By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi Chartered Accountants
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S/s. 45, 54, 54F – Deduction u/s. 54F cannot be denied in a case where the assessee has made payment and as per agreement was scheduled to receive possession of the property but did not receive possession of the property.
Facts:
During the previous year the assessee sold a residential house on 13-06-2008 and a plot of land on 10-11-2008. Both these assets were held by the assessee as long term capital assets. The long term capital gain arising on transfer of house was Rs. 31,00,369 and long term capital gain arising on transfer of plot was Rs. 19,89,914. Thus the aggregate long term capital gain was Rs. 50,90,283. The assessee claimed exemption u/ss. 54 and 54F. The assessee entered into an agreement with Golden Gate Properties Ltd. on 18-12-2008 for purchase of a house. She paid the builder Rs. 42,50,000 on different dates between 31-05-2008 to 31-12-2008 and deposited Rs. 14,50,000 in capital gain account scheme. As per agreement, the assessee was scheduled to receive possession of the house by 30- 09-2009 i.e. within the time limit mentioned in these sections for purchase of house.
Before the AO, the assessee relied upon the ratio of the decisions in the case of CIT vs. R. L. Sood (2000) 245 ITR 727 (Del); CIT vs. Sardarmal Kothari & Another 302 ITR 286; the judgment of Karnataka High Court dated 15-02-2012 in the case of CIT vs. Sri Sambandam Udaykumar in IT Appeal No. 175/2012 (2012-TIOL-217- HC-Kar-IT); Mrs. Seetha Subramanian vs. ACIT 56 TTJ 417 (Mad) and Satish Chandra Gupta vs. AO (54 ITD 508 (Del) and argued that the delay was not due to the fault of the assessee.
The AO rejected the arguments of the assessee that there was no relationship between the assessee and the builder and hence there can be no occasion to consider connivance. He also rejected the contention that the builders had since entered into a financial arrangement with M/.s J M Financial Asset Reconstruction Co. P. Ltd. who had committed funds to the builders and the builder had communicated that construction of the flat allotted was under progress and date of possession communicated by them was December 2012 and the builders had further demanded funds of Rs. 14,17,352 vide email dated 10-03-2012 and the assessee was in the process of arranging the same.
Since the assessee had not received possession of the house, the AO denied the exemption on the ground that these sections require purchase of house within a period of two years from date of transfer and even while the assessment was going on the assessee had not received possession of the house.
Aggrieved the assessee preferred an appeal to the CIT(A) who allowed the appeal.
Aggrieved the revenue preferred an appeal to the Tribunal.
Held
The Tribunal noted that the payments were made by the assessee on the specific dates pursuant to an agreement entered with the builder on 18-12-2008 i.e. within the specified time and the delivery was scheduled to take place before 30-09-2009 i.e. very much within the stipulated time and also that since there was no relationship between the assessee and the builder no connivance or collusion can be read into the agreement. Considering these facts and also the settled legal position laid down interalia by the decision of Delhi High Court in the case of CIT vs. R. L. Sood 245 ITR 727 (Del) the Tribunal confirmed the order passed by CIT(A). The appeal filed by revenue was dismissed.
