The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has upheld section 54 deduction as handing over of possession was delayed due to builder’s fault and assessee fulfilled all statutory requirements.
The assessee, Vinay Girish Bajpai had e-filed his return of income on 26.08.2015 declaring total income. During the year, the appellant had claimed deduction under section 54 of the Income Tax Act, 1961 amounting to Rs.3,42,58,350/-. Therefore, the appellant was requested to submit the detailed note on satisfaction of condition under section 54 of the Income Tax Act for claiming deduction along with supporting evidence. In response to the above, assessee had furnished details of the transactions of sale & purchase of property.
The AO was not satisfied, he held that the letter of the Developer is contradictory to the fact that the Developer itself has- updated status on RERA site on 02.11.2017 as “On-going project and revised date of completion is mentioned as 31.08.2018; capital gains. and possession of the house property wherein the appellant had invested. Even though the appellant had submitted a letter from the Developer stating that the construction is complete, there is no specific date mentioned in the letter. The assessee is yet to make the final payment in respect of the investment transaction. Occupation Certificate is not yet received. The assessee has not got possession of the property. The circular no. 471 & 972 referred by the assessee were for specific schemes. Circular 471 is about reckoning of the holding period. The Central Board of Direct Taxes (CBDT) issued a circular (No.471, dated 15th October, 1986), where it has clarified that for flats under self-financing schemes of the DDA; the holding period shall begin from the date of the allotment letter. During the assessment proceedings, the appellant had requested the AO to take liberal view with regard to deduction u/s.54. In this regard AO held that though liberal view can be taken while allowing deduction u/s.54 as it a beneficial section, however, the decisions cannot be applied mechanically.
The coram of Judicial Member Amarjit Singh and Accountant Member Shamim Yahya has held that assesssee has complied with the condition mention under section 54 of the IT Act to claim the exemption. As pointed out by the Ld. Counsel of the assessee above, the handing over of the possession was delayed due to fault on the part of the builder and assessee has complied with the necessary condition of payment as required. There is a due agreement and part amount was paid.
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