Rajiv Madhok, New Delhi V. ACIT, New Delhi

ITA 2291/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1237 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 17-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Share purchase agreement; Benefit of exemption; Set aside; Capital Gains
• Section: 54F; 201; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.2291/DEL./2017 ASSESSMENT YEAR: 2012-13 MR. RAJIV MADHOK, A-4/2, VASANT VIHAR, NEW DELHI VS. ACIT, CIRCLE-30(1), NEW DELHI PAN : AHWPM1025C (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI DINESH GUPTA, CA DEPARTMENT BY SHRI UMESH TAKYAR, SR. DR DATE OF HEARING 26.02.2020 DATE OF PRONOUNCEMENT 29.05.2020 ORDER PER O.P. KANT, A.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 31/01/2017 PASSED BY THE LEARNED CIT(APPEALS)-10, N EW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 201 2-13 RAISING FOLLOWING GROUNDS: 1. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE PE TITIONERS CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10, NE W DELHI ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER AND IN SUSTAINING THE DISALLOWANCE OF THE CLAIM OF RS.2,07,62,580/- MADE IN TERMS OF THE PROVISIONS CO NTAINED IN SECTION 54F OF THE INCOME TAX ACT, 1961. 2. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE PE TITIONERS CASE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-10, NEW DELHI, ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF THE L EARNED ASSESSING OFFICER AND IN NOT ALLOWING DEDUCTION UNDER SECTION 54F OF THE ACT EVEN FOR THE AMOUNTS SPENT ON CONSTRUCTION OF THE R ESIDENTIAL HOUSE PROPERTY AFTER THE DATE OF LONG TERM CAPITAL GAIN/T RANSFER OF THE ORIGINAL ASSET. 2 ITA NO. 2291/DEL./2017 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FILED RETURN OF INCOME ON 27/07/2012 DECLARING TOTAL INCO ME OF RS. 1,70,06,340/-. THE RETURN OF INCOME FILED BY THE AS SESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTI CES WERE ISSUED AND COMPLIED WITH. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE SHOWN LONG-TERM CAPITAL GAIN OF RS. 2, 18,91,720/- ON SALE OF THE SHARES ON 02/09/2011, BUT SAME WAS C LAIMED AS NOT TO BE CHARGED IN TERMS OF SECTION 54F OF THE AC T IN VIEW OF THE INVESTMENT IN PURCHASE/CONSTRUCTION OF PROPERTY BEA RING NO.T- 204/08-03 IN COMMON WEALTH GAMES, VILLAGE, DELHI. TH E ASSESSEE CLAIMED THAT THE PROPERTY WAS PURCHASED/CO NSTRUCTED WITHIN THE TIME PERIOD PROVIDED IN THE SECTION 54F OF THE ACT AND THUS, HE IS ENTITLED FOR NOT CHARGING OF LONG-TERM CAPITAL GAIN TO THE EXTENT OF INVESTMENT IN PURCHASE/CONSTRUCTION O F THE RESIDENTIAL HOUSE PROPERTY. HOWEVER, ACCORDING TO T HE ASSESSING OFFICER, THE RESIDENTIAL HOUSE HAS BEEN PURCHASED P RIOR TO THE TIME PERIOD PROVIDED IN SECTION 54F OF THE ACT AND THEREFORE ASSESSEE IS NOT ENTITLED FOR SAID BENEFIT UNDER SEC TION 54F OF THE ACT. THE ASSESSING OFFICER, ACCORDINGLY COMPLETED T HE SCRUTINY ASSESSMENT ON 27/03/2015 AFTER MAKING ADDITION FOR THE LONG- TERM CAPITAL GAIN OF RS. 2,18,91,720/-. ON FURTHER APPEAL, THE LD. CIT(A) UPHELD THE ADDITION, HOWEVER, REDUCED THE AD DITION TO RS. 2,07,62,580/- I.E. THE AMOUNT WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 54F OF THE ACT. AGGRIEVED, THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUC ED ABOVE. 3. THE SOLE ISSUE RAISED IN BOTH THE GROUNDS OF THE APPEAL IS SUSTAINING DISALLOWANCE OF CLAIM OF RS. 2,07,62,580 /- WHICH WAS MADE UNDER SECTION 54F OF THE ACT. 3 ITA NO. 2291/DEL./2017 4. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AN D PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE CASE THE AS SESSEE SOLD SHARES AND SHOWN LONG-TERM CAPITAL GAIN OF RS.2,18, 91,720/-. INITIALLY, IN THE DOCUMENTS FILED BEFORE THE ASSESS ING OFFICER THE ASSESSEE CLAIMED TO HAVE SOLD THE SHARES ON 02/09/2 011, HOWEVER, BASED ON SHARE PURCHASE AGREEMENT (SPA), T HE DATE OF THE SALE WAS CLAIMED AS ON 17/08/2011. THE ASSESSIN G OFFICER AND THE LD. CIT(A) HAS ACCEPTED THE DATE OF THE SAL E AS ON 17/08/2011. THUS THERE IS NO DISPUTE AS FAR AS DATE OF THE SALE OF THE SHARES IN THE AMOUNT OF LONG-TERM CAPITAL GAIN OF RS.2,18,91,720/- IS CONCERNED. 4.1 ON SALE OF A CAPITAL ASSET, CAPITAL GAIN IS CHA RGED AS PER PROVISIONS OF SECTION 45 OF THE ACT. BUT IF AN ASSE SSEE INVEST IN CERTAIN NEW ASSETS, THE CAPITAL GAIN IS NOT CHARGED TO THE EXTENT PROVIDED IN THE PROVISIONS OF THE ACT. ONE OF SUCH PROVISION IS SECTION 54F OF THE ACT. IN THE CASE THE DISPUTE IS REGARDING AVAILING OF BENEFIT UNDER SECTION 54F OF THE ACT. U NDER THE PROVISIONS OF THE SECTION 54F, THE LONG-TERM CAPITA L GAIN IS NOT CHARGED, IF ANY INDIVIDUAL OR HUF INVEST THE ENTIRE SALE CONSIDERATION ARISING ON TRANSFER OF ANY LONG-TERM CAPITAL ASSET (NOT BEING A RESIDENTIAL HOUSE), I.E., ORIGINAL ASS ET, INTO A PURCHASE OR CONSTRUCTION OF RESIDENTIAL HOUSE (I.E NEW ASSET ). IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE CAPITAL GAIN IN PROPORTION TO T HE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, IS NOT CHARGE D UNDER SECTION 45 OF THE ACT. 4.2 FOR AVAILING THE BENEFIT OF SECTION 54F, THE IN VESTMENT IN PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE HAS TO B E MADE AS UNDER: 4 ITA NO. 2291/DEL./2017 (A) PURCHASE OF RESIDENTIAL HOUSE WITHIN A PERIOD OF ON E YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRA NSFER OF THE ORIGINAL ASSET TOOK PLACE, OR (B) CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN A PERIOD O F THREE YEARS FROM THE DATE ON WHICH THE TRANSFER OF THE OR IGINAL ASSESSEE TOOK PLACE. 4.3 IN THE CASE OF THE ASSESSEE, THE TRANSFER OF TH E SHARES HAS TAKEN PLACE ON 17/08/2011 AND THEREFORE TIME PERIOD AVAILABLE TO THE ASSESSEE FOR PURCHASE/CONSTRUCTION FOR AVAILING BENEFIT OF THE SECTION 54F WORKS OUT AS UNDER: (A) PURCHASE WITHIN A PERIOD OF ONE YEAR BEFORE THE TRA NSFER OF SHARES (I.E. PERIOD BETWEEN 17/08/2010 TO 16.08.201 1 OR PURCHASE WITHIN TWO YEARS AFTER THE DATE OF THE TRA NSFER OF SHARES (I.E. PERIOD BETWEEN 17.08.2011 TO 18.08.201 3) OR (B) CONSTRUCTION WITHIN A PERIOD OF THREE YEARS FROM TH E TRANSFER OF SHARES (I.E. PERIOD BETWEEN 17.08.2011 TO 18/8/2014) 4.4 REGARDING THE PURCHASE/CONSTRUCTION OF THE RESI DENTIAL HOUSE THE ASSESSEE PROVIDED FOLLOWING INFORMATION: (I) THE ASSESSEE ENTERED INTO BUYERS AGREEMENT FOR PURCHASE OF APARTMENT WITH BUILDER/DEVELOPER I.E. EMMAR MGF CONSTRUCTION PRIVATE LIMITED AND PAID ADVANCE OF RUPEES 2,03,32,669/- (PAGE 6-7 AND 44 OF PB) 29/09/2009 (II) LETTER OF INTIMATION OF POSSESSION RECEIVED ON DEMAND OF FINAL AMOUNT CALLED BY THE BUILDER/DEVELOPER(PAGE 50 OF PB) 09/04/2012 (III) FINAL AMOUNT OF RS 13, 76, 702/ - PAID TO THE BUILDER/DEVELOPER( PAGE 51 OF PB) APRIL , 2012 5 ITA NO. 2291/DEL./2017 4.5 THE ABOVE FACTS RELATED TO INVESTMENT IN PROPER TY ARE NOT IN DISPUTE. IN VIEW OF THE BUYERS AGREEMENT DATED 29/ 09/2009 BETWEEN THE ASSESSEE AND BUILDER/DEVELOPER, THE LD AO/CIT(A) ARE OF THE VIEW THAT THE FLAT WAS READY ON THE SAID DATE AND THUS TRANSFER OF THE FLAT TOOK PLACE ON 29/09/2009. THE ALLOTMENT WAS FINAL ON 29/09/2009 AND GRANT OF COMPLETION CERTIFICATE/OCCUPANCY CERTIFICATE UPON WHICH LETTER OF INTIMATION OF POSSESSION WAS ISSUED ARE FOLLOW UP PROCEDURE TO THE PURCHASE OF FLAT. ACCORDING, TO THE LD. AO/CIT(A), THE SUBST ANTIAL PAYMENT OF THE FLAT WAS MADE BEFORE 29/09/2009 AND THUS TIT LE OF THE PROPERTY TRANSFERRED IN FAVOUR OF THE ASSESSEE ON 2 9/09/2009. 4.6 IN VIEW OF ABOVE OBSERVATION, ACCORDING TO THE LD. AO, THE RESIDENTIAL HOUSE (FLAT) WAS PURCHASED ON 29/09/200 9, WHICH IS BEYOND THE PERIOD OF PURCHASE OF RESIDENTIAL HOUSE (I.E 17/08/2010 TO 18/08/2013) AND THUS, THE ASSESSEE WA S NOT ENTITLED FOR THE BENEFIT OF SECTION 54F OF THE ACT. 4.7 THE ASSESSEE, HOWEVER, REFERRED TO VARIOUS CLAU SES OF THE BUYER AGREEMENT AND SUBMITTED THAT ON THE DATE OF T HE BUYER AGREEMENT, THE DEVELOPER WAS YET TO OBTAIN ALL REQU IRED PERMITS AND APPROVAL FOR CONSTRUCTION, COMMISSIONING AND DE VELOPMENT OF THE PROJECT [CLAUSE A(X)]; THE SUPER AREA OF THE FLAT WAS TENTATIVE AND WAS TO BE CONFIRMED AFTER CONSTRUCTIO N OF PROJECT (CLAUSE 1.2); LAYOUT PLANS WERE SUBJECT TO CHANGE ( CLAUSE 1.7A); PROPOSED BUILDING PLANS, DESIGN ETC. WERE TENTATIVE (CLAUSE 8.2); IF COMPLETION OF THE FLAT (PROJECT) DELAYED FOR THE RE ASONS BEYOND THE (IV) OFFER OF POSSESSION OF THE FLAT (NEW ASSET) RECEIVED BY THE ASSESSEE FROM THE BUILDER AND POSITION OF THE FLAT RECEIVED. (PAGE 52 OF PB) 06/07/2012 6 ITA NO. 2291/DEL./2017 CONTROL OF DEVELOPER, THEN DEVELOPER WAS TO BE ENTI TLED FOR EXTENSION OF TIME (CLAUSE 9.4.1). IN VIEW OF THE CL AUSES OF THE BUYERS AGREEMENT AND POSSESSION HANDED OVER IN APRI L, 2012, THE ASSESSEE CONTESTED THAT THE FLAT WAS CONSTRUCTE D BEFORE APRIL, 2012 AND IT WAS WITHIN THE PERIOD CONSTRUCTION OF T HREE YEARS AFTER THE SALE OF ORIGINAL ASSET ( I.E. 18/08/2014) . HE RELIED ON THE CBDT CIRCULAR NO. 471 DATED 15/10/1986 AND CIRCULAR NO. 672 DATED 16/12/1993 AND SUBMITTED THAT IN TERMS OF SCH EME OF THE ALLOTMENT AND CONSTRUCTION OF THE FLAT/HOUSE BY THE CO-OPERATIVE SOCIETIES OR THE OTHER INSTITUTION ARE SIMILAR TO T HOSE MENTIONED IN PARA 2 OF CBDT CIRCULAR NO. 471/DATED 15/10/1986 AND THUS SUCH CASES MIGHT BE TREATED AS THE CONSTRUCTION OF THE FLAT FOR THE PURPOSE OF SECTION 54 AND 54F OF THE ACT. 4.8 THE LD. CIT(A) REJECTED THE CONTENTION OF THE A SSESSEE AND HELD AS UNDER: 4.2.8 CLOSE READING OF ABOVE CIRCULARS, NOWHERE ME NTIONED THAT IN ORDER TO GET EXEMPTION CONSTRUCTION COULD TAKE PLAC E BEFORE THE DATE OF TRANSFER OF LONG TERM ASSETS. ON THE OTHER HAND, SECTION 54/54F MAKES IT CLEAR THAT THE CONSTRUCTION OF HOUSE MUST COMPLETE WITHIN 3 YEARS OF THE TRANSFER. FURTHER, CIRCULAR MAKES IT C LEAR THAT THE DATE OF PAYMENT OF FIRST INSTALLMENT FOR THE ALLOTMENT OF F LATS IS TO BE SEEN AS THE DATE OF OBTAINING THE TITLE OF THE PROPERTY. TH E ALLOTTEE GETS TITLE IN THE PROPERTY ON THE ISSUANCE OF THE ALLOTMENT LETTE R AND THE PAYMENT OF INSTALLMENT IS ONLY A FOLLOW UP ACTION AND TAKIN G THE DELIVERY OF THE POSSESSING IS ONLY A FORMALITY. 4.9 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT DATE OF POSSESSION OF THE FLAT SHOUL D BE TREATED AS THE DATE OF PURCHASE OF THE NEW ASSET IN VIEW OF TH E FOLLOWING DECISIONS: A. AYUSHI PATNI VS. DCIT (ITA NO. 1424/PUN/2016) B. SMT. RANJANA R. DESHMUCH VS. ITO (ITA NO. 697/MU M./2017) C. ITO VS. SHRI SHIV SUNIL KHANNA (ITA NO. 5857/MUM /2016) D. SMT. RAMITA MAHENDRA MEHTA VS. ITO (ITA NO. 4535 /MUM./2014) 7 ITA NO. 2291/DEL./2017 4.10 ACCORDINGLY, SUBMITTED THAT IN VIEW OF THE PO SSESSION OF THE FLAT TAKEN ON 06/07/2012, WHICH IS WELL WITHIN PERI OD OF TWO YEARS FROM THE TRANSFER OF THE ORIGINAL ASSET (I.E. BETWEEN 18.08.2011 TO 18.08.2013) AND THUS THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF SECTION 54F OF THE ACT. 4.11 THE TRIBUNAL IN THE CASE OF AYUSHI PATNI (SUP RA) AFTER FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF CIT VS SMT. BEENA JAIN, 217 ITR 363, TREATED THE DATE OF THE TAKING POSSESSION AS THE DATE OF THE PURCHASE O F THE FLAT AND ALLOWED BENEFIT OF SECTION 54F OF THE ACT OBSERVIN G AS UNDER: 6. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SID ES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO PERUSED THE DECISIONS ON WHICH THE LD. A.R. HAS PLACED RELIANCE . THE SOLITARY ISSUE RAISED IN THE PRESENT APPEALS BY THE ASSESSEE AND REVENUE IS: WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAIMING EXEMP TION U/S 54F IN RESPECT OF RESIDENTIAL FLAT / HOUSE FOR WHICH TH E ASSESSEE HAS ENTERED INTO AN AGREEMENT FOR PURCHASE MORE THAN ON E YEAR BEFORE THE DATE OF TRANSFER OF CAPITAL ASSET ? THE DATES QUA, TRANSFER OF CAPITAL ASSET, EXECUTION OF AGREEMENT FOR PURCHASE OF RESIDENTIAL FLAT AND POSSESSION OF THE FLAT ARE NOT IN DISPUTE. 7. THE CONTENTION OF THE ASSESSEE IS THAT SINCE FIN AL CONSIDERATION WAS PAID AND THE POSSESSION OF FLAT WAS RECEIVED WI THIN A PERIOD OF ONE YEAR PRIOR TO THE DATE OF TRANSFER OF CAPITAL A SSET, THE SAME SHOULD BE CONSIDERED AS THE DATE OF PURCHASE. WHERE AS, THE STAND OF DEPARTMENT IS THAT THE DATE OF EXECUTION OF AGREEME NT FOR PURCHASE OF FLAT SHOULD BE CONSIDERED AS THE DATE OF PURCHAS E. 8. THE LD. A.R. HAS DRAWN OUR ATTENTION TO CLAUSE ( 12) OF THE DEED OF AGREEMENT BETWEEN THE ASSESSEE AND THE BUILDER FOR PURCHASE OF FLAT. THE SAID CLAUSE IS REPRODUCED HEREIN BELOW : '12. NOTHING CONTAINED IN THIS AGREEMENT SHALL BE C ONSTRUED TO AS TO CONFER UPON THE PURCHASER ANY RIGHT WHATSOEVE R INTO OR OVER THE SAID PROPERTY OR THE SAID NEW BUILDING OR ANY PART THEREOF INCLUDING THE SAID PREMISES ON EXECUTION OF THIS AGREEMENT. IT IS AGREED BY AND BETWEEN THE PARTIES THAT CONFERMENT OF TITLE IN RESPECT OF THE SAID PREMISES SHALL TAKE PLACE IN FAVOUR OF THE PURCHASERS ONLY ON THE PURCH ASER'S 8 ITA NO. 2291/DEL./2017 MAKING FULL PAYMENT OF CONSIDERATION TO THE DEVELOP ERS AND COMPLYING WITH THE TERMS AND CONDITIONS OF THIS AGR EEMENT AND ON THE PURCHASER BEING ADMITTED AS A MEMBER OF THE SAID SOCIETY AS HEREIN PROVIDED.' THE AFORESAID CLAUSE MAKES IT UNAMBIGUOUSLY EVIDENT THAT THE ASSESSEE HAS NO RIGHT WHATSOEVER IN THE PROPERTY ON MERE EXECUTION OF AGREEMENT. THE ASSESSEE SHALL BE CONFERRED TITLE OF PROPERTY ONLY ON MAKING FULL PAYMENT OF CONSIDERATION TO THE BUIL DER. IN THE INSTANT CASE, FULL CONSIDERATION HAS BEEN PAID BY THE ASSES SEE FOR PURCHASE OF RESIDENTIAL FLAT WITHIN A PERIOD OF ONE YEAR BEF ORE THE DATE ITA NOS.1424 & 1707/PUN/2016 OF TRANSFER OF CAPITAL ASS ET. THEREAFTER, ACTUAL POSSESSION OF THE FLAT WAS DELIVERED TO ASSE SSEE ON 17.09.2010 I.E., WITHIN A PERIOD OF ONE YEAR PRIOR TO THE DATE OF TRANSFER OF CAPITAL ASSET. IT IS AN UN-REBUTTED FAC T THAT AT THE TIME OF EXECUTION OF AGREEMENT, THE RESIDENTIAL PROPERTY WA S NOT IN EXISTENCE. THEREFORE, TAKING INTO CONSIDERATION FAC TS OF THE CASE, THE DATE OF POSSESSION OF FLAT IS THE DATE OF ACTUAL PU RCHASE FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54F OF THE ACT. 9. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. BEENA K. JAIN (SUPRA). THE HON'BLE HIGH COURT IN THE APPEAL BY DE PARTMENT, UPHOLDING THE ORDER OF TRIBUNAL AND ALLOWED THE BEN EFIT OF EXEMPTION U/S 54F TO THE ASSESSEE. THE SUBSTANTIAL QUESTION F OR CONSIDERATION BEFORE THE HON'BLE HIGH COURT WAS : 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN ALLOWING EXEMPTION OF RS.11,0 4,423/- UNDER SECTION 54F OF THE INCOME TAX ACT, 1961, CONSIDERING THE DATE OF POSSESSION OF THE NEW RESIDENTIAL PREMISES INSTEAD OF THE DATE OF SALE AGREEMENT AND THE DATE OF REGISTRA TION ?' THE HON'BLE HIGH COURT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY ANSWERING THE QUESTION AS UNDER : '2. UNDER SECTION 54F OF THE INCOME-TAX ACT, IN THE CASE OF AN ASSESSEE IF ANY CAPITAL GAIN ARISES FROM THE TRANSF ER OF ANY LONG- TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL H OUSE, AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE, PU RCHASED A RESIDENTIAL HOUSE, THE CAPITAL GAIN SHALL BE DEALT WITH AS PROVIDED IN THAT SECTION. AS PER THE SECTION CERTAI N EXEMPTION HAS TO BE ALLOWED IN RESPECT OF THE CAPITAL GAINS T O BE CALCULATED AS SET OUT THEREIN. THE DEPARTMENT CONTENDS THAT TH E ASSESSEE DID NOT PURCHASE THE RESIDENTIAL HOUSE EITHER ONE Y EAR PRIOR TO OR TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WH ICH RESULTED IN THE LONG-TERM CAPITAL GAINS. ACCORDING TO THE DEPAR TMENT, THE AGREEMENT FOR PURCHASE OF THE NEW FLAT WAS ENTERED INTO MORE 9 ITA NO. 2291/DEL./2017 THAN ONE YEAR PRIOR TO THE SALE. HENCE, PETITIONER IS NOT ENTITLED TO THE BENEFIT UNDER SECTION 54F . IN OUR VIEW, THE TRIBUNAL HAS RIGHTLY NEGATIVED THIS CONTENTION AND HAS HELD THAT THE NEW RESIDENTIAL HOUSE HAD BEEN PURCHASED BY THE ASSESSE E WITHIN TWO YEARS AFTER THE SALE OF THE CAPITAL ASSET WHICH RESULTED IN LONG-TERM CAPITAL GAINS. THE TRIBUNAL HAS HELD THAT THE RELEVANT DATE IN THIS CONNECTION IS JULY 29, 1988, WHEN THE PETITIONER PAID THE FULL CONSIDERATION AMOUNT ON THE FLAT BECO MING READY FOR OCCUPATION AND OBTAINED POSSESSION OF THE FLAT. THIS HAS BEEN TAKEN BY THE TRIBUNAL AS THE DATE OF PURCHASE. THE TRIBUNAL HAS LOOKED AT THE SUBSTANCE OF THE TRANSAC TION AND COME TO THE CONCLUSION THAT THE PURCHASE WAS SUBSTA NTIALLY EFFECTED WHEN THE AGREEMENT OF PURCHASE WAS CARRIED OUT OR COMPLETED BY PAYMENT OF FULL CONSIDERATION ON JULY 29, 1988, AND HANDING OVER OF POSSESSION OF THE FLAT ON THE N EXT DAY.' 10. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BASTIMAL K. JAIN VS. ITO (SUPRA) UNDER SIMILAR SET OF FACTS HAD ALLOWED THE BENEFIT OF EXEMPTION U/S 54 TO THE ASSESSEE BY FOLL OWING THE RATIO LAID DOWN IN THE CASE OF CIT VS. SMT. BEENA K. JAIN (SUPRA). 11. THUS, IN VIEW OF UNDISPUTED FACTS OF THE CASE A ND THE DECISION RENDERED IN THE CASE OF CIT VS. SMT. BEENA K. JAIN (SUPRA), WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING EXEMPTIO N U/S 54F ON THE ENTIRE AMOUNT OF CAPITAL GAIN UTILIZED FOR PURCHASE OF RESIDENTIAL PROPERTY. CONSEQUENTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. 4.12 IN THE INSTANT CASE BEFORE US ALSO, THE ASSES SEE HAS BROUGHT OF ATTENTION TO CLAUSE 46.0 OF THE BUYERS AGREEMENT (WHICH IS AVAILABLE ON PAGE 41 OF THE PAPER BOOK), WHICH IS I DENTICAL TO CLAUSE 12 IN THE CASE OF AYUSHI PATNI (SUPRA) REPR ODUCED IN PARA 8 OF THE DECISION. THE RELEVANT CLAUSE 46.0 OF THE BUYERS AGREEMENT IS REPRODUCED AS UNDER: 46.0 THE ALLOTTEE UNDERSTANDS AND CONFIRMS THAT TH E EXECUTION OF THIS AGREEMENT SHALL NOT BE CONSTRUED AS SALE OF TR ANSFER UNDER ANY APPLICABLE LAW AND THE TITLE TO THE ALLOTTEE HEREBY ALLOTTED SHALL BE CONVEYED AND TRANSFERRED TO THE ALLOTTEE ONLY UPON HIS FULLY DISCHARGING ALL THE OBLIGATION UNDERTAKEN BY THE AL LOTTEE INCLUDING PAYMENT OF THE ENTIRE SALE PRICE AND OTHER APPLICAB LE CHARGES/DUES, AS MENTIONED HEREIN AND ONLY UPON THE REGISTRATION OF THE CONVEYANCE/SALE DEED IN HIS FAVOUR. PRIOR TO SUCH C ONVEYANCE, THE ALLOTTEE SHALL HAVE NO RIGHT OR TITLE IN THE APARTM ENT. 10 ITA NO. 2291/DEL./2017 9. IN VIEW OF THE IDENTICAL FACTS AND CIRCUMSTANCES , THE RATIO OF THE ABOVE DECISION IN THE CASE OF AYUSHI PATNI (SUP RA) IS SQUARELY APPLICABLE OVER THE FACTS OF THE INSTANT CASE AND T HUS ACCORDINGLY, WE HOLD THAT THE NEW ASSET I.E. RESIDE NTIAL HOUSE HAS BEEN PURCHASED WITHIN TWO YEARS FROM THE DATE OF TR ANSFER OF THE ORIGINAL ASSET I.E SHARES, AND THUS, THE ASSESSEE I S ENTITLED FOR BENEFIT OF SECTION 54F OF THE ACT. THE FINDING OF T HE LD. CIT(A) ON THE ISSUE IN DISPUTE IS ACCORDINGLY SET ASIDE AND T HE ASSESSING OFFICER IS DIRECTED TO ALLOW THE BENEFIT OF SECTION 54F OF THE ACT AMOUNTING TO RS.2,07,62,580/-. THE GROUNDS OF THE A PPEAL OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29/05/2020. RK/- (D.T.D.S) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI