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THE CHAMBER OF TAX CONSULTANTS 3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai - 400 020 Tel.: 2200 1787 / 2209 0423 Fax: 2200 2455 E-mail: citcindia@vsnl.net Visit us at: Website: http://www.ctconline.org STUDY CIRCLE MEETING ON 27.6.2013 ISSUES UNDER CAPITAL GAIN SECTION 54, 54F, 54EC. CHAIRMAN: SHRI VIPUL B. JOSHI, ADVOCATE GROUP LEADER: SHRI MANDAR VAIDYA, ADVOCATE, HIGH COURT STUDY CIRCLE MEETING (continuation) ON 27.6.2013. ISSUES UNDER CAPITAL GAINS- SECTIONS 54, 54F, 54EC. 1 I) Section 54/54F. a) Long term Capital Asset. Domain & control over the property is the relevant factor- Hilla Wadia 216 ITR 376 (Bom)- {A.Y. 1973-74}. Right in an immoveable property- The word property is of widest amplitude and this is re-emphasised by the use of the words of any kind. Right acquired under an Agreement to Sale (by the assessee/transferee) is property and capital gains would accrue on its transfer/ relinquishment.- Right to get conveyance is a property and cost of acquisition is the price paid for. Tata Services 122 ITR 594 (Bom). Holding period in an immoveable property which is incidental to share holding- Anilaben Upendra Shah 262 ITR 657 (Guj)- {A.Y. 1983-84} followed in Jinhas Gandhi 279 ITR 552 (Guj.); Nila Shah 51 SOT 461 (Mum.). Praveen Gupta 137 TTJ (Del.) 307. JAG MOHAN KHANNA 2013-TIOL-350-ITAT-DEL In this case, the assessee received consideration on sale of a plot sold vide Sale Deed dated 07.11.2005, resulting in long term capital gain. The assessee had also entered into an Apartment Buyers Agreement for purchase of flat in Gurgaon on 17.11.2004. Total consideration for the flat was paid upto 29.06.2005, i.e., even before the capital gains accrued to the

assessee. Exemption was claimed u/s 54F of the Act on the amount paid during the AY 2006-07 for purchase of a flat. b) No transfer of legal title is necessary for claiming the benefit u/s. 54/54F- T.A. Aravinda Reddy 120 ITR 465 (SC). c) Land purchased for construction of house qualifies for exemption u/s. 54- Pushpa Tibrewala ITA/1763/Hyd./2011 Circular no.667 of 1993. d) Two kinds of Capital gain falling u/ss. 54 & 54F- investment in one flat is permissible- Venkata Ramana Reddy ITA/552/Hyd./2012 dated 18.1.2013. e) Property/House consisting of both residential property as well as commercial property- Suresh Chand Kukreja TS-916-ITAT-2012 (Ind.). f) Commercial property excluded from purview of Section 54F notwithstanding applicability of section 22- Ifthiquar Ashiq TS-266- ITAT-2013-Chny. g) Fiction of section 50C cannot be extended to secs. 54/54F- Gouli Mahadevappa 128 ITD 503 (Bang.). Raj Babbar (Mum Trib.). h) Flat acquired in a development agreement qualifies for exemption u/s. 54.- Jatinder Kumar Madan 51 SOT 583 (Mum.); Veena Gope Shroff ITA/7159/Mum/2010.. i) Holding of property in joint name, does not disentitle an assessee from claiming exemption u/s. 54/54F- DR SMT P K VASANTHI 2

RANGARAJAN 252 CTR (Mad.) 336: 75 DTR (Mad.) 56: 209 Taxman 628. Add: Jennifer Bhide 349 ITR 80 (Kar.) Ravinder Arora 342 ITR 38 (Del.) j) Full value of consideration would be only land attributable to the builtup area transferred- Vijay Kumar Jain ITA/6120/Mum./2009.Vasavi Pratap Chand 89 ITD 73; Bifurcation of assets into land & structure- Jaimal Shah 137 ITD 376 (Mum.) {Hindustan Hotels 335 ITR 60 followed.} k) The exemption u/s. 54-whether restricted to one single house.- CIT V/s. Anand Basappa (2009) 309 ITR 329 :223 CTR (Kar) 186. View reiterated in Rukhminiamma 331 ITR 211 (Kar.). But no dispute that the assessee is entitled for as many houses as number of houses transferred- Rajesh Pillai 44 SOT 617 (Mum.); Ranjit Vithaldas 137 ITD 267 (Mum.) Also: Raman Suri 81 DTR 33 (Bom.) Syed Adil 352 ITR 418 (AP)- Adjacent flats) Gita Duggal (Del. HC) (Independent units) dt. 21.2.13 (Now followed in Chiranjeev Khanna ITA/3226/Mum/2010 dt. 26.2.13) l) Assessee selling property which was in name of HUF and purchased property in personal name. Held not entitled to section 54F exemption. Vipin Malik HUF 330 ITR 309 (Del). Assessee purchasing property in the name of son- Held assessee not entitled to 3

exemption u/s. 54F- Prakash V/s. ITO (2009) 312 ITR 40 (Bom). Contrary view in Kamal Wahal 351 ITR 4 (Del.). m) Acquisition of property in joint names- Vasanthi Rangarajan 252 CTR (Mad.) 336; Gurnam Singh 327 ITR 278 (P & H.) {In the context of sec. 54B}; Ravinder Kumar Aurora 342 ITR 38 (Del.). Also see n) Jennifer Bhide 349 ITR 80 (Kar.). Same principle applies for bonds u/s. 54EC- Vijay Shirodkar 48 SOT 8 (Mum.) o) Acquisition of property in name of wife permissible where wife s income was was assessed in the hands of husband (assessee)- V. Natarajan 287 ITR 274 (Mad.) p) Capital Gains Scheme Account.- The time limit for parking the capital gains in the account.- Jagriti Agarwal 339 ITR 610 (P & H); Rajesh Kumar Jalan 286 ITR 274 (Gau.);Fatima Bai 32 DTR (Kar.) 243; P.R. Kulkarni 135 TTJ (Bang.)630{A.Y. 06-07} Also: Kishore Galaiya 137 ITD 229 (Mum.) RKP Elayarajan 52 SOT 159 (URO) (Chennai) Jagtar Singh Chawla TS-112-HC-2013 (P & H) q) No requirement that construction should be complete, in order to claim benefit of section 54/54F- SHRI SAMBANDAM UDAYKUMAR 345 ITR 389 (Kar.).Sadarmal Kothari 302 ITR 286 (Mad.) r) Where assessee has invested some amount of capital gain in purchase of a new house and balance amount has been parked in Capital Gains Scheme Account, the assessee is entitled for exemption on both viz. amount invested in new house and amount invested in the 4

Account- Vikas Singh ITA/855/Del/2011) Decided on 18.11.2011 and Deepak Bheda 52 SOT 327 (Mum.). s) Exemption by constructing additional floor in existing house- Narsimhan 181 ITR 101 (Mad); Vidya Prakash Talwar 132 ITR 661 (Del); B.B.Sarkar 132 ITR 150 (Cal). II) Section 54EC. I) Date of Investment must be the date of payment & not the date of issue of certificate or bond.- Hindustan Unilever 325 ITR 102 (Bom.). II) Limit of Rs.50 Lacs-whether applies per financial year. Raj Kumar Jain 20 ITR (Trib.) 212 (Jp.). (In favour Revenue).Aspi Ginwale 52 SOT 16 (Ahd.).; Vivek Jairazbhoy (Bang.) (In favour of assessee). In the hands of minor- Rajeev Goyal 52 SOT 335 (Kol.). Shankar Sharma ITA/951/2011 {A.Y.07-08} dt.1.6.2012.(limit of Rs.50 Lacs would apply independently in the hands of minors.). III) Time limit of 6 months can start running from receipt of consideration- Mahesh Nemichandra Ganeshwade {2012} 17 ITR (Trib.) 116 (Pune). Same view in Chanchal Kumar Sircar {2012} 16 ITR (Trib.) 91 (Kol.). IV) Vinod Chhapia ITA/3178/Mum./2010. Dt. 21.11.12- Effect of change of tenants in the hands of the landlord. 5

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