Case Law Details
M. George Joseph Vs DCIT (Karnataka High Court)
In the instant case, the daughter of the assessee had entered into an agreement for purchase of a flat on 30.12.2006 with M/s Brigade Enterprises. On 21.08.2008, the assessee transferred his shares in the company on which Long Term Capital Gain was offered. Thereafter, under an agreement, on 18.03.2009, the flat was transferred in the name of the assessee and thereafter a registered sale deed was executed in favour of the assessee on 28.03.2011. The assessee had acquired the residential property viz., the flat under an agreement to sell in respect of undivided land and an agreement to build, thus, the instant case was a case of construction of a residential house. The sale deed was executed in favour of the assessee within a period of three yeas from the date of transfer of shares i.e., on 28.03.2011, prior to three years from the date of transfer of shares i.e., 21.08.2008. Therefore, the authorities under the Act ought to have examined the claim of the assessee whether or not the assessee had constructed a residential house within a period of three years from the date of transfer of original property. It is also pertinent to note that exemption under Section 54 of the Act is dependent on the date of acquisition of the property and not on the date of payment made in respect of such property. It is also noteworthy to mention that to claim an exemption under Section 54F of the Act, it is not necessary that the same sale consideration should be used for construction of a new house property. It is also noteworthy that Section 54F of the Act is a beneficial provision, which has been enacted with an object to promote investment in housing and enable the assessee to save tax on capital gains. It is a well settled rule of interpretation that benevolent provision should be interpreted liberally bearing in mind the object for which the provision is enacted. Thus, from narration of aforementioned facts, it is evident that the assessee had complied with the conditions stipulated under Section 54F of the Act and was entitled for exemption. Therefore, the finding recorded by the tribunal that since, payments were made prior to one year before the date of transfer of shares and therefore, the assessee is not entitled to claim exemption under Section 54F of the Act cannot but be termed as perverse.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2009-10. The appeal was admitted by a bench of this Court on the following substantial question of law:
“Whether the Income Tax Appellate Tribunal is justified in law in confirming the order passed by the first Appellate Authority and Assessing Officer that the appellant is not entitled to exemption of Rs. 88,98,970/- under Section 54F of the Act even though all the mandatory requirements and conditions were fulfilled on the facts and circumstances of the case?”
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