Amounts paid within the period of three years but sale deed not executed: Taxpayer eligible for capital gain exemption U/s 54

consenting witness to said sale deed who has made payment for and behalf of assessee and stamp duty also has been paid by him which clearly establish fact that advance paid by assessee to B was with an intention to reinvest proceeds of capital gains in acquiring a new property and consequently conditions as specified in section 54 having been complied

—Apex Court in case of Fibreboards (P) Ltd. v. CIT (2015) 376 ITR 596 (SC) had held that utilization of capital gains within period would suffice for making claim of deduction u/s 54G and there was no requirement to acquire asset intended within period specified, provided same has been acquired in due course

—In peculiar facts of present case, assessee has made advances to developer, which has culminated in a purchase of a new residential house, sourced by developer to fulfill his obligation of providing a residential house, which is also evidenced by recitals in sale deed, wherein he has affirmed receipt of advance and also paid for new asset

—In case of Sambandam Uday Kumar 345 ITR 389 [Karn]. Jurisdictional High Court had held that amounts paid within period of three years, would be eligible to claim of deduction under section 54, though house was not registered within period of three years or two years, considering fact that payment for new asset was paid off within specified time

—Utilisation of capital gains within time specified would entitle assessee to claim deduction under section 54, notwithstanding fact that new asset was registered beyond period specified under Act, which according to assessee was beyond her control and was to be liberally construed.

—It is held by various Courts that application of beneficial provisions must be liberal to accommodate rules laid down broadly to verify compliance and must not be interpreted literally, unlike charging sections which are to be construed strictly.

—Bonafides of assessee cannot be doubted, since assessee has made deposits into capital gains scheme immediately and thereupon made payments to developers to acquire new house property.

—Assessee was also prevented by reasonable cause since funds had already been utilized and was forced to acquire an asset due to reasons beyond her control.

—Section 54 being benevolent in nature, it should be liberal in interpreting provisions of section 54 considering the fact that the new house was eventually acquired, out of the same capital gains utilized, which has been brought on record and not in dispute.
—Assessee is entitled to claim deduction to extent of Rs.1,26,00,000 and direct A.O. to allow claim u/s 54 to said extent—Assessee’s appeal partly allowed.