Satyamurti Ramasunder Vs ACIT (ITAT Delhi)
ITAT Delhi held that deduction under section 54 of the Income Tax Act is allowable based on handing over of possession and not based on payment of consideration. Date of handing over of possession of new property is relevant for deduction u/s. 54.
Facts- Notice u/s 154 was issued by AO stating that Long Term Capital Gain was not deductible u/s 54 as original asset was transferred on 05.08.2011. Where ready build house purchased on 24.07.2010 which was purchased beyond the period of one year (to be purchased from 06.08.2010).
After submission from the assessee, there is nothing on record to establish that the proceeding initiated by issuing notice under Section 154 had been concluded by passing appropriate order under the said section or have been dropped/vacated. However, subsequently, a notice under Section 148 was issued on 27.09.2017.
Conclusion- Held that possession was handed over to the assessee on 16.01.2011. Assessee had sold his original asset on 05.08.2011. Thus, the new property was purchased within one year of the sale of original asset which fulfils the requirement of sec. 54 of the Act.
ITAT Mumbai in the case of Bastimal K. Jain vs. ITO held that deduction under Section 54 was rightly allowed because for purchase of new property, what is relevant is “handing over of possession” and not “payment of consideration”.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal filed by the assessee is against the order of learned Commissioner of Income-tax(Appeals)-1, Gurgaon vide appeal No.763/CIT(A)-1/GGN/2018-19,dated 18.02.2020 against the reassessment order passed under Section 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 23.12.2018 for assessment year 2012-13, passed by ACIT, Circle-4(1), Gurgaon.
2. There is a delay of 347 days in filing the present appeal. Impugned order by learned Commissioner of Income-Tax(Appeals) is dated 18.02.2020 which is claimed to have been received on 18.02.2020. Assessee has filed the present appeal on 31.03.2021 along with a petition for condonation of delay, dated 12.07.2021. The said period for filing the present appeal falls during the pandemic of COVID-19 for which Hon’ble Supreme Court in the case of suo moto Writ Petition (C) No.3 of 2020 dated 10.01.2022 has excluded the period from 15.03.2020 to 28.02.2022 for the purpose of taking into account the limitation. Vide this order, a further period of 90 days has been granted for providing the limitation, from 01.03.2022. Accordingly, considering the said decision and fact of the case, aforesaid delay is condoned and the appeal is admitted for adjudication.
3. Grounds taken by the assessee are as under:
1. That on the facts and circumstances of the case and in law, the Asst. Commissioner of Income-tax, Circle-4(1), Gurgaon [briefly ‘the Assessing Officer”] has erred in assuming jurisdiction under section 147 of the Income Tax Act, 1961 “the Act”).
2. That on the facts and circumstances of the case and in law, the jurisdiction to reassess the income was bad in law, for proviso to section 147 of the Act was applicable in the present case, inasmuch as, the original assessment was made under Section 143(3) and the notice under Section 148 of the Act was issued after the expiry of four years from the end of the assessment year and there was no failure on the part of the Appellant to disclose fully and truly all material facts necessary for the assessment.
3. That on the facts and circumstances of the case and in law, the learned Commissioner of Income-Tax(Appeals)-!, Gurgaon [briefly ‘the CIT(A)”] has erred in upholding the assessment under Section 147 read with section 143(3) of the Act at the income of Rs.2,27,63,318/-. The Appellant denies its liability to be assessed at the long term capital gain of Rs.2,27,63,318/-.
4. That on the facts and circumstances of the case and in law, the CIT(A) has erred in holding that the Appellant was not entitled to exemption/deduction under Section 54 of the Act allegedly for the reason that the new asset (residential house) was purchased prior to one year from the sale of original asset and that the new asset was not “purchased” but was constructed”.
5. That on the facts and circumstances of the case and in law, the authorities below have erred not appreciating that:
(i) the new asset was purchased on 19.1.2011, which was with-in one year from the sale of the original property that took place on 5.8.2011.
(ii) the Appellant did not book the new assets in any scheme floated by any builder, rather he purchased the new asset from Mrs. Lipi& Mr. Ratanjit Das, who endorsed their flat (new asset) in IVY group housing complex in favour of the Appellant with the permission of the Developer Company.
6. That on the facts and circumstances of the case and in law, the CIT(A) did not apply mind to the disputed issue inasmuch as though the issue involved related to the exemption/deduction under Section 54 of the Act, however, the CIT(A) has approached the issue from the point of view of deduction under Section 54F of the Act.
That on the facts and circumstances of the case and in law, the CIT(A) has erred in applying two different set principles in deciding the question by applying rule of consistency.
4. Facts of the case as submitted by the assessee in the brief synopsis are reproduced as under:
“Factual Background:
Capital gain: During the relevant previous year, the Appellant earned capital gain of Rs.2.26.21.178/- on sale of residential House No.7 in DLF City, Phase-1, Gurgaon (“the original asset”). It was sold by the Appellant and his wife Mrs. Geetha Rama Sundar for Rs 4,00,05,000/-vide sale deed dated 5.8.2011 (page 7 to 14 of paper book)
Purchase of net asset: Vide conveyance deed dated 19.01.2011, the Appellant purchased another residential flat No.502, Garden Court D, Sector 28, Gurgaon (“the new property”) having super area of 3819 sq.ft. (page 15 to 31 of paper book).
Ms. Lipi Das & Mr. Ratanjit Das were the original allottees of the new property. In terms of agreement dated 7.7.2010 between Ms. Lipi Das & Mr. Ratanjit Das and the Appellant, out of agreed sale consideration of Rs.2,60,00,000/-, Rs.2,44,34,630/- was to be paid to original allottees (paid on 7.7.2010 & 24.7.2010 – page 33-36 r/w 37) and Rs.15,65,369/- was to be paid to M/s. Green Max Estate Pvt. Ltd (“the developer” – paid on 24.7.2010).
Possession of new property. The possession was handed over on 16.1.2011 (page 32).
