IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H , MUMBAI BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER) ITA No. 2904/Mum/2017 (Assessment Year : 2013-14) Smt. Kalpana Paresh Dadia ITO, Wd.30(2)(1), 101, Hema Kunj, Mamlatdar C-13, 6th Floor, Pratyakshakar Wadi, 6th Cross Road, v/s Bhavan, BKC, Bandra (E), Malad(W), Mumbai-400064 Mumbai-400051 PAN : AAAPD5307P APPELLANT RESPONDEDNT Appellant by Shri Bhupendra Shah CA Respondent by Shri S Michael Jerald,Sr DR Date of hearing 18-09-2019 Date of pronouncement 01-10-2019 ORDER Per Pawan Singh, Judicial Member: 1. This appeal by assessee is directed against order of CIT(A)-41, Mumbai dated 01-02-2016, which in turn, arises from assessment order passed u/s 143(3) on 12-01-2016. assessee has raised following grounds of appeal. (1) Ld. A.O. has erred in not allowing deduction U/S.54F of Rs.82,13,803/- and Ld. CIT(A)-41 has erred in confirming same. 2. brief facts of case are that assessee is partner in M/s Arham Industries, filed her return of income for AY 2013-14. case was selected for scrutiny. During assessment, from computation of income, AO noted that assessee has claimed capital gain on sale of 2 ITA 2904/Mum/2017- Kalpana Paresh Dadia 50% share in land and earned capital gain of Rs.82,13,803/-. assessee also claimed deduction u/s 54F on purchase of flat in Ahuja Mapl View of M/s Adarsh Industrial Estate P Ltd. assessee sold capital asset / land on 22.11.2012 and purchased new flat vide allotment letter dated 28-09-2013. assessee made payment of Rs.87 lakhs out of total value of new asset / flat of Rs.1,12,22,600/- and thus claimed that substantial part of payment was made before allotment letter dated 28-09-2013. AO did not accept contention of assessee by taking view that conditions of section 54F were not fulfilled by assessee. As assessee neither received possession of new asset / flat nor property was registered in name of assessee within stipulated period. AO concluded that no legal document for purchase was produced by assessee to prove that assessee purchased or acquired property after expiry of three years from date of sale. Aggrieved by order of AO, assessee filed appeal before CIT (A), where action of AO was confirmed. Thus, further aggrieved by order of CIT (A), assessee has filed present appeal before us. 3. We have heard submission of Ld. AR of assessee and Ld. DR for revenue and perused material available on record. ld. AR for assessee submits that grounds of appeal raised by assessee is 3 ITA 2904/Mum/2017- Kalpana Paresh Dadia covered by decision of Hon ble Bombay High Court in PCIT Vs Vembu Vaidyanathan [2019] 101 taxmann.com 436 (Bom). ld AR for assessee submits that during relevant period assessee with her co-shares sold plot of land on 22.11.2012 for total consideration of Rs. 173,00,000/-. assessee was owner of 50% share in said plot. plot was acquired on 24/05/1994. assessee earned capital gain of Rs. 82,13,803/-. assessee invested entire sum of amount in purchasing new residential flat on 28.09.2013. assessee made payment of Rs. 87 lakhs (out of total consideration of Rs. 1.15 crore) before allotment of flat. Thus, assessee is entitled for exemption under section 54F of Act. 4. In support of his submissions ld AR for assessee relied on decision of Bombay High Court in PCIT Vs Vembu Vaidyanathan [2019] 101 taxmann.co. 436(Bombay), decisions of Tribunal in Nisha Suman Jain Vs DCIT (ITA No. 42/Mum/2015 dated 25.04.2019, Umashankar Mishra Vs DCIT (ITA No. 5653/Mum/2016 dated 02.08.2017) and Anita D Kanjani Vs ACIT [2017] 79 taxmann.com 67 (Mum-Trib). 5. On other hand ld. DR for revenue supported order of lower authorities. ld. DR for revenue further submits that mere issuance of allotment letter does not create right in respect of asset in 4 ITA 2904/Mum/2017- Kalpana Paresh Dadia absence of registered agreement or sale deed for acquisition of property. assessee has not fulfilled conditions prescribed under section 54 of Act. 6. We have considered rival submissions of parties and have gone through orders of lower authorities and also deliberated on various case law relied by parties. On care full perusal we have noted that there is not dispute for earning of capital gain, short controversy for our consideration is if assessee is entitled for deduction under section 54F on investing gain on acquisition of new asset / residential flat, which was allotted to assessee vide allotment letter dated 28.09.2013. Admittedly, when allotment letter was issued to assessee, assessee has paid sum of Rs. 87 lakhs (not disputed by lower authorities.) 7. Hon ble Bombay High Court in PCIT Vs Vembu Vaidyanathan (supra) while considering question of law whether on facts and in circumstances of case and in law, ITAT was justified in treating gain arising from sale of capital asset as Long Term Capital Gain without appreciating fact that mere letter of allotment does not lead to creation of proper and effective right over capital asset sought to be acquired, but only on execution of agreement spelling out all exact terms and conditions for acquisition held that for computing capital gain 5 ITA 2904/Mum/2017- Kalpana Paresh Dadia tax, date of allotment of flat by DDA would be date on which purchaser of flat can be stated to have acquired property. 8. Further, coordinate bench of Tribunal in Nisha Suman Jain Vs DCIT (supra) has taken view that for computing period for Long Term Capital Gain (LTCG) has to be taken from date of allotment letter. In Umashankar Mishra Vs DCIT (supra) also allowed computation of LTCG from date of allotment letter. Further, in Anita D Kanjani Vs ACIT (supra) similar view was taken in order to determine nature of asset in term of section 2(42A), holding period has to be computed from date of issue of allotment letter and not from date when agreement to sale was registered. 9. In view of aforesaid discussions, we may further retreat that when assessee was allotted residential flat on 28.09.2013 assessee has paid sum of Rs. 87,00,000/-. Assessing Officer has not disputed payment made against purchase of new residential flat. objection of Assessing Officer was that property is not registered in name of assessee nor possession is obtained by her. In our view, once assessee has invested substantial part of capital gain in acquisition of residential house. assessee is entitled to exemption under section 54F of Act. As assessee has fulfilled condition for seeking deduction under section 54F of Act. 6 ITA 2904/Mum/2017- Kalpana Paresh Dadia 10. In result, appeal of assessee is allowed. Order pronounced in open court on 01-10-2019. Sd/- Sd/- (Shamim Yahya) (Pawan Singh) ACCOUNTANT MEMBER JUDICIALMEMBER Mumbai, Dt : 1st October, 2019 Pk/- Copy to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Asstt. Registrar, ITAT, Mumbai Kalpana Paresh Dadia v. ITO, Ward- 30(2)(1), Mumbai