FARIDA A. DUNGERPURWALA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE appeal of the assessee is directed against the order dated March 29, 2010 passed by the learned Commissioner of Income -tax (Appeals) -25, Mumbai and it relates to the assessment year 2006 -07. The assessee is aggrieved by the decision of the learned Commissioner of Income -tax (Appeals) in confirming the rejection of claim for deduction under section 54 of the Act made by the assessee in her return of income. The assessee sold a residential flat on October 10, 2005 for a sum of Rs. 28,50,000. The assessee claimed a sum of Rs. 14,33,450 as deduction under section 54 in respect of cost of a new flat. The Assessing Officer noticed that the assessee had booked a flat in a project as per the sale agreement registered on December 4, 2002 for a consideration of Rs. 31,20,000. The assessee paid the abovesaid consideration in instalments. It is noticed that the flat was booked in the joint names of the assessee and her relative. According to the assessee, she obtained possession of the new flat on December 4, 2004. Before the Assessing Officer, the assessee submitted that the new flat should be considered as having purchased only on December 4, 2004, i.e., on the date on which he obtained possession. Under section 54 of the Act, the cost of new house purchased within one year prior to the date of sale of original residential house is also eligible for deduction. It appears that the cost of new flat worked out to about Rs. 34.86 lakhs and the assessee claimed 50 per cent of her share therein as deduction under section 54 of the Act.

(2.) THE Assessing Officer did not accept the contentions of the assessee that the date of possession of new house should be taken as the date of purchase. The Assessing Officer placed strong reliance on the decision of the jurisdictional High Court rendered in the case of CIT v. Mrs. Hilla J.B. Wadia : [1995] 216 ITR 376 (Bom) with the following observations:

(3.) THE learned Commissioner of Income -tax (Appeals) also confirmed the decision of the Assessing Officer with the following observations: