Appellant, out of advances received, purchases a land at Peerkankakari village ad measuring 3638 sq ft vide Sale Deed registered as Document No.7151/2013, for consideration of Rs.45,00,000/- 7 16.12.2013 Appellant received Rs.58,00,000/- towards sale consideration from G. Ramprasad (with this total sale consideration of Rs.2,83,00,000/- received.)
8 07.10.2014 Mr. G. Ramprasad requested to handover possession of said land. 9 15.10.2014 Possession of vacant land at Sholinganallur handed over to Mr. G. Ramprasad 10 23.02.2015 Sale deed executed by appellant for sale of land to Mr. G. Ramprasad 11 29.04.2015 Appellant purchased another land adjacent to the land already purchased at peerkankarai village admeasuring 2728 sq.ft for total sale consideration Rs.57,10,000/- and constructed residential building thereon.
The Ld. CIT(A) upheld disallowance of Rs.45 Lacs and also upheld the restriction of deduction on the ground that unutilized gains were not deposited in Capital Gains Account Scheme. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 6. It could be seen that the assessee has entered into sale agreement dated 15.05.2013 for sale of property for Rs.283 Lacs. The terms of the sale agreement has been honored and the intended purchaser has paid sale consideration from time to time. The full sale consideration has been paid on 16.12.2013 whereas sale deed has been executed on 23.02.2015. The possession is stated to be handed over on 15.10.2014. As against installments so received, the assessee has purchased land on 29.11.2013 which falls within one year from receipt of full sale consideration as well as handing over of the possession. Undisputedly the investment has been made out of part of sale consideration. Therefore, simply because the sale deed has been executed subsequently, the deduction of Rs.45 Lacs could not be denied to the assessee. We order so.
So far as the investment in subsequent property is concerned, we find that the assessee has purchased adjacent land and constructed residential property on the same. The assessee made investment in land Rs.57.10 Lacs as well as incurred substantial construction expenditure to the extent of Rs.130.56 Lacs Only small amount of Rs.30.56 Lacs was spent thereafter. The provisions of Sec.54F are beneficial provisions and therefore, the substantial compliance of the same by the assessee, in our considered opinion, would entitle the assessee to claim full deduction. Therefore, Ld. AO is directed to allow remaining deduction of Rs.30.56 Lacs also. We order so.
The appeal stand allowed in terms of our above order.
Order pronounced on 18th January, 2023