COMMISSIONER OF INCOME TAX -17 Vs. KALPANA HANSRAJ

JUDGEMENT

(1.) Revenue is in the appeal against the judgment of the Income Tax Appellate Tribunal ("Tribunal" for short) dated 17.4.2015. Following question has been presented for our consideration:-

(2.) Respondent - assessee is an individual. For the assessment year 2006-07, in the return filed by the assessee, the Revenue objected to the assessee's claim of exemption under Sec. 54F of the Income Tax Act, 1961 ("the Act" for short) on the ground that the assessee had sold a flat which was in the nature of residential unit and therefore, Sec. 54F would not apply. In the appeal, the Commissioner gave relief to the assessee upon which the issue reached the Tribunal. The Tribunal, by the impugned judgment, dismissed the revenue's appeal by making following observations:-

(3.) Perusal of sub-section (1) of Sec. 54 of the Act would show that the exemption would be available to an assessee being an individual or Hindu Undivided Family where the capital gain arises from the transfer of a long-term capital asset, not being a residential house provided the remaining conditions of the said provisions are satisfied. In this context, as noted, the revenue's objection is that the assessee had sold a flat which was in the nature of residential unit. The Tribunal, however, found that the facts of the case are somewhat peculiar. The assessee had booked a flat on 15.1.1981. The builder failed to complete the construction and the scheme ran into multiple legal disputes. These disputes travelled to the Bombay High Court. The Bombay High Court appointed a committee in the nature of Receiver and was asked to observe the completion of the construction. Under such circumstances, the construction was completed sometime on Feb., 2011. In the meantime, the assessee had sold the flat in the year 2005 which she had booked. The same was still under construction. The same resulted into long-term capital gain. It was in such peculiar facts that the Tribunal held that the assessee cannot be said to have transfered a capital asset in the nature of residential house. We may recall that the assessee had booked the flat far back in Jan. 1981 and till the time, she sold for the same in the year 2005, completion of Constitution was nowhere in the sight. It was only with the intervention of the High Court and the steps taken by the Committee appointed by the High Court that the construction could be completed much later in the year 2011. In the peculiar facts of this case, therefore, we do not find any error in the view of the Tribunal. Tax appeal is dismissed.