The Tax PublishersITA No. 216/Mum/2020
2020 TaxPub(DT) 4941 (Mum-Trib)INCOME TAX ACT, 1961
Section 263
Revision made by CIT on the ground that assessee had not made the new investment within the prescribed time limit under section 54 for claiming exemption was not justified as once the executed documents were registered, the transfer would take place on the date of execution of documents, and not on the date of registration of documents. It is well-settled that immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession or the date of registration of document which is relevant. Once the executed documents are registered, the transfer will take place on the date of execution of documents and not on the date of registration of documents.
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Revision under section 263 - Erroneous and prejudicial order - Disallowance of claim of deduction under section 54 -
Assessee sold her residential house on 19-11-2014. The capital gains received on transfer of old property was invested by assessee in a new residential flat under construction building for which assessee received an allotment Letter, dated 5-2-2015 on making payment of Rs. 3,62,97,800. AO accepted the same while making assessment under section 143(3). CIT held that 'in paragraph 18 of the agreement, the builder talked about making endeavour to complete the construction at the earliest by 31-3-2017; however, the occupancy certificate received by MCGM on 25-7-2017 and therefore, assessee could not have purchased/occupied the flat before receiving the said occupancy certificate. CIT observed that as assessee had purchased the flat and not constructed, the time limit available to her was two years and the time limit for making investment was till 19-11-2016 and since the date of sale of the old property was 19-11-2014, the date of occupancy certificate, i.e., 25-7-2017 was beyond the limitation of two years from the date of transfer. Thus, order passed by AO was erroneous and prejudicial to the interest of revenue. Held: It was noted that substantial consideration towards investment was made within two years itself from the date of transfer. The purchase agreement was, dated 2-11-2015 registered on 7-11-2015 along with allotment letter, dated 5-2-2015.It was well-settled that immovable property was not conveyed by delivery of possession, but by a duly registered deed. Further, it was the date of execution of registered document, not the date of delivery of possession or the date of registration of document which was relevant. Once the executed documents were registered, the transfer would take place on the date of execution of documents and not on the date of registration of documents.Moreso,if the order of AO was erroneous but was not prejudicial to the interest of revenue or if it was not erroneous but was prejudicial to the interest of revenue, recourse could not be had to section 263(1).Thus, the order of CIT under section 263 was quashed.
Followed:Malabar Industrial Co. Ltd. v. CIT(2000) 243 ITR 83 (SC) :2000 TaxPub(DT) 1227 (SC); Alapati Venkataramiah v. CIT ((1965) 57 ITR 185 (SC) : 1965 TaxPub(DT) 0294 (SC)), CIT v. Podar Cements (P) Ltd. ((1997) 226 ITR 625 (SC) : 1997 TaxPub(DT) 1265 (SC)) and CIT v. Vishnu Trading & Investment Co. ((2003) 259 ITR 724 (Raj) : 2003 TaxPub(DT) 0162 (Raj-HC)).
REFERRED : The CIT v. Shri Nirav Modi (2017) 390 ITR 292 (Bom) :2016 TaxPub(DT) 3506 (Bom-HC); The CIT, Panaji Goa v. Shri Girish L. Ragha (2016) 289 CTR 213 (Bom) : 2016 TaxPub(DT) 2294 (Bom-HC); CIT v. Gabriel India Limited (1993) 203 ITR 108 (Bom) : 1993 TaxPub(DT) 1357 (Bom-HC); CIT v. Mrs. Hilla JB. Wadia (1995) 216 ITR 376 (Bom) : 1995 TaxPub(DT) 0162 (Bom-HC); Shri Hasmukh N. Gala v. ITO 20 (1) (3)(2017) 83 taxmann.com 49 (Mumbai-Trib.) : 2015 TaxPub(DT) 3502 (Mum-Trib)
FAVOUR : In assessee's favour
A.Y. : 2015-16
IN THE ITAT, MUMBAI BENCH
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