Case Law Details
Tarun Jalali Vs Dy. DIT (ITAT Delhi)
sub-section 4 of section 54F prescribes appropriation of sale consideration of original asset towards provision of new asset made within one year before the date of transfer of original asset, two years from the date of transfer or construction of new in-house property, within three years from the date of transfer of original receipt but the Act does not prescribe any condition as to the date of commencement of construction of house property which may be commenced even before the date of transfer of original receipt. Similarly, the (Kar.) had expressed similar view and had held that investment made towards construction of house property prior to the date of transfer should also be eligible as deduction for the purpose of section 54 of the Act. Accordingly, respectfully following the ratio laid down by the Hon’ble Delhi High Court and the Hon’ble Karnataka High Court as aforementioned, we are of the view that provisions of section 54F do not prescribe any condition as to the date of commencement of construction of new house property, meaning thereby that the construction of house property may be commenced even before the date of transfer of original asset. However, it should be completed within three years after the date of transfer of original asset. On the facts of this case, we find that the construction of house property had been completed within three years from the date of transfer and accordingly, we are of the view that the assessee is eligible for exemption u/s 54F in respect of the two disputed amounts viz. Rs. 12 lakh paid on 20.06.2008 and Rs. 14,91,697 paid on 22.08.2008 which were expended prior to the date of transfer of original asset.
FULL TEXT OF THE ITAT JUDGMENT
This appeal has been preferred by the assessee against the order dated 27.02.2014 passed by the Ld. Commissioner of Income Tax(A)-XXIX, New Delhi for assessment year 2009-10.
2. Brief facts of the case are that the assessee sold a flat owned by him vide agreement to sale dated 30.09.2010. As per the assessee, he had entered into sale cum construction agreement dated 20.11.2007 with M/s Skyline Construction and Housing Pvt. Ltd. for purchase of flat no. A-304, Skyline Magnolia, Bangalore and had made payment amounting to Rs. 57,14,699/- towards the purchase of this new residential house on different dates ranging from 18.5.2007 to 15.4.2011. It was the assessee’s contention before the Assessing Officer that the new residential property was acquired vide sale deed dated 20.04.2011 which was within a period of three years from the date of sale for the old residential property and since the construction of the new house had been completed within the period of three years from the date of transfer of the old residential property, requirements of section 54 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) were fulfilled. It was also contended by the assessee before the Assessing Officer that although the construction was started prior to the date of sale of old property, the same was immaterial as the construction was completed within a period of three years from the date of sale. The assessee also contended before the Assessing Officer that in the alternative even if it was to be considered as purchase of new house, he had made substantial investment towards purchase of new house during the year under consideration and further that the agreement to buy a new house was within a period of one year from the date of sale of old house, and, therefore, the assessee was eligible for exemption u/s 54 notwithstanding the fact that the builder had failed to hand over the possession of the flat to the assessee within the stipulated period. However, the Assessing Officer was of the opinion that the case of the assessee did not fall within the precincts of section 54 of the Act as no allotment or agreement was made within the stipulated period of one year from the date of sale of the old property and further no substantial payments were made towards the cost of new asset and only an amount of Rs. 34,54,371/- was paid during the year under consideration. The Assessing Officer proceeded to add back the amount of exemption claimed by the assessee u/s 54 and amounting to Rs. 33,18,000/- to the income of the assessee.
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