| The Tax Publishers2020 TaxPub(DT) 0999 (Bang-Trib) INCOME TAX ACT, 1961
Section 54F
Where the assessee got 24 flats in terms of JDA and was in process of selling then it cannot be said that on date of investment for purpose of section 54F he was owing more than one house. Firstly this condition of proviso to section 54F(1) shall apply on date of transfer of original asset and secondly out of these 24 flats, 15 flats were already sold in present year and remaining 9 flats were likely to be sold within the period of three years from the date of its purchase and proviso (a) (i) to section 54F is not applicable because in addition to these 9 flats and one residential house purchased by assessee for which assessee was claiming exemption under section 54F, therefore, exemption could not be denied to assessee.
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Capital gain - Exemption under section 54F - Assessee giving up land under JDA - Assessee getting his share of flats in pursuance thereof--Applicability of proviso to section 54F(1)
The assessee entered into a JDA as per which the assessee agreed to surrender 58% of undivided share in land to the developer and the assessee was to get 32,840 Sq. Feet of Built up area in the apartment complex which ultimately resulted in 24 flats coming to the share of the assessee. In the present year, 15 flats were sold by the developer on behalf of the assessee and as on 31-3-2012, 9 flats were lying unsold. The assessee deposited an amount of Rs. 250 lakhs on 30-7-2012 under Capital gains Account Scheme i.e. within the due date of filing the Return of Income and claimed deduction of Rs. 248,72,991 under section 54F. Later on, the assessee used this money to buy a property in koramangla. The objection of the assessing officer was this that the assessee owns a self-occupied house property and these nine unsold flats and therefore, as per proviso a (i) to section 54F (1), the assessee is not eligible for deduction under section 54F. Held: (i) For the purpose of proviso to section 54F(1), date of transfer of original asset is important which is 16-9-2008 being the date of JDA. Even if we take 1-4-2011 (i.e. First Day of the Previous year relevant to present assessment year 2012-13) as the date of transfer because Capital gain is being taxed in the present year, this is not a finding of the assessing officer that on this date, these flats were owned by the assessee because ownership of flats will be there only when the construction is completed. As per Letter, dated 4-3-2015 submitted by the Developer to the assessing officer, copy on page 44 of the paper book, the construction of 24 flats was completed in April 2011 and the Developer started selling these flats from July 2011. Hence, on 1-4-2011, these flats were not in existence and hence, it cannot be said that the assessee was owner of these flats on the date of sale of the original asset being date of JDA or 1-4-2011 being the first day of the previous year relevant to the present assessment year. (ii) Out of these 24 flats, 15 flats are already sold in the present year and remaining 9 flats are likely to be sold within the period of three years from the date of its purchase but the assessee is not claiming deduction under section 54F in respect of any of these 24 flats but since even these 9 unsold flats can be considered as a part of new asset for deduction under section 54F, the proviso (a) (i) to section 54F is not applicable because in addition to these 9 flats and one residential house purchased by the assessee for which the assessee is claiming deduction under section 54F, the assessee was owning only one residential house being self-occupied house and hence, this proviso is not applicable.
REFERRED : CIT & Jt.CIT v. TK. Dayalu (2011) 202 Taxman 531 (Karn) : 2011 TaxPub(DT) 1642 (Karn-HC) andf CIT v. Smt. KG. Rukminiamma 2011 TaxPub(DT) 0429 (Karn-HC).
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, BANGALORE BENCH
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