Taxpayer Should Acquire Residential House Within Three Years From Date Of Transfer Of Old House, For Claiming Benefit Of Capital Gains U/s 54: Delhi ITAT

Finding that the assessee has not fulfilled either of the conditions mentioned in Section 54 of the Income tax Act, the New Delhi ITAT held that there is no infirmity in the orders of the I-T Authorities in denying the benefit of deduction of long term capital gains to the assessee u/s 54. The Division Bench of N.K. Billaiya (Accountant Member) and Yogesh Kumar U.S (Judicial Member) observed that “For the purpose of claiming the benefit u/s 54 of the Act, within a period of one year before or two year after the date of transfer of old house, the tax payer should acquire another residential house or should construct a residential house within a specified period of three years from the date of transfer of old house”. (Para 8) As per the brief facts of the case, the assessee filed return declaring at Rs. 94,02,280/-, which was subsequently revised to Rs. 1,04,01,920/-. In its return, the assessee had offered for tax income from Long Term Capital Gain (LTCG) of Rs. 35,58,612/- being income arising from sale of property situated at Dwarka which was sold/transferred for a total sale consideration of Rs. 1,36,00,000/- and the LTCG of Rs. 35,58,612/- was computed. The assessment order came to be passed by making disallowance of Rs. 35,58,612/- on the ground that the Assessee has not fulfilled the conditions of Section 54 of the Act. The Bench found from the Agreement that nowhere it is mentioned that the intended property to be sold by Piyush Aggarwal in favour of the Assessee is either under construction or is an incomplete property. Rather, the construction of the said property has been started much before the execution of the sale deed of the residential property (Flat) by the assessee, added the Bench. In the present case, the Bench noted that as per the Agreement dated 18/02/2014, the Assessee has been given full right to use, to hold, enjoy, sell, mortgage the Property to be purchased by the Assessee, whereas on the the other hand, the first party i.e. Peeyush Aggarwal will not have any right, title or interest over the said property. The Bench also obverted that as per the Assessee, the new Flat was purchased by sale endorsement dated 18/02/2014, but later on, contended that the Assessee has purchased Bare-Shell flat on 13/08/2016, which is not supported by any of the documents. On the contrary, the Assessee has entered into Agreement to Sell on 18/02/2014 which itself given with certain absolute rights to the assessee, added the Bench. Hence, the ITAT dismissed the assessee's appeal. Counsel for Appellant/ Assessee: Rohit Jain Counsel for Respondent/ Revenue: Samarth Singh Dhumal Case Title: Mohan Lal Jain verses ACIT Case Number: ITA No.746/Del/2023 Click here to read/ download the Order

Taxpayer Should Acquire Residential House Within Three Years From Date Of Transfer Of Old House, For Claiming Benefit Of Capital Gains U/s 54: Delhi ITAT

Pankaj Bajpai

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