Bastimal K Jain V ITO (ITAT)- Mumbai Judgement
POSSESSION DATE OF PROPERTY SAME AS “PURCHASE DATE”
In Bastimal K Jain V ITO (ITAT) Mumbai, it has been held that the date of purchase of a new property is the same as the date of possession and not the date on which the agreement was signed, for all purposes included herein.
In this case, the assessee entered into a contract of purchase for a property with Sharpmind developers on 28.12.2007. However the intended property to be bought was not built at the time of the agreement. So, the contract signed on 28.12.2007 was nothing but an intention to purchase a property at the said construction and not actual possession. The flat was finally handed over to him on 11.09.2009 after completion by the builder.
It was submitted by the assesse before the Hon’ble Court that in a similar case of VM Dujodwala v ITO 36 ITD 130 (Mum), the payments for the flats are made in advance in different stages called instalments in order to finish construction however the actual possession of the flat is handed over at a much later date. Thus, for taxation purposes u/s 54 of the Act, he argued that the date for assessment should be the same as the date of possession. The learned counsel also submitted the case of CIT V Smt Beena K Jain 2217 ITR 363.
Decision of the Tribunal
It was held by the Hon’ble Court that the date of ownership of a property for assessment u/s 54 is considered only from the date when possession of a property is handed over to the assessee.
It was further explained by the Court that S54 was enacted to give relief of exemption from capital gains in the case of assessee selling existing residential units and acquiring another one. This has to be done within one year of sale or purchase of the property. If done so, capital gains arising on transfer of the first house property will be exempt to the extent of investment in the second property as stipulated in S54.
The learned bench thus ruled that in the light of the present circumstances of the case as well as the case relied upon by the Counsel of the assessee in case of Dujodwala as well as Smt Beena K Jain supra, we are of the view that the assessee’s claim of deduction u/s 54 of the Act is to be reckoned from the date of handing over of the possession of the flat by the builder to the assessee i.e 11.09.2009 and if the same date is taken into consideration then the assessee is entitled to deduction u/s 54 of the Act because he sold his flat on 24.02.2010 which falls under the criteria of the deduction and thus allowing the claim of the assessee.