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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 13/12/2012 for Assessment year 2009-10 of the Ld. First Appellate Authority, Mumbai. The only ground raised in the present appeal is with respect to allowing exemption u/s 54 of Income Tax Act, 1961 (hereinafter the Act) holding that the date of purchase is the date on which agreement for purchase is registered, without appreciating that the date of agreement has to be considered as the date of purchase.
During hearing the ld. DR, defended the addition made by the ld. Assessing Officer taxing the long term capital gains of Rs.74,77,895/- and disallowing claimed exemption u/s 54 of the Act. On the other hand, the ld. counsel for the assessee, defended the order of the First Appellate Authority by placing reliance upon the decision in Smt. Sundar Kaur Sujan Sing Gadh (205) 3 SOT 206 (Mum.) order dated 27/02/2005, Purshottam Govind Bhai vs ITO (1985) 13 ITD 939 (Bom.), CIT vs Beena K. Jain (1994) 75 taxman 145 (Bom.), Vinod Kumar Jain vs CIT (2010) 195 taxman 174 (P & H) and CIT vs R. L. Sood (2000) 245 ITR 227 (Del.).
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee showed long term capital gain on sale of residential property at Rs.74,77,895/- and claimed the same as exempt u/s 54 of the Act. In lieu of investment made by the assessee in new residential property. The claimed exemption was disallowed by the ld. Assessing Officer on the plea that the assessee sold the residential property after more than one year of purchase of new residential property. The assessee vide letter dated 21/11/2011, submitted the copy of the agreement before the Assessing Officer for construction of residential property, which was entered into an agreement on 09/08/2006 and the construction was completed along with the possession 08/01/2009. The stand of the ld. Assessing Officer and also of the ld. DR is that for availing the exemption u/s 54 has to satisfy that the new asset came into existence within one year before and two years after the sale of residential property. We find that the residential property was sold on 01/09/2008, whereas, the purchase of new residential property was on 09/08/2006, meaning thereby the same was within two years before the sale of the earlier residential flat. The possession of the new property was taken on 08/01/2009. The stand of the Revenue is that the assessee purchased the float on 09/08/2006 and substantial payments were made by him before the sale of the old property, thus, the delay in completing the procedure by the builder and handing over the possession to the purchase did not change the date of purchase. We note that the old flat was purchased on 31/05/2001 for Rs.21,38,860/- and sold on 01/09/2008 for Rs.1,04,00,000/-. The date of agreement of the flat under construction was 09/08/2006, whereas the possession of the constructed property was taken on 08/01/2009 (as per letter from M/s K. Raheja Universal Pvt.
Ltd.) at the cost of Rs.1,02,13,685/-. The factual matrix was duly examined by the Ld. Commissioner of Income Tax (Appeal) and he has justifiably place reliance upon the decision in CIT vs H.K. Kapoor (1998) 234 ITR 753(All.), CIT vs J.R. Subramanya Bhatt (1987) 165 ITR 571 (Kar.). The assessee entered into an agreement dated 09/08/2006 with M/s K. Raheja Universal Pvt. Ltd. for purchase of a flat (No.1103). The builder demolished the old structure on the land and commenced construction. As per the agreement, the assessee agreed to purchase the flat vide letter dated 12/02/2008 and was informed that the builder has obtained occupation certificate from the municipality. We find that there are various decisions with respect to the date whether it is to be considered the date of agreement or the date of the possession. Admittedly, through agreement dated 09/08/2006, the assessee acquired the valuable right but cannot be said that the new flat was purchased. On the date of agreement, the building was under construction and the assessee paid installments to the builder as has been reflected at page 19 of the impugned order. The assessee sold the earlier residential flat for Rs.4,41,00,000/-, as per agreement dated 13/01/1997 and the sale proceeds were invested to purchase of another residential house. The circular no. 471 dated 15/10/1986 and further circular no.672 dated 16/12/1993 clarified the position by holding that in the case of construction of residential flat and not the date of purchase of the flat is to be considered. The Hon’ble jurisdictional High Court in the case of Beena K. Jain (1994)
75 taxman 145 (Bom.), wherein, assessee claimed exemption u/s 54F of the Act by making investment in the residential house. The assessee sold the premises on 23/07/1987 resulting into long term capital gain of Rs.24,05,050/-. The assessee entered into an agreement dated 04/09/1985 for purchase of a flat for Rs.12,26,751/- and the sale was registered on 27/10/1985. The assessee paid consideration amount on 29/07/1988 and got the possession of the flat on 30/07/1988. The assessee claimed benefit of exemption u/s 54 of the Act. The Hon’ble High Court, after considering the fact, held that the date of possession is the relevant date for the premises instead of date of agreement and date of registration. Identically Hon’ble Punjab & Haryana High Court in Vinod Kumar Jain vs CIT (2010) 195 taxman 174 decided in favour of the assessee. The ratio laid down in CIT vs R.L. Sood (245 ITR 227)(Del.) and Smt. Shashi Sharma vs CIT (224 ITR 106)(MP) decided in favour of the assessee. Even otherwise, when two views are possible, which favours the assessee, has to be preferred. We are, usefully, reproducing hereunder the relevant provision of section 54 of the Act for ready reference and analysis:-
(1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date[constructed, one residential house in India], then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. From the reading of section 54(1), it is clear that section concerns two type of house property, namely (i) original asset and (ii) the new asset. Original asset here means the house property on the transfer whereof the capital gain arises. The new asset refers to the property which has been purchased or constructed within the stipulated period. The ratio laid down in CIT vs D. Ananda Basappa (2009) 309 ITR 329 (Karn.) SLP dismissed ; (2010) 320 ITR (St.) 19(SC). To avail the exemption, the taxpayer has to deposit the appropriate amount of capital gains in the specified banks by the due date of furnishing of return of income laid down in section 139(1) of the Act. Since, the facts mentioned in the impugned order are not in dispute, therefore, considering the totality of facts and judicial pronouncements discussed hereinabove, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal).
Finally, the appeal of the Revenue is dismissed.
This order was pronounced in the open court in the presence of Ld. representatives from both sides at the conclusion of the hearing on 16/06/2016.