Deputy Commissioner of Income tax, Circle 2(1), , Raipur V. Shri Radheshyam Agrawal, Raipur

ITA 32/RPR/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9963 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 02-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT M JAIN
• Keywords: Capital asset; TDS; Capital Gains
• Section: 54; 54F; 22

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.32/RPR/2020 Ǔनधा[रण वष[ / Assessment Year : 2015-16 The Deputy Commissioner of Income Tax-2(1), Raipur (C.G.) .......अपीलाथȸ/Appellant बनाम / V/s. Radheshyam Agrawal 27/B, Ankit Choubey Colony, Raipur (C.G.). PAN : ACZPA6544J ......Ĥ×यथȸ / Respondent Assessee by :Shri Amit M Jain, CA Revenue by :Shri P.K Mishra, CIT-DR स ु नवाई कȧ तारȣख / Date of Hearing : 29.07.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 23.09.2022 2 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the department is directed against the order passed by the CIT(Appeals)-1, Raipur dated 19.11.2019, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (for short ‘the Act’) dated 27.12.2017 for assessment year 2015-16. Before us the department has assailed the impugned order on the following grounds of appeal: “1. Whether on the facts of the cases and in law, the Ld. CIT(A) was justified in deleting the disallowance of deduction u/s 54F amounting to Rs.2,59,08,966/- ignoring the facts that the claimed acquisition of new asset was not supported by registered deed of purchase? 2. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the disallowance of deduction u/s 54F amounting to Rs.2,59,08,966/- ignoring the fact that the impugned acquisition of the new asset was merely supported by an unregistered sale agreement without mentioning the vital details of the asset including area of land, market value, built up area of building, date of transfer etc.? 3. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the disallowance of deduction u/s 54F amounting to Rs.2,59,08,966/- ignoring the fact that possession of the new asset was not handed over to the assessee by the agreement and hence the transaction cannot be treated as a part performance of the contract as referred to in section 53A of Transfer of Property Act and hence not eligible for deduction u/s 54F of the I.T. Act? 3 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 4. Whether on the facts of the cases and in law, the CIT(A) was justified in deleting the disallowance of cost of improvement amounting to Rs.18,77,602/- out of total amount claimed at Rs. 31,62,386/- ignoring the fact that the assessee failed to produce satisfactory evidence in support of his claim? 5. Any other ground as may be raised during the course of appeal.” 2. Succinctly stated, the assessee had e-filed his return of income for the assessment year 2015-16 on 29.03.2016 declaring an income of Rs.23,75,550/-. Subsequently, the case of the assessee was selected for scrutiny assessment under CASS for two-fold reasons, viz. (i) large agricultural income; and (ii) large deductions claimed u/ss. 54B, 54C, 54D, 54G & 54GA of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee had in his return of income disclosed Long term capital gain (LTCG) of Rs,15,92,998/- (after claim of deduction u/s 54F of Rs. 2,59,08,966/-), as under: 4 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 On being queried as regards the deduction that was claimed u/s.54F of the Act of Rs.2,59,08,966/-, it was the claim of the assessee that the same was with respect to purchase of a new residential property vide an unregistered purchase agreement, dated 30.03.2015. It was the claim of the assessee that he had at the time of executing the purchase agreement made the full payment towards the purchase consideration, and was put into physical possession of the same. Although it was claim of the assesee that purchase of the aforementioned property unregistered purchase agreement would fall within the meaning of “transfer” as contemplated in section 2(47)(v) of the Act r.w section 53A of the Transfer of the Property Act, 1882 (4 5 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 of 1882), but the A.O was not inclined to accept the same. It was observed by the A.O that a valid purchase of the property could have been made only on the basis of a registered deed. Qua the Unregistered Purchase Agreement filed by the assessee the AO was of the view that no valid purchase could have been on the basis of the said instrument as it did not confer a valid title of the property upon the assessee. In support of his aforesaid conviction the A.O had relied on Section 53A of the Transfer of Property Act, 1882; Section 17 of the Indian Registration Act; and Section 49 of the India Registration Act. It was observed by the A.O that Section 53A of the Transfer of the Property Act,1882 was subjected to an amendment vide the Registration and other Related laws (amendment) Act, 2001, pursuant whereto the words “the contract, though required to be registered, has not been registered or” had been omitted from the said statutory provision. It was further observed by the A.O that on a similar footing Section(s) 17 and 49 of the Indian Registration Act, 1908 had also been amended, therein clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of section 53A of 1882 of the Act) is registered, it shall not have any effect in law other than being 6 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 received as evidence of a contract in a suit for specific performance’ or as an evidence of any collateral transaction not required to be effected by a registered instrument. In sum and substance, it was observed by the A.O that pursuant to the amendment if the document transferring the immovable property is not registered then, the said transfer would be invalid and have no value in the eyes of law. In support of his aforesaid conviction the A.O had relied on the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Vs. Balbir Singh Maini (2017) 398 ITR 531 (SC). 4. Also, it was observed by the A.O that the assessee while computing the capital gain on the transfer of the aforesaid property had claimed deduction of indexed cost of improvement of Rs.31,62,386/-. It was observed by the A.O that the assesee had over the years claimed to have incurred expenses towards improvement of the property in that was sold, viz. (i). A.Y. 2010-11: Rs.11,14,316/-; (ii).A.Y.2011-12: Rs.2,56,570/-; and (iii). A.Y. 2012-13 : Rs.3,60,181/-. On being called upon by the AO to justify the authenticity of his claim of having incurred the aforesaid expenditure the assessee filed with him bills of payment of Rs.8,52,584/-. On a perusal of the details filed by the assessee, it was observed by the 7 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 A.O that the same comprised of, viz. (i) expenses incurred towards purchase of iron and steel in A.Y.2010-11: Rs.5,46,636/-; and (ii) expenditure incurred towards purchase of iron and steel in A.Y.2012-13: Rs. 3,05,948/-. The AO considering the fact that the assessee had substantiated his aforesaid claim of expenditure incurred on the improvement of the property in question only to the extent of the details that were filed before him, thus, restricted the assessee’s claim of expenses incurred towards improvement /development of the property in question to the said extent and computed the indexed cost of improvement at Rs.12,84,784/-. Although the assessee had in the course of the assessment proceedings furnished certain cash payment vouchers, however, the A.O observed that all those were related to F.Y.2014-15 and did not pertain to the year in which the assessee had in his return of income claimed to have incurred expenses towards improvement /development of the property sold. The assessee’s claim of cost of improvement/development of the property that was sold, as against that allowed to him on the basis of documents filed in the course of the assessment proceedings was tabulated by the AO, as under: 8 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 F.Y Amount claimed for cost of improvement (in Rs.) Amount on which bills regarding the cost of improvement has been submitted (in Rs.) Amount on which bills regarding the cost of improvement could not able to submitted ( In Rs.) 2009-10 11,14,316/- 5,46,636/- 5,67,680/- 2010-11 2,56,570/- Nil/- 2,56,570/- 2011-12 3,60,181/- 3,05,948/- 54,233 Total 8,52,584/- 8,78,483/- On the basis of his aforesaid deliberations the assessee’s claim for deduction of indexed cost of acquisition of the property sold was restricted by the AO at Rs.12,84,784/-, as under: F.Y. 2009-10 5,46,636*1024/632 885688 2010-11 Nil/- 0 2011-12 3,05,948*1024/785 399096 Total 12,84,784 5. Accordingly, the A.O on the basis of his aforesaid observations vide his order passed u/s.143(3), dated 27.12.2017 assessed the LTCG in the hands of the assessee at Rs.3,01,62,118/-. 9 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 6. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals) after deliberating on the contentions advanced by the assessee was inclined to concur with the same. As regards the assessee’s claim for deduction u/s.54F of the Act, it was observed by the CIT(Appeals) that the assessee had admittedly made the full payment of the purchase consideration of Rs. 2.91 crore (approx.) as well as taken the possession of the new residential property during the year under consideration. It was further observed by the CIT(Appeals) that the registered sale deed of the new residential house was subsequently executed in favor of the assessee on 29 th March, 2019 for a total consideration of Rs. 2.91 crore. It was further observed by the CIT(Appeals) that the entire amount of purchase consideration of Rs.2.91 crore (after deduction of tax at source a/w. interest of Rs.3,21,555/-) was paid by the assessee vide an online payment from his bank account with IDBI Bank, Branch : Raipur at the time of executing the unregistered purchase agreement i.e on 31.03.2015. 7. Adverting to the applicability of the provisions of section 2(47) (v) of the Act r.w.s 53A of the Transfer of the Property Act, 1882, it 10 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 was observed by the CIT(Appeals) that as the purchase transaction in the case of the present assessee was completed and the entire amount of purchase consideration was paid (after deducting TDS a/w. interest) and the assessee was put into the possession of the property, therefore, the transfer was completed and hence, question of any part performance of the contract did not arise. Observing that the facts involved in the case of Balbir Singh Maini (supra) were distinguishable as against those involved in the present case of the assessee, the CIT(Appeals) was of the view that the A.O had wrongly relied on the same. It was further observed by the CIT(Appeals) that the eligibility criteria for claiming deduction u/s.54F of the Act was that the new house property should be “purchased” by the assessee, and it was not required that the valid title of the new residential property should have been conferred upon him. The CIT(Appeals) on the basis of his aforesaid deliberations was of the view that since the assessee had purchased the new residential property, therefore, his claim for deduction u/s.54F of the Act was in order. 8. Adverting to the assessee’s claim for deduction of the indexed cost of acquisition of Rs.31,62,386/-, it was observed by the 11 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 CIT(Appeals) that the A.O had restricted the said claim for deduction only qua the expenditure which the assessee was able to substantiate on the basis of supporting documentary evidence. It was further observed by the CIT(Appeals) that though the assessee had filed cash payment bills/vouchers but the same were rejected by the A.O, for the reason that those pertained to F.Y.2014-15 and not the years in which the assessee in his return of income had claimed to have incurred the same. On a perusal of the registered sale deed, it was observed by the CIT(Appeals) that the same was in the nature of a constructed property i.e. a double storeyed house. It was noticed by the CIT(Appeals) that the assessee had for constructing the aforesaid property in question claimed to have incurred construction expenses @296/- per square feet. During the course of the appellate proceedings, the CIT(Appeals) was of the view that as the assessee had filed payment bills/vouchers pertaining to purchase of steel and iron, therefore it could safely be inferred that there would have been purchase of other building material, viz. sand, cement and incurring of expenses on labour without which the construction of new residential house would not have been possible. It was observed by the CIT(Appeals) that merely because some bills/vouchers towards 12 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 labour expenses or building material were not produced by the assessee, then, the said fact on a standalone basis could not have been used for drawing of adverse inferences as regards the assessee’s claim of having incurred expenditure on construction of the property, as the same would be otherwise in clear conflict with the recitals of the registered sale deed which clearly spelt out that construction was carried out by the assessee on the 1 st and 2 nd floor of the aforesaid property. It was further observed by the CIT(Appeals) that now when the registered deed clearly referred to the construction of a double storied house and if that would have not been so, the Registration Authority would have declined from executing the registered deed. The CIT(Appeals) concurred with the claim of the assessee that as in the unorganized sector which regulates labour payments, purchase of sand and other building material etc. the payments/expenses are in normal course made/incurred in cash and the bills/vouchers would either not be available or may not be provided by the recipients of the payments, therefore, considering the said ground realties the recitals of the registered sale deed which evidenced the construction of the property were to be given due weightage, which, thus supported the assesee’s claim of having incurred the 13 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 expenditure towards construction of the property under consideration. Accordingly, the CIT(Appeals) on the basis of his aforesaid deliberations allowed the assessee’s claim for deduction of indexed cost of improvement. 9. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 10. We have heard the Ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR to drive home his contentions. 11. Ostensibly, our indulgence has been sought by the revenue for adjudicating two issues, viz. (i) as to whether or not the CIT(Appeal) was right in law and the facts of the case in allowing the assesse’s claim of having purchased a new residential house on the basis of an unregistered purchase agreement and consequently accepting his claim for deduction u/s.54F of the Act.; and (ii) as to whether or not the CIT(Appeals) was right in law and in the facts of the case in 14 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 allowing the assessee’s claim of indexed cost of improvement, despite the fact that the same was not substantiated on the basis of supporting documentary evidence by the assessee before the lower authorities. 12. Before adverting to the grievance of the revenue as regards allowing of the assessee’s claim for deduction u/s.54F of the Act of Rs.2.59 Crore (approx.) as regards the new residential property that was claimed by him to have been purchased vide an unregistered purchase agreement, we deem it fit to cull out the provisions of section 54F of the Act which will have a strong bearing on the adjudication of the issue in question: “54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where— (a) the assessee,— 15 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property". Explanation.—For the purposes of this section,— "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub- section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : 16 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount by which— (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid.” As per the aforesaid statutory provision, it transpires that the same therein contemplates that if the assessee on the transfer of any long term capital asset, not being a residential house, had thereafter, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then the capital gain shall be dealt with in accordance with the provisions set out in the said statutory provision. On a careful perusal of the aforesaid statutory provision which was made available on the statute vide the Finance Act, 1982 w.e.f. 01.04.1983, we find from a perusal of the memorandum explaining the provisions of the Finance Bill, 1982 that the same was made available with a 17 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 view to encourage the housing sector by carving out a concession in a case where the assessee who after holding a long term capital asset [other than residential house] for a period of more than 36 months, had thereafter transferred the same and made an investment towards purchase, or construction of a residential house within the time period stipulated in the said statutory provision. 13. As specifically provided in the aforesaid statutory provision i.e. Section 54F of the Act, the assessee is obligated to purchase a residential house within the specified time period and nothing can be gathered therefrom which obligates him to purchase the same vide a registered deed which would confer the title as that of an owner upon him in the eyes of law. Undeniably as the assessee before us had pursuant to the sale of the property purchased a new residential house, though vide an unregistered purchase agreement, dated 30.03.2015 i.e. within the prescribed time period contemplated in sub-section (1) of section 54F of the Act, therefore, he had claimed deduction under the aforesaid statutory provision. Controversy involved in the present appeal hinges around the solitary aspect as to whether or not the assessee’s claim for deduction under Sec. 54F 18 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 would by any means be hindered, for the reason that he had purchased the new residential house vide an unregistered purchase agreement, dated 30.03.2015, which as per the mandate of Section 17 r.w.s. 49 of the Indian Registration Act, 1908 though did not confer a valid title of the property purchased on him. 14. In our considered view, the observation of the A.O that as the assessee had purchased the new residential house vide an unregistered purchase agreement, dated 30.03.2015, therefore, de hors the purchase of the same vide a registered instrument, the assessee would be not eligible for claiming deduction u/s.54F of the Act, based on a misconceived and misconstrued position of law cannot be subscribed on our part. On a careful perusal of the aforesaid statutory provision i.e. 54F of the Act, it transpires that the one of the twin conditions therein provided, which entitles the assessee for the concession therein provided is that the assessee should have after the date on which the transfer took place purchased the new residential property. Holding a legal title of the new residential house within the time period stipulated in the aforesaid statutory provision is not a condition precedent for 19 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 satisfying the eligibility criteria contemplated in Section 54F of the Act. If purchase consideration for the new residential house is paid and possession of the same is taken then, in our considered view that deduction u/s.54F would be allowable notwithstanding the fact that the registration of the sale deed was executed beyond the aforesaid time period. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Laxmichand Narpal Nagda (195) 211 ITR 804 (Mum.). In its aforesaid order it was observed by the Hon’ble High Court that as the word “purchase” occurring in Section 54 of the Act, is not defined under the I.T Act, therefore, resort to its ordinary meaning as understood by a lay man will have to be made. Considering the letter and spirit of Section 54 of the Act, it was observed by the Hon’ble High Court that the said word is not used in the sense of a legal transfer. It was, thus, concluded by the Hon’ble High Court that the claim of the revenue that unless a regular registered sale deed was executed and title passed to the purchaser, it could not be said that there was a "purchase" within the meaning of the said word occurring in section 54 of the Act, could not be accepted. For the sake of clarity the 20 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 relevant observations of the Hon’ble High Court are culled out as under: “ Taking into consideration the letter as well as the spirit of section 54 and the word "towards" used before the word "purchase" in sub-section (2) of section 54, it seems to us that the said word is not used in the sense of legal transfer and, therefore, the holding of a legal title within a period of one year is not a condition precedent for attracting section 54. In the instant case, the whole consideration was paid, possession of the flat was obtained and it was actually put to use for dwelling within four months, as a result exemption contemplated under section 54 was clearly attracted. Our pointed attention was drawn by the Revenue to the decision of the Supreme Court in the case of Alapati Venkataramiah v. CIT wherein the word "transfer" as found in section 12(b) of the Indian Income-tax Act, 1922, is interpreted as meaning "passing of title". Since the word interpreted as well as its context are different, the ratio of that decision will have no application to the instant case.” Also, a similar view had been taken by the Hon’ble High Court of Madhya Pradesh in the case of CIT Vs. Ajit Singh Khajanchi (2008) 297 ITR 95 (MP.HC). It was observed by the Hon’ble High Court that in order to claim benefit of the provision of section 54F, it is not necessary that the new house should be registered in the name of the assessee, for the reason that the section only speaks of purchase and registration is not imperative. Relying on the judgment of the Hon’ble High Court of Delhi in the case of Balraj Vs. CIT (2002) 254 ITR 22 (Del.), it was observed by the Hon’ble High Court as under: “Insofar as the question No. 2 is concerned, the learned Counsel for respondent has relied on the decision of this Court in Smt. Shashi Varma v. CIT (1999) 152 CTR (MP) 227 : (1997) 224 TTR 106 (MP). In the said judgment, it was averred that the 21 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 assessee sold her property at Jabalpur and realized capital of Rs. 31,980 out of which she invested a sum of Rs. 71,256 and purchased a house at Delhi. The exemption was claimed from the charge of tax on capital gain under Section 54F of the Act. It was, rejected by the ITO as also by the Tribunal. This Court observed that substantial investment was made in construction of the house. In view of the requirement of Section 54F of the Act, the Tribunal, in the facts and circumstances of the case, was not justified. We are fortified in the above view by the decision of the Delhi High Court in Balraj v. CIT to the effect that for the purpose of attracting the provision, it was not necessary that the assessee should have become the owner of the property. Section 54F spoke of purchase and registration was not imperative.” On a similar footing the Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. Mrs. Shahzada Begum (1988) 173 ITR 397, had held that where the assessee who had sold a residential house property has agreed to buy another property for self-occupation and secures possession of the property within one year from the date of sale of other property, he was entitled for exemption from capital gains u/s. 54(1) of the Act notwithstanding registration of the sale deed beyond the period of one year. The observations of the Hon’ble High Court are culled out as under: “...............The Income-tax Officer held that the crucial date for the purpose of determining when the property was purchased was the date of registration of the sale deed in favour of the assessee. and inasmuch as the date of the sale deed fell outside the period of one year from the date of sale of the property earlier, the assessee was not entitled to claim exemption under section 54(1) of the Act. The above view was upheld on appeal by the Appellate Assistant Commissioner but was reversed by the Tribunal on second appeal. The Tribunal held that, on the facts and circumstances, the question is as to when the assessee "purchased" the property. The Tribunal felt that the matter need not be 22 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 decided on the basis as to when the property was sold in favour of the assessee. The expression "purchased" would undoubtedly connote the domain and control of the property given into the assessee's hands. From the facts on record, it is clear that, apart from the payment of substantial purchase consideration, the assessee secured possession of the property on August 10, 1976, which is within the period of one year specified under section 54(1) of the Act. There might have been some procedural delay in obtaining formal registration of the sale deed. But, that, in our opinion, is immaterial. In the facts and circumstances, the Tribunal was right in coming to the conclusion that the assessee purchased another residential house within the period of one year as stipulated under section 54(1) of the Act. The house property purchased by the assessee had come into the full domain and control of the assessee within the period of one year. Also, a similar view had been taken by the Hon’ble High Court of Delhi in the case of CIT Vs, Kuldeep Singh (2014) 226 Taxman 133 (Delhi) and that of in the case of Balraj Vs. CIT, (2002) 254 ITR 22. 15. Adopting a similar view a co-ordinate bench of the Tribunal i.e. ITAT, Delhi Bench “B” in the case of Elegant Infraworld Pvt. Ltd. Vs. ITO (2019) 55 CCH 0100 (Del-Trib), had held, that now when the assesee had entered into an sale agreement and handed over the possession of the impugned property to the purchaser then, the same would tantamount to parting with the asset a/w. all interests therein involved of the purchaser and as per Section 269UA of the Act, it would not be necessary that the said agreement should be registered. On the basis of its aforesaid observations, it was therein 23 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 concluded that as the condition contemplated in 2(47)(vi) were satisfied, therefore, the transfer of the property in question stood completed. 16. On the basis of our aforesaid observations read in light of the aforesaid judicial pronouncements, we are of the considered view that as the assessee before us had vide an unregistered purchase agreement, dated 30.03.2015 purchased a residential house and, had made not only made the payment of the entire amount of purchase consideration to the seller amounting to Rs.2.91 Crore (approx.) out of his bank account with IDBI Bank, Branch : Raipur on 31.03.2015 (after deducting TDS of Rs.3,21,555/-) and had taken the possession of the property, therefore, it can safely be concluded that he had duly satisfied the requirement of having “purchased” a residential house within the stipulated time period contemplated in Section 54(1) of the Act. We, thus, in terms of our aforesaid observations concur with the view taken by the CIT(Appeals), who in our considered view had rightly vacated the disallowance of the assessee’s claim for deduction u/s.54F of Rs.2,59,08,966/-, uphold his order to the said extent. Thus, the Grounds of appeal No.(s) 1 to 24 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 3 raised by the revenue are dismissed in terms of our aforesaid observations. 17. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in vacating the disallowance of the assessee’s claim for deduction of indexed cost of improvement of the property that was sold, losing sight of the fact that he had in the course of the assessment proceedings despite sufficient opportunity could not substantiate the incurring of expenses towards development /improvement of the property sold on the basis of supporting documentary evidence. 18. Admittedly, it is a matter of fact borne from record that the assessee in the course of the assessment proceedings was able to place on record only purchase bills of iron and steel amounting to Rs.8,52,584/- pertaining to F.Y.2009-10, AY 2011-12. As the assesee could not support his claim of having incurred expenses towards development/improvement of the property sold as was claimed by him in his return of income, therefore, the A.O as a consequence thereto had restricted his entitlement for deduction of indexed cost of improvement to an amount of Rs.12,84,784/-. 25 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 19. On appeal, we find that it was claim of the assessee that as the recitals of the sale deed clearly revealed that the property which was sold was a double storied house, therefore, it could safely be concluded that as he had carried out construction on the land that was purchased by him at Pandri, Raipur. Concurring with the aforesaid claim of the assessee, the CIT(Appeals) was of the view that now when the recitals of the sale deed clearly revealed that the property sold by the assessee was a double storeyed house, therefore, it could be safely concluded hat the assessee had incurred expenses towards construction i.e. labour expenses, sand and cement etc. It was observed by the CIT(Appeals) that as the consumption of sand, cement and incurring of labour expenses a/w. iron and steel would undeniably be involved in the construction of the aforesaid property, therefore, the claim of the assessee of having incurred the same could not have been summarily scrapped by the A.O. Also, the CIT(Appeals) was of the view that as the purchase of the certain building material such as sand, cement and incurring of labour expenses are made from an unorganized sector, therefore, the fact that the assessee could not obtain bills/vouchers in support of 26 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 his claim of having incurred the said expenses could not be ruled out. Considering the recitals of the registered sale deed which clearly revealed the fact that the assessee had sold a double storeyed house, the CIT(Appeals) had accepted the assessee’s claim of having incurred expenses on the improvement of the property that was sold by him. 20. Having given a thoughtful consideration to the view taken by the CIT(Appeals), we finding no infirmity in the same are inclined to subscribe to the same. In our considered view, the CIT(Appeals) in the backdrop of the ground realties i.e the purchase of sand, cement and incurring of labour expenses form part of an unorganized sector, had thus rightly observed that the fact that the assessee could not have obtained the purchase bills/receipts qua the incurring of the expenses could not be ruled out. It was further rightly observed by him that a conjoint perusal of the facts attending to the case of the assessee, viz. (i). that the assessee had vide a registered sale deed sold a double storied house; and (ii). that now when the assessee had placed on record the purchase bills of iron and steel, therefore, the fact of having incurred expenses towards purchase of other building 27 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 material, viz. sand, cement and incurring of labour expenses could not be ruled out as otherwise the coming into existence of the double storeyed house would not have been possible. Accordingly, finding no infirmity in the view taken by the CIT(Appeals) who had rightly allowed the assessee’s claim for deduction of indexed cost of improvement, we, thus, uphold his order to the said extent. Thus, the Ground of appeal No.4 raised by the revenue is dismissed in terms of our aforesaid observations. 21. Ground of appeal No.5 being general in nature is dismissed as not pressed. 22. Resultantly, the appeal of the revenue is dismissed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 23 rd September, 2022 **SB 28 DCIT-2(1) Vs. Radheshyam Agrawal ITA No.32/RPR/2020 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur.