54ec

This query is : Resolved

Ca Siddharth Mehta (Querist)
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07 February 2012 Ms. Roshell Roudrics entered into sale agreement with Mr. Frederick Furtado for a
sum of Rs. 6,000,000. The Agreement was registered on March 28, 2009 on a payment
of Rs. 500,000.
In Clause 4 of the aforesaid Agreement, it was clearly stated that the seller would hand
over possession of the flat only after the receipt of the balance payment for the
consideration of the sale of the flat. In clause 7 of the Agreement, it was stated that on
receipt of balance payment of RS. 5,500,000, the Vendor shall handover quite, peaceful,
and vacant possession of the property. Sub-clause (ii) of clause 7 of the Agreement
stated that the vendor shall grant, assign, transfer, and assure all her rights, title, and
interest in the said flat on receipt of the balance consideration of RS. 5,500,000. The
balance amount was received by Ms. Roshell on April 23, 2009. Possession was given
on April 28, 2009. Society transferred the share certificates in the name of buyer on
August 12, 2009.
Thus, Ms. Roshell offered the capital gains from this flat during Assessment Year 2010-
11 and claimed exemption under section 54EC after making investment in eligible bonds
on October 17, 2009.
The Assessing Officer during course of Assessment opined that, since Agreement was
registered on March 28, 2009, capital gains were chargeable in Assessment Year 2009-10. He further denied benefit of exemption under section 54EC as the investment was
not made within six months from the date of transfer.

Kindly advise.

CA. Hari Kishan

CA. Hari Kishan (Expert)
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07 February 2012 You have a good case for litigation. I am personally of the opinion that the case should be in the favor of the assessee as he always had the intention of investing the amount in the 54E bonds. Also registration of the sale deed though forms the crux of determination of the transfer of title, the deed clearly states that possession right etc shall be handed over only upon payment of the majority of the consideration amount. You should fight it out... keep me posted about the developments of the case.

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