Commissioner Of Income Tax -17 v. Kalpana Hansraj

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. INCOME TAX APPEAL NO. 767 OF 2016 Commissioner of Income Tax -17 ..Appellant Versus Kalpana Hansraj ..Respondent ................... •Mr. Suresh Kumar for the Appellant ................... CORAM : AKIL KURESHI & B.P. COLABAWALLA, JJ. DATE : JANUARY 7, 2019. P.C.: 1.Revenue is in the appeal against the judgment of theIncome Tax Appellate Tribunal ("Tribunal" for short) dated17.4.2015. Following question has been presented for ourconsideration:- "Whether on the facts and circumstances of the case and inlaw, the Tribunal was justified in confirming the order of CIT(A)in allowing the exemption u/S. 54F of the Act, when propertywhich was transfered was residential house?" 2.Respondent - assessee is an individual. For the assessment year 2006-07, in the return filed by theassessee, the Revenue objected to the assessee's claim of exemption under Section 54F of the Income Tax Act, 1961("the Act" for short) on the ground that the assessee had solda flat which was in the nature of residential unit andtherefore, Section 54F would not apply. In the appeal, theCommissioner gave relief to the assessee upon which theissue reached the Tribunal. The Tribunal, by the impugnedjudgment, dismissed the revenue's appeal by making following observations:- "5.We have considered the rival contentions of the Ld.Representatives of both the parties and have also gone through therecords. The Ld. CIT(A) has categorically discussed the factualposition of the case that the assessee had booked a residential flaton 15.01.1981. The builder failed to complete the construction and thedispute travelled to the Hon'ble Bombay High Court. The Hon'bleBombay High Court had appointed a committee/receiver with adirection to complete the construction. The construction of thebuilding was not complete up to Feb 2011 as has been gathered bythe Ld. CIT(A) from the letter dated 17.02.2011 issued by the saidcommittee of court receiver. The assessee, however, in the year2005 had sold the unconstructed / under construction unit resulting intaxable long term capital gains. The Ld. CIT(A) has categoricallyheld, after appreciation of the factual matrix of the case, that theproperty transferred by the assessee could not be termed to be aresidential house. The findings of the Ld. CIT(A) have beenreproduced above. The provisions of section 54F are beneficialprovisions enacted for the purpose of promoting theconstruction/purchase of residential houses. The property in questionsold by the assessee could not be constructed by the builder for asufficient long time and the same could not be categorized as residential house and therefore the claim of the assessee has rightlybeen allowed by the Ld. CIT(A) under section 54F of the Act. We donot find any infirmity on the order of the Ld. CIT(A) in this respect.There is no merit in the appeal of the Revenue and the same isaccordingly dismissed." residential house and therefore the claim of the assessee has rightlybeen allowed by the Ld. CIT(A) under section 54F of the Act. We donot find any infirmity on the order of the Ld. CIT(A) in this respect.There is no merit in the appeal of the Revenue and the same isaccordingly dismissed." 3.Perusal of sub-section (1) of Section 54 of the Act wouldshow that the exemption would be available to an assesseebeing an individual or Hindu Undivided Family where thecapital gain arises from the transfer of a long-term capitalasset, not being a residential house provided the remainingconditions of the said provisions are satisfied. In this context,as noted, the revenue's objection is that the assessee hadsold a flat which was in the nature of residential unit. TheTribunal, however, found that the facts of the case aresomewhat peculiar. The assessee had booked a flat on15.1.1981. The builder failed to complete the constructionand the scheme ran into multiple legal disputes. Thesedisputes travelled to the Bombay High Court. The BombayHigh Court appointed a committee in the nature of Receiverand was asked to observe the completion of theconstruction. Under such circumstances, the constructionwas completed sometime on February, 2011. In themeantime, the assessee had sold the flat in the year 2005 which she had booked. The same was still underconstruction. The same resulted into long-term capital gain.It was in such peculiar facts that the Tribunal held that theassessee cannot be said to have transfered a capital asset inthe nature of residential house. We may recall that theassessee had booked the flat far back in January 1981 and tillthe time, she sold for the same in the year 2005, completionof Constitution was nowhere in the sight. It was only with theintervention of the High Court and the steps taken by theCommittee appointed by the High Court that the constructioncould be completed much later in the year 2011. In thepeculiar facts of this case, therefore, we do not find any errorin the view of the Tribunal. Tax appeal is dismissed. [ B.P. COLABAWALLA, J. ] [ AKIL KURESHI, J ]