Assistant Commissioner of Income-tax, Circle 25(3) v. Smt. Sunder Kaur Sujan Singh Gadh [2005] 3 SOT 206 (Mum.)
Brief facts of the case are, that the assessee had sold a residential flat No. 4 in Vasant Vihar, 14th Khar Road, Mumbai-52, for a total consideration of Rs. 41 lakhs as per agreement dated 13-1-1997. The said flat had been purchased by the assessee for a sum of Rs. 7.75 lakhs on 10-7-1992. As against the sale proceeds of Rs. 41 lakhs the assessee had invested a sum of Rs. 11,47,500 towards purchase of another residential house property at Ahmedabad. The builders M/s. Radhe Developers (India) Ltd., of Ahmedabad, Gujarat had, issued an allotment letter dated 26-2-1996 to the assessee allotting flat No. B-62 in the building names as Thirthdham and Rs. 11,47,500 were paid by the assessee to the developers in two instalments, i.e., Rs. 10 lakhs were paid on 5-1-1996 and Rs. 1,47,500 were paid on 12-1-1996 out of her capital account with M/s. Harmohan Singh Sujan Singh. Subsequently, the builder had not constructed the 'B'-Block in Thirthdham in respect of which the allotment letter was issued by them to the assessee and as an alternative the membership of the assessee was shifted to flat No. C-32 in the same building. The possession of the said flat No. C-32 was handed over to the assessee before 4-1-2000 as is evident from the builder's letters dated 19-11-1999 and 4-1-2000.
Vide Board's Circular No. 471, dated 15-10-1986 it has been explained that to
qualify investment for construction under section 54F the crucial date is the
date of allotment of flat by DDA and payment of instalment was only a follow-up
action and taking possession of the flat is only a formality, of course, instalments have to be paid by the allottee as per the schedule fixed by the DDA. As per Board's Circular No. 672, dated 16-12-1993 the Board after referring to the above mentioned Circular No. 471 extended the facility of exemption under sections 54 and 54F in respect of allotment of flats/house by co-operative societies and other institutions, and the allotment and construction of the flat by co-operative societies and other institutions are to be considered in similar manner for the purpose of allowing exemption under section 54 . The above circulars are binding on the revenue authorities under section 119 of the Act. Since the flat has been allotted to the assessee by the builder who would fall in the category of other institutions mentioned in the circulars, it has to be taken as a case of construction of the residential flat and not as a purchase of a residential flat.
Before the Tribunal, the contention of the assessee was that the provisions of section 54F is a beneficial provision for promoting the construction of residential houses.Therefore, the said provision has to be construed liberally and for achieving
the purpose for which it was incorporated in the statute. In support of the said
contention the assessee relied upon the decision in the case of Bajaj Tempo Ltd. The assessee also relied upon certain circulars issued by the CBDT. One of the circulars was Circular No. 471, dated 15th October, 1986. This was issued by the CBDT clarifying the position that where an assessee acquires a flat by an allotment under the self-financing scheme of the Delhi Development Authority, the allotment itself is sufficient compliance for getting the benefit under section 54F, even though the assessee has not paid all the instalments due under the said scheme. Later by another Circular No. 672, dated 16th December, 1993, the CBDT has issued clarification extending the same benefits for acquisition of houses or flats on allotment under similar schemes. Therefore it was contended that the intention of the Legislature was to invest in the acquisition of a residential house and completion of construction or occupation is not required. We find force in the argument of the learned counsel for the assessee. The said intention is very clear from the two circulars issued by the CBDT, where it was held that an assessee is entitled to the benefit of sections 54 and 54F, if an assessee gets an allotment under the selffinancing scheme and pays the first instalment of the cost of construction. From that it is clear that in order to get the benefit under section 54F the assessee need not complete the construction of the house and occupy the same. Admittedly in the present case, the assessee had invested the entire net consideration within the stipulated period and in fact has even constructed the entire residential property, except some finishings to make it fit for occupation. As the assessee has substantially completed all the work of construction and has invested the entire net consideration, it has to be inferred that the assessee has complied with the conditions provided under section 54F.
A similar case was considered by the Delhi Bench of this Tribunal in the case of Satish Chandra Gupta v. Assessing Officer [1995] 54 ITD 508 and this Tribunal after considering the provisions of section 54 as well as section 55 held that the claim cannot be denied on the ground that the construction the house started by the assessee was not completed within the stipulated period of three years and some work was carried out thereafter. The said decision also supports the assessee's contention. Under the above circumstances, especially in the light of the circulars issued by the Central Board of Direct Taxes, we hold that the Commissioner of Income-tax was not justified in revising the assessment of the Assessing Officer. Hence we set aside the order of the CIT and restore that of the Assessing Officer.