| COURT: | ITAT Hyderabad |
| CORAM: | Asha Vijayaraghavan (JM), P.M.Jagtap (AM) |
| SECTION(S): | 54F |
| GENRE: | Domestic Tax |
| CATCH WORDS: | construction of house |
| COUNSEL: | A. V. Raghuram |
| DATE: | December 31, 2014 (Date of pronouncement) |
| DATE: | January 8, 2015 (Date of publication) |
| AY: | 2009-10 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 54F: Amount paid to builder for house is equivalent to amount spent by assessee for construction. Fact that only advance is given and construction is delayed beyond 3 years does not deprive assessee of exemption | |
(i) In the present situation we have to consider the following factors distinguishing a house construction as against flat booked with the construction company in the context of exemption u/s. 54F:
(a) Real estate prices have soared up and, therefore, very few individual house are being constructed.
(b) Exemption is available in case of purchase of a flat within two years.
(c) It has been held by co-ordinate Benches that consideration received on transfer has been invested either in purchasing a residential house or in constructing a residential house, even though the transactions are not complete in all respects and as required under the law would not disentitle the assessee from availing benefit u/s. 54F of the Act.
(d) The concept of reasonable delay will not apply once we accept the decision of the co-ordinate Bench in the case of Narasimha Raju Rudra Raju (supra).
(e) Section 54F is a benevolent provision.
(ii) In this scenario, the only issue is whether the amount of consideration received on transfer invested by the assessee in a flat constructed within three years would amount to construction of a residential house within the time limit of three years. In short, we are of the opinion that a flat which is newly constructed by a builder on behalf of the assessee is in no way different from a house constructed. Section 54F being a beneficial provision has to be interpreted so as to give the benefit of residential unit viz., flat instead of house in the present state of affairs.Further, as already pointed out even if only advance is given the benefit still will be available for exemption u/s. 54F.
right judgement by the judicial member.. what is wrong ? to say it is a controversial decision sounds funny.
Does the observation”Fact that only advance is given and construction is delayed beyond 3 years does not deprive assessee of exemption” would mean that either date of registration or possession of flat are of no consequence? In another case If a flat is booked, advance is given and even registration is done but the possession is not handed over, whether 3 years period for LTG would be counted from the date of advance/registration of document without possession?
If a person pays money to a builder for booking/purchase of a house/apartment and the builder fails to complete the construction within 3 years and is not able to execute the sale deed in respect of the booked house within 3 years, the person has not committed any fault to be deprived of the exemption u/s 54F. A GOOD Decision.
Hi,
So what if a person has : official receipts from the builder for the pymnts made before the expiry of three years from the date of the sale of the earlier flat,showing the flat number booked by her but due to lack of approvals builder is unable to execute the agreement and therefore is unable to start the construction work even though three years time period given under section 54 and 54 F are over.
After all the assessee is not at fault!? Delay is from the builder’s side.
Inder chand correctly replied to pratab chandurkar… that way ITAT correctly opined, after all you need to read law meaningfully, when statute section is not correctly expanded naturally court has to explain, in the absence of correct version of section, none can be unreasonable as explained in Wednesbury principle please, after all principle of proportionaltyis also to be read into please!
courts/tribunals as fact finding instrumentality need to function else administrative absurdities would arbitrarily function, like if the officer fails to appreciate sec 143(2)(ii) but simply moves to scrutiny that way bad in law situations occur and unnecessarily harass the taxpayers.
I am sorry but my query still remains unanswered as to- ‘ Does the observation”Fact that only advance is given and construction is delayed beyond 3 years does not deprive assessee of exemption” would mean that either date of registration or possession of flat are of no consequence for determining LTG?’
Inder chand correctly replied to pratab chandurkar… that way ITAT correctly opined, after all you need to read law meaningfully, when statute section is not correctly expanded naturally court has to explain, in the absence of correct version of section, none can be unreasonable as explained in Wednesbury principle please, after all principle of proportionaltyis also to be read into please!
courts/tribunals as fact finding instrumentality need to function else administrative absurdities would arbitrarily function, like if the officer fails to appreciate sec 143(2)(ii) but simply moves to scrutiny that way bad in law situations occur and unnecessarily harass the taxpayers.