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Income Tax Appellate Tribunal, “ D” BENCH, CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN
आदेश/ O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER :
The assessee filed this appeal against the order of Commissioner of Income Tax (Appeals)-12, Chennai in dated 18.09.2018 for assessment year 2015-16.
Shri. Narayan Agarwal, the assessee, though has not claimed any deduction u/s. 54 in the return, however, during the course of assessment offered long term capital gain from sale of property at Rs. 75,10,589/- and claimed exemption u/s. 54. The AO refused such claim holding, inter alia, the builder has not given possession to the assessee as the flat was under construction, no documents such as agreement for sale of UDS or construction agreement entered with the builder were submitted during the assessment proceedings and the flat was not transferred to the assessee. So, the AO assessed the entire profits at Rs. 88,55,701/- under the head income from other sources””. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal.
The Ld. AR submitted that the assessee had booked a flat in metro zone towers, a project undertaken by M/s.Ozone Projects Pvt. Ltd., on 09.09.2010. The agreed price was Rs. 74,85,411/-. The assessee paid a total sum of Rs. 61,44,289/- till 31.12.2013. Since, the developer i.e., M/s.Ozone Projects Pvt. Ltd., could not complete the project and there was inordinate delay, the assessee considered that to avoid the risk, it is better is sell and accordingly by a tri-party agreement, an agreement for sale was executed on 31.03.2015, by the parties concerned viz., the assessee, Ozone Projects Pvt. Ltd. (developer) and the purchaser (Mr. N.
Vadivel and V. Manjula, and transferred his rights in favour of the buyers for Rs. 1,50,00,000/-. Subsequently, the assessee acquired a new flat for Rs. 2,95,60,500/-towards which he claimed the deduction u/s. 54 of the profits arising from the sale consideration. Since, the assessee had transferred his rights and received the consideration, the gains arising out of which is capital asset and it has to be assessed under the head capital gains only. Since, the assessee has also purchased another flat, the assessee is entitled for the benefit of exemption u/s. 54 and hence, the Ld. AR submitted that lower authorities have committed error in understanding the facts and circumstances. Therefore, he pleaded that the assessee’s appeal be allowed. Per contra, the Ld. DR submitted that since, the transaction between the assessee and the seller is not registered, there is no transfer and hence, the assessee is not entitled for the benefit of deduction u/s.
Therefore, the Ld. DR supported the orders of the lower authorities.
We heard the rival submissions and gone through the relevant material. It is clear from the fact that there was an agreement for purchase of a property at metro zone between the assessee and the developer, Ozone Projects Pvt. Ltd., as on 09.09.2010. In accordance with the agreement, out of agreed sale consideration of Rs. 74,89,411/-, the assessee paid a total amount of Rs. 61,44,299/- till 31.12.2013.
Since, there was a delay in handing over the project and the assessee did not want to take the risk, he found a party to sell his rights and accordingly all the three parties involved in the transaction entered into an agreement dated 24.02.2015 and an unregistered sale agreement date 31.01.2015. Accordingly, the assessee has received Rs. 1,50,00,000/- towards the sale of his rights. Therefore, the transaction is completed and accordingly, the assessee had gained a profit of Rs. 88,55,701/- from the sale of his rights, which is a capital asset.
Therefore, it is assessable under the head capital gains, particularly as a long term capital gains. The assessee has also purchased a flat in TVH Lumbini Square for Rs. 2,95,60,500/- towards which the assessee claimed the set off of the long term capital gains u/s. 54. Since, the basic facts are not disputed and the assessee gained from its capital rights, as pleaded by the assessee, the gain which arose out of the transaction is assessable under the head long term capital gains only.
Therefore, the assessee is entitled to the benefit sought u/s. 54. In view of that, the AO is directed to compute the long term capital gains and allow the exemption u/s. 54 to the extent the capital gain is available.
In the result, the assessee’s appeal is allowed. Order pronounced on 12th December, 2019 at Chennai.