Case Law Details
Seema Sabharwal Vs. ITO (ITAT Chandigarh)
Admittedly, the capital gain had arisen to the assessee on 17.9.2012 and the amount was paid by the assessee to the builder for purchase of a new house on 9.9.2014 i.e. within 2 years of the date of transaction of sale of the house property. The Assessing officer denied the claim because as per the agreement with the builder, the house was to be completed within 4 years, whereas, as per the provisions of section 54 of the Act, the house should have been constructed within 3 years from the date of receipt of the capital gains. Though the assessee has relied upon various cases wherein liberal construction has been taken by the Tribunal as well as various High Courts which is in consonance of the object for which the exemption provisions of sections 54 & 54F of the Act have been enacted i.e to promote purchase and construction of residential houses. Various courts have held that if assessee invests the amount in purchase / construction of building within the stipulated period and the construction is in progress, then the benefits of exemptions, cannot be denied to the assessee. Reliance in this respect can be placed on the decision of the Jurisdictional High Court of Punjab & Haryana in the case of ‘Mrs. Madhu Kaul Vs. CIT’ ITA No. 89 of 1999 vide order dated 17.1.2014 and further on the decision of the Hon’ble Calcutta High Court in ‘CIT s Bharati C.Kothari’ (2000) 160 CTR 0165 and also on the decisions of the various Coordinate Benches of the Tribunal. We have also gone through the provisions of sections 54 & 54F of the Act and we do not find any such distinction as drawn by the CIT(A) or any such dissimilarity in the wordings of the provisions from which any such conclusion can be drawn that u/s 54F of the Act the investment is to be considered and / or that u/s 54 of the Act, the house must be completed within the stipulated period of three years or that investment is not be considered. We may further point out here that even the decision of the Hon’ble Calcutta High Court is in relation to the provisions of section 54 only, wherein, the Hon’ble Calcutta High Court has categorically held that if agreement for purchase of residential flat is made and the entire amount is paid within three years from the date of sale, the basic requirement for claiming relief u/s 54(1) of the Act is to be taken as fulfilled. The issue, thus, is squarely covered in favor of the assessee by the various decisions of the Hon’ble High Court.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
The present appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals), [hereinafter referred to as CIT(A)], Panchkula dated 13.12.2016.
2. The brief facts relating to the issue are that during the assessment proceedings the Assessing officer noted that the assessee had shown Long Term Capital Gain at nil on sale of Flat No. 1902 M. Marathan Next Gen. Lower Parel, Mumbai for Rs. 5,20,00,000/- on 17.09.2012, after reducing thereon indexed cost at Rs. 1,31,67,571/-, cost of transfer at Rs. 35,000/- and cost of improvement at Rs. 86,98,452/-. The Assessing officer examined about claim of various costs and after considering the documentary evidences submitted by the assessee accepted the cost of house at Rs. 1,35,22,571/- and cost of improvement at Rs. 86,98,452/-. Thus, computed a long term capital gain of Rs. 2,97,78,977/-. The Assessing officer also noted that assessee had claimed exemption for Rs. 3,00,00,000/- on account of investment in another Flat No. 402, Emerald Road No.1, Juhu Scheme, Vide Parle (West) on 11.09.2014. The Assessing officer asked the assessee to submit the purchase deed of the flat. An agreement between M/s Sun Vision Emerald, Shri Suresh M. Shroff and Ms. Seema Sasbarwal was produced. The Assessing officer observed that as per provisions of section 54, Long Term Capital Gain on sale of residential house was required to be invested in purchase of residential house within a period of one year before or two years after the date of transfer or construction of residential house within a period of three years after the date of transfer. In the case of assessee, the transfer of residential house took place on 17.09.2012 and investment in another residential house as per agreement took place on 11.09.2014. As per clause 15 of agreement, the assessee had to take possession of new residential flat on or before August, 2016. The Assessing officer concluded that assessee had only purchased the right to purchase the flat which was proposed to be given after four years from the date of transfer in August 2016. Thus, the Assessing officer found that conditions as per provisions of section 54 were not complied and, therefore, the claim of exemption u/s 54 of the Act of Rs. 2,97,78,977/- was not allowed.
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