TMI Blog2018 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... artnership firm. Therefore A.O has rightly limited the benefit to 33.33% of the amount invested in purchase of residential house at ₹ 71,46,348/-. We find no reason to interfere in the findings of Ld.CIT(A). Ground No.4 of the assessee is dismissed. Allowing the benefit u/s 54F only to the extent of amount deposited till the date of filing of return - whether required amount was deposited within the statutory time limit of two years as contemplated u/s 54F? - Held that:- One cannot have any other opinion except that the assessee has to either apply the net consideration for purchase of construction before the due date of filing of return of income or in the alternative deposit the same in the capital gain account. We can understand this provision with an example. For instance if during the financial year 2012-13, sale of immovable property i.e. the capital asset take place on 1.4.2012 and the due date of filing of return of income is 30.9.2013, then the assessee will have 18 months to utilize the net consideration. If for instance the assessee sells capital assets on 31.3.2013 then the assessee will have only 6 months to utilize the consideration for purchase or constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less: Index cost of improvement ₹ 33,09,589/- Less: Transfer expenses ₹ 33,49,170/- Total ₹ 3,70,87,756/- Less: Exemption u/s 54F ₹ 23,82,116/- Long Term Capital Gain Rs.3,47,05,640/- The above sum of Long Term Capital Gain was added to the income disclosed in the income tax return at ₹ 12,79,190/- and income assessed at ₹ 3,59,84,830/-. 3. Aggrieved assessee preferred an appeal for Ld.CIT(A) and partly succeeded. 4. Now the assessee is in appeal before the Tribunal raising following five grounds of appeal; 1. That on the facts and in the circumstances of the case, Ld. Commissioner of Income Tax (Appeals)-I, Indore has erred in conforming addition to the extent of ₹ 88,02,522/- to the total income of the assessee, whereby addition of ₹ 79,05,700/_ is confirmed by restricting the claim of investment made in purchase of residential flat U/s 54F to 33.33% and moreover by only considering the amount which is invested up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n value and valuation referred by Ld. DVO, hence it is humbly prayed that actual transaction value should not be rejected just on estimation basis more particularly when the variation between the actual value and the one adopted is less than 10%. Reliance is placed on following judicial pronouncement in support of our above argument. C.B. Gautam Vs. Union of lndia, [1992165 Taxman 440 (SC) CIT Vs. Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar [1992164 TAXMAN 585 (RAT.) Honest Group of Hotels P. Ltd. Vs. CIT TAXMAN 464 (J K)) Smt. Sita Bai Khetan Vs. ITO, [20171 88 taxmann.com 377 (Jaipur - Trib.) BIMLA SINGH Vs. COMMISSIONER OF INCOME TAXI (2009) 308 ITR 71 M/s John Fowler (India) Pvt. Ltd. Vs. DCIT, I.T.A No. 7545/Mum/2014 M/s Krishna Enterprises Vs. Addl. CIT, I.T.A. No. 5402(Mum 111/2014 Rahul Construction Vs. DCIT ITA No. 1543 Thus, your honor in light of the above judicial pronouncement it can be seen that estimation variation of 10% or less should be ignored, thus it is humbly prayed to delete the addition of ₹ 8,96,882/- made on such account. 7.2. That, vide ground No. 1 and ground No. 5, it is argued that the Ld. CIT -A erred in sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he object and paralyses the purpose of the beneficial enactment, reliance is placed on CIT Vs. Rajesh Kumar Talan 286 ITR M274 (Gau. H.C.) 9. That, looking to the facts and circumstances of the case, case laws on the issue cited above, it is humbly requested your Honor's to kindly decide the issue on merit and delete the addition sustained by Ld. CIT-A. 6. The Ld. Departmental Representative vehemently argued, supporting the findings of Ld. CIT(A). 7. We have heard rival contentions and perused the records placed before us and also gone through the judgments and decisions referred and relied by Ld. Counsel for the assessee carefully. 8. First we will take up Ground No.1, 2 3 which revolves around the addition of ₹ 8,96,882/- confirmed by the Ld. CIT(A). We find that the assessee sold the warehouse at a sale consideration of ₹ 2,07,00,000/-. Ld.A.O adopted fair market value price of ₹ 4,75,00,000/-. During the assessment proceedings Ld.A.O called for the Departmental Valuation Officer s report vide letter dated 16.3.2016 but the valuation report was received by the assessee on 13.6.2016 which was much after the finalization of the assessment u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case where the alleged difference between the valuation made by the Ld. DVO and the sale consideration shown by the assessee is only 4.33%, Ld. CIT(A) erred in sustaining the addition of ₹ 8,89,882/-. We therefore direct the Ld.A.O to compute the Long Term Capital Gain on the basis of sale consideration of ₹ 2,07,00,000/- disclosed by the assessee. In the result Ground No.1, 2 3 of assessee s appeal are allowed to the extent of deletion of addition of ₹ 8,89,882/-. 13. Now we take up Ground No.4 which relates to restriction of claim of benefit under section 54F of the Act to the extent of 33.33%. Brief facts are that the assessee in order to claim the benefit u/s 54F of the Act invested the sale consideration from sale of warehouse for purchasing residential flat. The flat was purchased in the joint name of assessee, Shri Rajesh Sharma and partnership firm M/s R J Chemicals. The assessee claimed the exemption of ₹ 1,02,87,756/-. Ld. A.O on observing that the payment for purchase of residential flat has only been made at ₹ 71,46,348/- up to the date of filing of the return of the income ignored the remaining amount. Ld.A.O fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO wherein the court did not approve the claim of exemption u/ s 54F on property purchased in the name of adopted son. The concepts of the assessee , own , owned owner , ownership , co- owner , owner of house property or ownership of property as elaborated in s. 22 to 27 and 32 of the IT Act, are very much interlinked and connected for granting the benefit under the 11' Act. The word and phrase owner in the context of s. 22 of the IT Act has been elaborated in CIT vs. Podar Cement (P) Ltd. Etc. (1997) 141 CTR (SC) 67 : (1997) 226 ITR 625 (SC); and Mysore Minerals Ltd. vs. CIT (1999) 156 CTR (SC) 1 : (1999) 239 ITR 775 (SC). An assessee must have valid title legally conveyed to him after complying with the requirement of law or at least entitled to receive income from the property in his own right and have control and domain over the said property for all the legal purposes, which basically excluding a third person of any right over the said property. Therefore, all these concepts are inter-linked. The scheme and purpose of s. 54F, which was inserted by the Finance Act, 1982, w.e.f 1st April, 1983, i.e., from the asst. yr. 1983-84 is with a view to encourage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the record that the deceased assessee, admittedly, though sold the property owned by him yet purchased the new property in the name of adopted son and paid consideration out of the sale proceeds in question, with clear intention to transfer the property to the adopted son. He, therefore, utilised the sale proceeds to construct a house by transferring the property and submitting plan in the name of the son only. The intention was very clear from the day one to transfer the property even before the construction of residential house to the adopted son. He transferred the property before the prescribed period, as per the scheme of section, and the son becomes the owner of the property for all the purposes. The deceased assessee, admittedly, had no domain and/ or right whatsoever on the said property. This fact itself, therefore, disentitled to claim any exemption as there were various non compliances of the conditions as per the scheme of ss. 54 and 54F of the IT Act as mentioned above. In view of the above the claim of the appellant has been rightly restricted to 33.33% by the AO. The same is confirmed in appeal. This ground of the appellant is therefore dismissed . 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her co-owners are not the relatives of the assessee but are partners in the partnership firm. Therefore in the given circumstances Ld.A.O has rightly limited the benefit to 33.33% of the amount invested in purchase of residential house at ₹ 71,46,348/-. We find no reason to interfere in the findings of Ld.CIT(A). Ground No.4 of the assessee is dismissed. 16. Now we take up Ground No.5 of the assessee wherein assessee has assailed the findings of Ld. CIT(A) pleading that both the lower authorities erred in allowing the benefit u/s 54F only to the extent of amount deposited till the date of filing of return at ₹ 71,46,348/- ignoring the fact that required amount was deposited within the statutory time limit of two years as contemplated u/s 54F of the Act. 17. We have heard rival contentions and perused the records placed before us. We find that the assessee in order to claim exemption u/s 54F of the Act, invested part of the consideration received from sale of warehouse for purchasing residential flat at Flat-1403, 4th floor, Tower-A, Omkar Alta Monte Bldg, Kurar Village, WE Highway, Malad-E, Mumbai in the name of Shri Rajesh Kala (assessee), Shri Rajesh Sharma and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 4 of section 139 of the Act implying that the investment could have been made at any time before filing of return up to the due date as per section 139(4). The decision of the jurisdictional ITAT in the case of Aftab Mohammad has also been relied upon by the appellant. The said decision is distinguishable on facts as in that case no return of come was filed by the assessee u/s 139(1)/139(4) of The Act and there was filed only in response to notice u/s 148 and the reinvestment was made before that date within the statutorily provided period of three years and hence it was held that the assessee was eligible for the benefit u/s 54F in the light of the extant judicial position. In the case of the present appellant it is seen that the due date for filing of return u/s 139(1) was 30.9.2013 and u/s 139(4) it was 31.3.2015. The return of income was filed by the appellant on 30.3.2014 and hence even if the ratio of the decisions cited by the appellant is applied the sale consideration should have been utilized for reinvestment before the said date i.e. 30.3.2014 and the unutilized amount should have been deposited in the Capital Gains Account Scheme and the proof of such deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed from HDFC. The assessee is not entitled to exemption under section 54F because the assessee neither deposited the sale proceeds for construction of the building in the bank in terms of sub-section (4) before the date of filing returns nor was the sale proceeds utilized for construction in terms of section 54F(3). So much so, the assessee was not entitled to claim exemption on capital gains under section 54F of the Act which the AO rightly declined. As has already been noted above the decision of the Jurisdictional of ITAT in the case of Aftab Mohammad is also of no help to the appellant on the issue as the facts are different. The AO has already allowed the benefit u/s 54 F to the extent of reinvestment made up to the date of filing of return as is evident from the ledger of investment in new house filed by the appellant. In view of the above discussion the action of the AO is approved and confirmed in appeal . 19. Further in order to adjudicate the issue we will like to go through the provisions of Section 54F of the Act which reads as under; Section 54F Capital gain on transfer of certain capital assets not to be charged in case of investment in residenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the period of three years after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the net consideration which is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the transfer of original asset took place or which is not utilized by him for the purchase/construction of the new asset before the date of furnishing the return of income u/s 139(1) of the Act, then in order to claim the benefit, the remaining amount needs to be deposited in the capital gain account in accordance with the scheme which the Central Government notify through notification framed in this behalf and the proof of such deposit needs to be accompanied with the income tax return. Thereafter the assessee will be at liberty to utilize the amount deposited in such Capital Gain Account Scheme for purchase or construct the new asset within the statutory time limit provided in Section 54F of the Act i.e. either to construct within three years or to purchase within two years from the date of sale of original asset. In our view one cannot have any other opinion except that the assessee has to either apply the net consideration for purchase of construction before the due date of filing of return of income or in the alternative deposit the same in the capital gain account. We can understand this provision with an example. For instance if during the financial year 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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