Kishore H. Galaiya v. Incometax Officer

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The Tax Publishers2012 TaxPub(DT) 2549 (Mum-Trib) : (2013) 050 (II) ITCL 0058 : (2012) 137 ITD 0229 : (2012) 150 TTJ 0444 : (2012) 079 DTR 0201 INCOME TAX ACT, 1961 --Capital gains--Deduction under section 54Exemption under section 54 available even if possession not taken--Assessee claimed exemption under section 54 in respect of capital gain arising from sale of flat and investment in new residential flat. Assessing officer disallowed the same observing that provisions of section 54 were not fulfilled. *Held:* Was not justified as all the conditions of section 54 were satisfied. Firstly, assessee booked the new flat with the builder and the builder was required to handover the possession of flat after construction, therefore, it was considered as construction of new residential house and not purchase of flat in view of Circular No.471, dated 15-10-1986 and Circular No. 472, dt. 16-12-1993 of CBDT and in such case, assessee has to invest capital gain within a period of three years. It was not necessary to take possession of flat within the period of three years as it could be delayed because of many factors not under the control of assessee or due to default on part of builder and, therefore, merely because possession was not taken within the period of three years, the exemption cannot be denied. Secondly regarding deposit of unutilized capital gain in capital gain account scheme, assessee kept the entire amount in saving bank account and had not utilized it for any other purposes. Thirdly, the due date for furnishing of return of income under section 139(1) was subject to the extended period provided under section 139(4), therefore, assessee invested the whole amount within the said period, therefore the claim of assessee cannot be denied. Income Tax Act, 1961 Section 54 IN THE ITAT MUMBAI BENCH 'A' B.R. MITTAL, J.M. & RAJENDRA SINGH, A.M. Kishore H. Galaiya v. ITO ITA No. 7326 (Mum) of 2010 A.Y. 2006-07 13 June, 2012 Booking of flat with a builder, is a case of construction for purpose of claiming exemption under section 54; if construction is complete within 3 years section 54 exemption would be available even if possession was not taken within three years Appellant by : Bhavesh Doshi Respondent by : K.R. Vasudevan ORDER *Rajendra Singh, A.M.* This appeal by the assessee is directed against the order dated 13-8-2010 of Commissioner (Appeals) for the assessment year 2006-07. 2. The only dispute raised by the assessee in this appeal is regarding disallowance of claim of exemption under section 54 of the Income Tax Act, 1961 (the Act) in respect of long term capital gain arising from sale of a residential flat. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2549 (Mum-Trib) : (2013) 050 (II) ITCL 0058 : (2012) 137 ITD 0229 : (2012) 150 TTJ 0444 : (2012) 079 DTR 0201

INCOME TAX ACT, 1961

--Capital gains--Deduction under section 54Exemption under section 54 available even if possession not taken--Assessee claimed exemption under section 54 in respect of capital gain arising from sale of flat and investment in new residential flat. Assessing officer disallowed the same observing that provisions of section 54 were not fulfilled. Held: Was not justified as all the conditions of section 54 were satisfied. Firstly, assessee booked the new flat with the builder and the builder was required to handover the possession of flat after construction, therefore, it was considered as construction of new residential house and not purchase of flat in view of Circular No.471, dated 15-10-1986 and Circular No. 472, dt. 16-12-1993 of CBDT and in such case, assessee has to invest capital gain within a period of three years. It was not necessary to take possession of flat within the period of three years as it could be delayed because of many factors not under the control of assessee or due to default on part of builder and, therefore, merely because possession was not taken within the period of three years, the exemption cannot be denied. Secondly regarding deposit of unutilized capital gain in capital gain account scheme, assessee kept the entire amount in saving bank account and had not utilized it for any other purposes. Thirdly, the due date for furnishing of return of income under section 139(1) was subject to the extended period provided under section 139(4), therefore, assessee invested the whole amount within the said period, therefore the claim of assessee cannot be denied.

Income Tax Act, 1961 Section 54

IN THE ITAT MUMBAI BENCH 'A'

B.R. MITTAL, J.M. & RAJENDRA SINGH, A.M.

Kishore H. Galaiya v. ITO

ITA No. 7326 (Mum) of 2010

A.Y. 2006-07

13 June, 2012

Booking of flat with a builder, is a case of construction for purpose of claiming exemption under section 54; if construction is complete within 3 years section 54 exemption would be available even if possession was not taken within three years

Appellant by : Bhavesh Doshi

Respondent by : K.R. Vasudevan

ORDER

Rajendra Singh, A.M.

This appeal by the assessee is directed against the order dated 13-8-2010 of Commissioner (Appeals) for the assessment year 2006-07.

2. The only dispute raised by the assessee in this appeal is regarding disallowance of claim of exemption under section 54 of the Income Tax Act, 1961 (the Act) in respect of long term capital gain arising from sale of a residential flat.