ITAT confirmed allowance of claim of exemption u/s 54 (of Income Tax Act, 1961)

1. Assessee sold property, wherein he was 50% owner.

2. Sale proceeds had been invested in the purchase of a new flat.

3. Assessee claimed exemption u/s 54 (of Income Tax Act, 1961).

4. AO noted that purchase agreement for new flat was 31.01.2007 and old flat was sold on 06.04.2009.

5. Hence, the window period in which the assessee should have made the investment was between 06.04.2008 and 05.04.2011 to claim the exemption u/s 54 (of Income Tax Act, 1961).

6. AO issued a show cause notice.

7. AO rejected assessee's explanation and disallowed claim, because investment should have been made beyond period of one year before and 2 years after the date on which transfer of the old asset took place.

8. CIT(A) allowed the assessee’s claim u/s 54 (of Income Tax Act, 1961).

On Revenue’s appeal, the ITAT held as under:

9. However, the said agreement was completely rectified and replace with a new agreement which was entered for purchase of a different flat No. 1302 on 19.04.2008.

10.The possession of the said flat was given on 21.02.2009 and agreement for sale was made on 30.03.2009. Old flat was sold on 6th April, 2009.

11. Thus, the claim of exemption u/s 54 (of Income Tax Act, 1961) made by the assessee was very much well within the 'window period' as defined in section 54 (of Income Tax Act, 1961).

12. Therefore the finding of fact as recorded by the CIT(A) is affirmed.

Case Reference - Income Tax Officer vs Mr. Chandrakant Himatlal Shah.

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "C", MUMBAI

BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER

AND SHRI AMIT SHUKLA, JUDICIAL MEMBER

ITA No. : 6725/Mum/2013

(Assessment year :2009-10)