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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
Order of the Commissioner of Income Tax (Appeals)-5, Chennai, in dated 28.01.2016 for the AY 2009-10.
Mr.M.Palanichamy, JCIT, represented on behalf of the Revenue and Mr.G.Baskar, Adv., represented on behalf of the assessee.
ITA No.272/Mds/2016 :- 2 -:
It was submitted by the Ld.AR that the only issue in the assessee’s appeal was against the action of the Ld.CIT(A) in confirming the denial of the exemption u/s.54F to an extent of Rs.24,30,000/-. It was a submission that the assessee had sold a land at Perungudi for a consideration of Rs.1,14,00,000/-. The said land was sold on 03.05.2008 and was originally purchased on 15.02.1989. The assessee had entered into a construction agreement with M/s.Akshaya Homes Pvt. Ltd., on 16.04.2007 for the construction of a flat. The first payment was made to M/s.Akshaya Homes Pvt. Ltd. on 10.01.2007 for an amount of Rs.5.00 lakhs. The AO had disallowed the payment made by the assessee to M/s.Akshaya Homes Pvt. Ltd., in respect of the acquisition of the new flat for a period from 10.01.2007 to 10.03.2007 on the ground that the said payment had been made on a period prior to one year before the sale of the original asset. It was a submission that the assessee had registered undivided share in respect of the flat purchased on 19.11.2008 and the possession of the flat was also taken on 19.11.2008. It was a submission that the registration of handing over of the said new flat was within a period of two years from the date of the transfer of the original asset and consequently in view of the decision of the Hon’ble Bombay High Court in the case of Smt.Beena K. Jain reported in 217 ITR 363, the assessee was entitled to the benefit of Sec.54F.
ITA No.272/Mds/2016 :- 3 -:
In reply, the Ld.DR vehemently supported the order of the order of the AO and the Ld.CIT(A).
We have considered the rival submissions. A perusal of the decision of the Hon’ble Bombay High Court in the case of Smt.Beena K. Jain referred to supra, the Hon’ble High Court has held as follows:
Under s. 54F of the IT Act, in the case of an assessee if any capital gain arises from the transfer of any long-term capital asset, not being a residential house, and the assessee has, within a period of one year before or two years after the date on which the transfer took place, purchased a residential house, the capital gain shall be dealt with as provided in that section. As per the section certain exemption has to be allowed in respect of the capital gains to be calculated as set out therein. The Department contends that the assessee did not purchase the residential house either one year prior to or two years after the sale of the capital asset which resulted in the long-term capital gains. According to the Department, the agreement for purchase of the new flat was entered into more than one year prior to the sale. Hence, the petitioner is not entitled to the benefit under s. 54F. In our view, the Tribunal has rightly negatived this contention and has held that the new residential house had been purchased by the assessee within two years after the sale of the capital asset which resulted in long-term capital gains. The Tribunal has held that the relevant date in this connection is 29th July, 1988, when the petitioner paid the full consideration amount on the flat becoming ready for occupation and obtained possession of the flat. This has been taken by the Tribunal as the date of purchase. The Tribunal has looked at the substance of the transaction and come to the conclusion that the purchase was substantially effected when the agreement of purchase was carried out or completed by payment of full consideration on 29th July, 1988, and handing over of possession of the flat on the next day.
The principles laid down by the Hon’ble Bombay High Court in the case of Smt.Beena K. Jain, when applied to the present case shows that the assessee has got constructed the new flat after completion of the construction on 19.11.2009 i.e. within the two years period from the date of the transfer of the original asset. In these circumstances, as the assessee has constructed the flat within the two years from the date of transfer of the original asset, we are of the view that the assessee is entitled for benefit of deduction u/s.54F. Respectfully applying the principles laid down in the Hon’ble Bombay High Court referred to supra,
ITA No.272/Mds/2016 :- 4 -: the AO is directed to grant the assessee the benefit of deduction u/s.54F as claimed.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the Open Court on October 10, 2017, at Chennai.