ITO 16(2)(2), MUMBAI vs. AAKANKSHA R. SHAH, MUMBAI

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ITA 318/MUM/2014Status: DisposedITAT Mumbai10 August 2016AY 2009-105 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had fulfilled the conditions of Section 54F by investing the entire capital gains in the purchase of the property, even though it was under construction and possession was not yet received. The AO's denial was therefore incorrect.

What were the facts?

The assessee claimed exemption under Section 54F for Long Term Capital Gains by investing in a property under construction. The AO denied the exemption as the property was not completed and possession was not given. The CIT(A) allowed the exemption, holding that the assessee had complied with the conditions by investing the capital gains in the purchase of the flat.

What were the issues?

Whether investment in a property under construction, without possession, qualifies for deduction under Section 54F. Whether the AO was justified in denying the exemption based on non-completion and lack of possession.

Which sections of the Income-tax Act were involved?

Section 54F,Section 45

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: HON’BLE S/SHRI JOGINDER SINGH (JM), & RAJESH KUMAR,(AM)

Hearing: 27.7.2016Pronounced: 10.08.2016

अऩीरधथी ओय से / Appellant by: Shri Sachchidanand Dube प्रत्मथी की ओय से/Respondent by S/Shri Shrad Patel and Amrit Porwal सुनवधई की तधयीख / Date of Hearing : 27.7.2016 घोषणध की तधयीख /Date of Pronouncement : 10.08.2016 आदेश / O R D E R

Per RAJESH KUMAR, Accountant Member:

1.

This is an appeal filed by the revenue and is directed against the order of the Ld. CIT(A)-27, Mumbai dated 28.10.2013 pertaining to A.Y.2009-10.

2.

Only issue raised in the grounds of appeal

is against allowing the deduction u/s 54 of the Income Tax Act, 1961 (hereinafter referred to as the Act) by the ld. CIT(A) which was denied by the AO on the ground that the assessee has not complied with the mandatory provisions of section 45, 54F three years.

3. Brief facts of the case are that the assessee filed e-return on 30.7.2009, declaring total income at Rs.8,01,588/-, which was processed u/s 143(1) of the Act. Thereafter, scrutiny proceedings were initiated against the assessee and statutory notices under section 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO observed that the assessee has shown Long Term Capital Gains (LTCG) of Rs.1,59,79,878/- which claimed exempt u/s 54F of the Act and accordingly, the AO vide letter dated 30.11.2011 called upon the assessee to furnish a copy of occupation certificate and possession letter from the builder in respect of deduction claimed u/s 54F of the Act. The assessee vide letter dated 08.12.2011 submitted that she has invested the entire amount of capital gains on the purchase of property which was under construction and not completed by the builder and no possession letter was given for that. It was further submitted by the assessee that in order to avail the benefit of section 54F, it would be sufficient if the assessee has invested the entire amount of capital gains in the residential / house and accordingly requested the AO to allow the benefit u/s 54F by relying on the decision in the case of Sashi Varma V/s CIT (1997) 224 ITR 106) (MP), CIT V/s R C Sood (2000) 108 Taxmann 227 (Del ) and CIT V/s Sardarmal Kothari. The AO, however, not convinced with the reply of the assessee brought the Long Term Capital Gain of Rs.1,59,79,878/- to tax by rejecting the claim of 54F and thus completed the assessment at an income of Rs.1,67,81,470/- .Aggrieved by the order of the AO, the assessee appealed before the ld. CIT(A) who allowed the appeal of the assessee by holding that the assessee has duly complied with the various conditions as laid down in the provisions of section 54F of the Act and thus as invested the entire amount of capital gain in the purchase of flat and even holding that the payment to the builder to the tune of Rs.1,61,16,341/- the details whereof payment were also given by the assessee which were incorporated by the ld. CIT(A) in his order and is also reproduced below for ready reference:-

Date Rs. To the developers 7.6.2008 50,00,000 16.2.2009 50,00,000 16.2.2009 50,00,000 Total 1,50,00,000 Stamp duty 17.2.2009 10,80,990 Registration fees 17.2.2009 30,000 Bank charges for DD 17.2.2009 3,131 Copying fee to

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