Skip to main content

Booking of an Under-Construction Flat is a Case of Construction and not Purchase

The Mumbai  bench of  Income Tax Appellate Tribunal (ITAT) in Mr. Mustansir I Tehsildar vs Income Tax Officer has held that booking of an under-construction flat is a case of construction and not a purchase. 

The bench comprising of Judicial Member Saktijit Dey and Accountant Member B.R.Baskaran ruled so while allowing the assesse’s appeal. 

The instant appeal filed by assesse challenging the order of CIT(A), Mumbai confirming the partial rejection of claim made by the assessee for deduction under Section 54 of the Income Tax Act for assessment year 2013-14. 

Assesse in the present case held a share in flat of an apartment ,sold the same for consideration  and consequent thereto, the long term capital gain was computed .The assessee had earlier booked a flat which was under construction and he had made payments to the builder much earlier to the date of transfer of old flat and the aggregate payments made by the assessee towards the new flat was more than the amount of Capital gain ie; entire amount of capital gain was deductible u/s 54 of the Act by treating the acquisition of new flat as a case of “Construction”. 

The assessing officer, on the other hand took the acquisition of flat as a case of purchase of flat. Accordingly he took the view that the flat should have been purchased one year before or two years after the date of transfer and the aggregate payment made by the assesse falls outside the period and hence not eligible for deduction u/s 54 of the Act. 

The tribunal observed that since the amount invested in the new flat prior to the due date for furnishing return of income was more than the amount of capital gain, the requirements of depositing any money under capital gains account scheme does not arise in the instant case. 

It further observed that the acquisition of new flat in an apartment under construction should be considered as a case of “Construction” and not “Purchase” and held that the assesse is entitled for deduction of full amount of capital gains u/s 54 of the Act The tribunal bench set aside the order passed by Ld CIT(A) and direct the AO to allow the deduction u/s 54 of the Income Tax Act as claimed by the assesse.

Article referred: http://www.taxscan.in/booking-construction-flat-case-construction-not-purchase-itat-grants-capital-gain-exemption/15393/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

Comments

Post a Comment

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...
Post a Comment
Read more

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...
1 comment
Read more

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...
1 comment
Read more