The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT)has held that capital gain exemption cannot be denied on the ground of Delay in the registration of new property for reasons beyond the control.
The assessee, Vikas Narayan Baddichallengedthe order passed by the Commissioner of Income-Tax(Appeals)-11, Ahmedabad CIT(A) under section 250(6) of the Income Tax Act, 1961 (the Act) dated 18.12.2015 about the Asst.Year 2012-13.
It was stated that the claim of exemption of long-term capital gain of Rs.1,08,69,338/- by the assessee was denied by the Revenue by holding that the assessee had failed to comply with the conditions stated therein of investing in the new residential house within the stipulated period of two years from the date of sale of the original asset.
The assessee claimed that the delay in investment was for reasons beyond his control and that too of a very short period of five months and the assessee intended to invest capital gain in a new residential house.
The assessee had sold land situated in Bangalore for total consideration of Rs.1,52,04,000/- and claimed to have invested the sale consideration in the capital gain scheme of the bank on 29.3.2012. The counsel for the assessee contended that the residential house could not be purchased within the stipulated time since the Society, in which the residential house was situated, was not registered, and therefore, occupants of the society had agreed to form and register a Cooperative Society i.e. “Vithalkunj” which was ultimately registered on 1.2.2014.
The assessee made payment of the entire sale consideration of the property of Rs.1,87,25,000/- on 02-04-2014 and invested the entire net consideration received on the sale of his property amounting to Rs.1,52,04,000/-, and sale deed of new property purchased was immediately thereafter registered and executed on 3.5.2013.
The assessee contended that the title to the property not being clear and which was beyond the control of the assessee, and the delay in the purchase of the property beyond the time stipulated under section 54F of the Act cannot be attributed to the assessee. It was a very short period of delayof five months only and the intention of the assessee to purchase the said property was clear all along.
A Coram of Smt Annapurna Gupta, AM and Smt. Suchitra Kamble, JM observed that the delay in registration of the new property was for reasons beyond his control and the denial of exemption u/s 54 F in the present case is for a mere technical default in not getting the new property registered in his name within the stipulated period of two years, as specified under section 54F of the Act, the consequent delay being a minor delay of 5 months that too for reasons beyond the control of the assessee.
The Tribunal held that the assessee is entitled in law to claimexemption of capital gains amounting to Rs.1,08,69,338/- under section 54F of the Act and direct the AO to allowthe claim of the assessee. The appeal of the assessee was allowed. Shri Manish Shah, Advocate with Jimi Patel appeared for the assessee and Shri G.C. Daxini appeared for the revenue.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.
