TMI Blog2010 (9) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... ning a designated account and depositing the proceeds in that account - the assessee has not utilized the amount in question for construction of house before the due date of filing of the return of income i.e., 31-8-1996 as per notified scheme - Decided against the assessee - IT Appeal No. 2049 (Ahd.) of 2002 - - - Dated:- 17-9-2010 - G.D. Agarwal, Bhavnesh Saini, JJ. M.K. Patel for the Appellant. K.M. Mahesh for the Respondent. ORDER Bhavnesh Saini, Judicial Member. This appeal by the assessee is directed against the order of the CIT(A)-VI, Baroda dated 28-3-2002 for assessment year 1996-97. 2. The learned Counsel for the assessee did not press ground No. 3 of the appeal. The same is dismissed as not pressed. 3. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material on record. 4. Ground No. 1 of the appeal reads as under : 1. That the ld. Commissioner of Income-tax (Appeals)-VI, Vadodara-CIT(A) - ought to have directed the Ld. Assessing Officer (AO) to accept the declared gross Long-Term Capital Gain (LTCG), agreeing in toto with the valuation report of the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income and has shown the value of the land as on 1-4-1981 at the rate of Rs. 20 per Sq. Mtr. The Assessing Officer in view of the above reasons held that the rate adopted by the assessee as on 1-4-1981 at Rs. 65 per Sq. Mtr. is without any basis and accordingly directed to apply Rs. 20 per Sq. Mtr. for the purpose of calculation of capital gains. 6. The assessee challenged the findings of the Assessing Officer before the learned CIT(A) and reiterated the same submissions and it was mainly submitted that the Assessing Officer should have accepted the report of the Government Approved Valuer for the purpose of valuation as on 1-4-1981 at the rate of Rs. 65 per Sq. Mtr. It was also explained that the Assessing Officer has not given any reason for not accepting the report of the registered valuer. The learned CIT(A) considering the submissions of the assessee however, adopted the average rate of Rs. 42 per Sq. Mtr. for the purpose of calculating capital gains and allowed the appeal of the assessee partly. The findings of the learned CIT(A) in para 2.2 are reproduced as under : 2.2 I have considered the submissions of the appellant and the order of the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Assessing Officer is directed to adopt the fair market value of land as on 1-4-1981 at Rs. 42 per sq. m. as against Rs. 20. 7. The learned Counsel for the assessee reiterated the submissions made before the authorities below. However, the learned DR relied upon the order of the learned CIT(A). 8. On consideration of the rival submissions in the light of the facts of the case and finding of the learned CIT(A), we do not find it to be a fit case for interference. The Assessing Officer has assigned several reasons for rejecting the report of the Government valuer which have not been rebutted by the assessee through any material on record. It is difficult to believe that the agricultural land purchased by the assessee on 9-2-1979 at the rate of Rs. 5.20 per Sq. Mtr. would get the value of Rs. 65 per Sq. Mtr. as on 1-4-1981. It is also admitted fact that no expenses were incurred for development of the agricultural land. The approved valuer has not given any reason why comparable cases should not be accepted. The co-owner of the land Shri Jasubhai Gohil had also declared the value of the land as on 1-4-1981 at the rate of Rs. 20 per Sq. Mtr. Therefore, the assessee cannot claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, balance amount of Rs. 9,50,484 was utilized for construction of the house by second May, 1997. Thus, the assessee fulfilled the conditions of construction of the house within 3 years. It was also submitted by the assessee that the intention of the Legislature to introduce sub-section (4) to section 54F of the Income-tax Act was to avoid rectification of assessment on a later date by the department on non-compliance of the investment within the prescribed time-limit. The assessee has complied with all the conditions for claiming deduction under section 54F(4) of the Income-tax Act except the deposit of amount in capital account scheme. The assessee submitted that when substantial compliance was made, deduction should not be denied. The learned CIT(A) however, considering the submissions of the assessee dismissed the appeal of the assessee. The findings of the learned CIT(A) in para 3.3 of the impugned order are reproduced as under : 3.3 I have considered the submission of the appellant and the order of the Assessing Officer. It is seen that the appellant has not deposited the sale consideration in the designated Capital Gain Accounts Scheme, 1988 and instead the amount was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anatory note to Finance Bill, 1982 Clauses 41 and 42 reported at 134 ITR (Statute) 138 in which it is provided that with a view to encourage house construction, it is proposed to provide where any capital gain arises from the transfer of any long-term capital asset and the taxpayer purchased within a year or after the date on which the transfer took place or constructed within a period of 3 years after the date of transfer of a residential house, capital gains arising from transfer will be treated in a concessional manner as provided under the Act. The learned Counsel for the assessee submitted that the provisions of law should be construed liberally so as to advance the remedy provided under the Act. He has relied upon the decision of the Hon ble Supreme Court in the case of British Airways PLC v. Union of India [2002] 2 SCC 95 in which it was held that It is a cardinal principle of construction of a statute that effort should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The well-known principle of harmonious construction is that effect shall be given to all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year in which such new asset is transferred. (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount not utilized for purchase or construction of the new house should be deposited by the assessee within the time and in the manner required by sub-section (4) and should be utilized by the assessee in accordance with the notified scheme, in order to avail himself of the benefit of sub-section (1) of the Income-tax Act. However, in the case of the assessee, the assessee has kept the amount in his ordinary saving bank account meaning thereby the amount remained in the custody and control of the assessee and the assessee could utilize the same in any manner as he wished. It would, therefore, frustrate the very purpose of the notified scheme by the Government. The above provisions would thus prove that in case the assessee seeks exemption from the payment of tax on account of long-term capital gains, the assessee shall have to satisfy the mandatory provisions of law as noted above. Therefore, the interpretation of the above provision would show that the assessee shall have to strictly comply with the provisions of law in order to get exemption under section 54F of the Income-tax Act. No other interpretation could be given to such provisions of law. The assessee, therefore, in order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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