Case Law Details
ACIT Vs Seema Sobit (ITAT Delhi)
Conclusion: Since the booking of bare shell of a flat was a construction of house property and not purchase, therefore, the date of completion of construction was to be looked into which was as per provision of section 54, therefore, AO was directed to allow benefit to assessee as claimed u/s. 54.
Held: Assessee declared long term capital gain from the sale of property on which he claimed deduction u/s 54. However, AO disallowed the claim on the ground that assessee had entered into an agreement dated 10.02.2006 and therefore the date of agreement be treated as the date of acquisition, which fell beyond the period of one year prior to the date of transfer prescribed under section 54. In the present case, assessee had booked a semi finished flat with the builder and as per agreement, he was to make payment in installments and the builder was to construct the unfinished bare shell of flat for finishing by the buyers on their own to make it live-able (having specifications set out in Annexure-V) as per clause 10.1 of the said agreement. It was also noted that Builder Company offered vide letter dated 30.12.2011 that the Occupation certificate had been received from the Competent Authorities and the six months period for completing the interiors, in terms of agreement shall commence from 01.01.2012 and was to be completed before 30.06.2012. Builder Company’s letter dated 20.03.2012 and 20.01.2012 offered to finalise the details of interiors and extended the time for completion of interior to 30.09.2012 and finally possession was granted on 30.10.2013. It was held it was a case of construction of flat and not purchase of flat as held by the AO. Since, the case pertained to construction, benefit of section 54 were available to assessee. In view of above, the booking of bare shell of a flat was a construction of house property and not purchase, therefore, the date of completion of construction was to be looked into which was as per provision of section 54, therefore, AO was directed to allow benefit to assessee as claimed u/s.54.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the Revenue against the Order dated 21/08/2015 passed by the Ld. CIT(A)-17, New Delhi relating to assessment year 20 12-13 on the following grounds:-
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ACIT Vs Seema Sobit (ITAT Delhi)
Q
Conclusion:
Since the booking of bare shell of a flat was a construction of house property and not purchase, therefore, the date of completion of construction was to be looked into which was as per provision of section 54, therefore, AO was directed to allow benefit to assessee as claimed u/s. 54.
UQ
TEXT Of –
Acit, New Delhi vs Smt. Seema Sobti, New Delhi on … – Indian Kanoon
https://indiankanoon.org/doc/64791777/
KEY Note;
The ITAT Order covers not just one issue, as wrongly implied in the caption ,- “Booking of bare shell of flat was construction of house property and not purchase U/s. 54 ” . In fact, there was one more Issue , decided in assessee’s favour.
READ:
“4. CLAIM U/S 54EC IS ALLOWABLE
4.1. The relevant facts regarding this claim are that against the capital gains arising out of sale of the residential house on 21.12.2011, as detailed above, the Assessee purchased eligible bonds of the Rural Electrification Corporation (‘REC’) worth Rs. 50 Lakhs on 31.01.2012 vide No. 0900848, and worth Rs. 50 Lakhs on 31.05.2012 vide No. 0912416.”
This is an aspect on which the law was amended by the finance No. 2 Act of 2014; but only prospectively wef 01-04- 2015. (READ paragrphs 4.3 and 4.4 of the ITAT Order ).
Also READ the discussion of the above referred amemdment of the law (sec 54 EC) and the other related points of view
in the published Article – (2014) 226 TAXMAN pg. 143 (MAG) .
Interestingly, one such other point, covered in the Epilogue therein, is also of contextual relevance in the instant case.
Also gone into in detail in the 2 Articles –
@https://taxguru.in/author/vswami/- and, within >
9. Sec 54F- A Brain Teaser !
12. Budget 2014 – Does it really not contain retrospective amendments?
KEY Note: The suggestions offered in those Articles, on points requiring clarity , are still pending consideration. That explains why disputes and litigation continue to dogmatically persist !