Date of transfer of ownership of new property necessary for a deduction under Section 54
Fact and issue of the case
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.
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.
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”).
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.
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/-.
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”.
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.
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.
Observation of the court
Admittedly, it is a fact 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. Learned counsel for the assessee made a reference to the decision of Co-ordinate Bench of ITAT, Mumbai in the case of Bastimal K. Jain vs. ITO [2016] 76 taxmann.com 368 (Mum) to submit 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”. Learned counsel had also pointed out that learned Assessing Officer had denied the deduction under Section 54 for the reason that new property was not purchased but was constructed and that construction within one year prior to the sale of original asset is not eligible for deduction under Section 54 of the Act. In this respect, the correct fact in the present case is that assessee had purchased a new property from the original allottee i.e. Miss Lipi Das and Mr. Ratanjit Das vide agreement dated 07.07.2010 and the possession was handed over on 16.01.2011. Therefore, purchase of new property was within one year of transfer of original asset. Conveyance Deed was executed on 19.01.2011. 10.3. From the above stated factual matrix and considering the decision of Co-ordinate Bench of ITAT, Mumbai in Bastimal K. Jain (supra), claim of the assessee under Section 54 is allowed. Accordingly, ground nos. 3 to 6 in this respect are allowed.
In the result, appeal of the assessee is allowed.
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order from here
Satyamurti-Ramasunder-Vs-ACIT-ITAT-Delhi-2-1
