SANDEEP VIJAY MITTAL,MUMBAI vs. ACIT 17(3), MUMBAI

In the light of the aforesaid facts, the only question to be adjudicated in is that whether the assessee is entitled for exemption u/s 54F of the Act? The authorities below have denied the claim mainly on the ground that the allotment letter was issued in the year 2015 as the builder got commence certificate for 28th. floor only on 31.01.2015 and that the assessee did not get possession of the flat within three years as contemplated in section 54F of the Act. The Ld. CIT(A) has further observed that the documents on record including receipts filed by the assessee do not mention the complete details of the property and rights and liabilities of the assessee.

In the light of the rival contention, we have carefully examined the evidence on record to ascertain as to whether the assessee is entitled for exemption us/54 of the Act. We notice that the assessee has made investment of the entire capital gain from transfer of long term capital asset in purchasing of flat from Vijay Associates (Wadhwa) Constructions as per the terms and conditions mentioned the Booking Form and details of Flat dated 28.06.2011. The assessee has also submitted the receipts issued by the builder and other documents to prove the investment. Documents on record further establish that the assessee had made payment of amount to the builder more than the amount of capital gain received from transferring the capital asset, during the assessment year under consideration. So far as the eligibility for exemption u/s 54F is concerned, as pointed out by the Ld. counsel, the Chandigarh Bench of the ITAT relying on the decision of the Hon’ble Punjab and Haryana High Court rendered in Mrs. Madhu Kaul vs. CIT, of 1999 and the decision of the Hon’ble Calcutta High Court in CIT vs. Bharati C. Kothari(2000)160 CTR 165 and various other decisions of the Tribunal, has held, in the case of Seema Sabharwal vs. ITO, ITA No. 272/Chd/2017 that if the assessee invests the long term capital gain in purchase/ construction of building within the stipulated period and the construction is in progress, then the benefit of exemption cannot be denied to the assessee on the ground that construction was completed within three years from the date of transfer of original asset.

The coordinate Bench in the case of Kishore H. Gaiaya vs. ITO, 137 ITD (Mum)/2012 has held that booking of flat with a builder is a case of construction for the purpose of claiming exemption under section 54F of the Act. If the construction is complete within three years exemption u/s 54F of the Act would be available even if possession was not taken within three years. The Hon’ble Karnataka High Court in the case of CIT vs. Sambandam Uday Kumar 345 ITR 389(Kar) has held that once it is demonstrated that consideration received on transfer of capital asset is invested in the residential property, the fact that the transaction involved in purchase or construction of such residential property are not completed in all respects would not disentitle the assessee from benefit of exemption under section 54F of the Act.

In the present case the Ld. CIT(A) has wrongly observed that the documents including receipts issued by the builder do not contain the details of the property to prove the investment of capital gain in residential property. The Booking Form along with details of property clearly mentions that the assessee had made payments in question for purchasing Flat No 05 at 28th. floor of the building Imperial Heights to be constructed by the builder. The assessee had invested more than the capital gain received on transfer of capital asset in the year 2011 in which the assessee had transferred his capital asset. Delay in construction was not on the part of the assessee, which is clear from the fact that the authorities concerned had to extend the commencement certificate so many times. As per the record the competent authority extended the commencement certificate last time on 31.01.2015. The said facts establish that delay in construction was attributable to the builder and not to the assessee.

Taking into consideration the entire facts of the case in the light of the cases discussed in the foregoing paras, we are of the considered view that the benefit of exemption u/s 54F of the Act cannot be denied to the assessee on the ground that the assessee did not get the possession of the residential property within three years from the date of sale of the original asset or that there was no allotment letter while making initial investment. Since, the assessee has made investment as per the terms of the Booking Form and ultimately got the same flat, details of which are mentioned in the Booking Form, from the builder, the Ld. CIT(A) has wrongly confirmed the action of the AO and denied the exemption. Hence, following the ratio laid down in the cases discussed above, we set aside the impugned order and direct the AO to allow the exemption u/s 54F of the Act as claimed by the assessee. In the result, appeal filed by the assessee for assessment year 2012- 2013 is allowed. Order pronounced in the open court on 11th July, 2018.