By TIOL News Service

NEW DELHI, DEC 16, 2013: THE issue before the Bench is - Whether when the assessee makes payments to a builder for purchase of flat but the builder fails to give delivery as per scheduled time, Sec 54F benefits are not available in such a case. And the verdict favours the assessee.

Facts of the case

The assessee had shown income from house property, business and other sources. The assessee sold house on which LTCG was shown at Rs.31,00,369/-. Deduction u/s 54 was claimed for entire capital gain on account of investment in house at Bangalore. Assessee also sold a plot through two sale deeds for a total sale consideration of Rs.24,81,000/-. LTCG was shown at Rs.19,89,914/-. Deduction u/s 54F was claimed for this entire amount on account of investment in the same house at Banglore. The AO allowed deduction to the extent of Rs.14,50,000/- on account of deposit in the capital gain A/c against the LTCG of Rs.50,90,283/- and the balance amount of Rs.36,40,283/- was held as taxable. The CIT(A) allowed the deduction u/s 54/54F as claimed.

On Appeal before the Tribunal the DR submitted that the assessee had not been given any possession of the flat or a house as per the requirement of the Statute. The AR submitted that the assessee cannot be penalized for the fault of the builder.

Having heard the parties, the Tribunal held that,

++ we have heard the rival submissions and perused the material available on record. It is seen that Ground No-1 of the department is misplaced as no evidence has been filed by the assessee before the CIT(A). Not only the facts relatable to the said agreement are found recorded in the assessment order, it is also seen that the Certificate given by the assessee has not been disputed by the Revenue despite a specific query. As such we hold that Ground No-1 deserves to be rejected;

++ considering the grounds agitated by the Revenue on merit, we find no substance in them as admittedly the payments were made by the assessee on the specific dates pursuant to the agreement entered with M/s Golden Gate Properties Ltd, Banglore on 18.12.2008 i.e within the specified time and the delivery was scheduled to take place before 30.09.2009 i.e very much within the stipulated time. The fact that there was no relationship between the assessee and the builder has not been assailed by the Revenue as such no connivance or collusion can be read into the Agreement. In these peculiar circumstances looking at the settled legal position on the said issue as considered by the Jurisdictional High Court amongst others, we find no infirmity in the impugned order;

++ accordingly being satisfied with the reasoning and finding, the departmental grounds are dismissed.

(See 2013-TIOL-1063-ITAT-DEL)