TMI Blog2012 (4) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... section 54F was rejected on the ground that the assessee has not constructed the residential house within the period of three years, which is mandatory as per the provisions of the Income-tax Act, 1961 - the learned counsel appearing for the assessee, argued that the sale proceeds were straightaway utilized by the assessee in purchasing the landed property to construct a residential house and it was on that basis that exemption was claimed under section 54F - intention of the assessee is very clear from the fact that within days of the sale of her old property, the assessee had purchased the new site for constructing a residential house - The purchase value of the property is more than the long-term capital gains taxable in the hands of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter, on 5-7-2006, purchased a landed property to construct a house for a consideration of Rs. 33,88,160/-The purchase price paid for the land was more than the long-term capital gains arisen in the hands of the assessee on sale of her capital asset. But the assessee could not construct the residential house in the land purchased by her, as proposed. The purchase of the property was transacted on the authority of a power of attorney. The owners of the land filed a petition for injunction before the Civil Court at Poonamallee in No.156 of 2008 in Civil Suit No.23 of 2008. In the above suit and petition, the Civil Court granted injunction to the owners of the property and ordered status quo, which prevented the assessee from proceeding fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved and, therefore, this second appeal before us. 7. The grounds raised by the assessee in the present appeal read as below:- "1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case and opposed to principles of legitimate expectation and evidence on record. 2. The assessing officer erred in reopening the asst. in the absence of materials to form opinion and live link or nexus for the purpose of reopening of the asst. 3. The learned CIT(A) erred in mechanically confirming the order of the Assessing Officer without considering the eligibility of relief based on the case law and on account of force majeure situation of stay order of the court obtained against the appellant and others and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee had purchased the landed property for a consideration more than the taxable long-term capital gains, but could not proceed further to construct the house, as the assessee was prevented from proceeding further by virtue of the restraint ordered by competent Civil Court. The learned counsel submitted that the law does not compel to perform a thing which is impossible to perform and, therefore, the non construction of the residential house was beyond the scope of assessee's abilities and, therefore, the purchase of the land itself should be considered as sufficient investment for claiming exemption under section 54F. He relied on the judgment of the Hon'ble Supreme Court in the case of State of Rajasthan v. Shamsher Singh , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was sold for a consideration of Rs. 34,73,447/-, out of which the assessee was accountable for long-term capital gains of Rs. 32,77,450/-. The assessee has invested Rs. 33,88,160/- for the purchase of the land, which is more than the quantum of long-term capital gains. This again demonstrates the fact that the assessee had arranged the transaction in such a bona fide manner so as to claim the exemption available under section 54F of the Income-tax Act, 1961. 11. It is after the purchase of the property that the hell broke loose against the assessee in the form of civil litigation. The litigation started on 25-2-2008 and ended only on 19-9-2011. By that time the available period of three years to construct the house was already over, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 54F. Therefore, what is the reality? The reality is that the assessee has spent the entire consideration received on the sale of property towards the construction of the residential house. It is true that the assessee could not construct the house. But she has purchased the land utilizing the entire consideration received on the sale of the old property. It means that the assessee has invested the entire consideration received on sale of the old asset in acquiring/constructing a residential house property. In the special facts and circumstances of the present case, therefore, it is necessary to hold that the amount utilized by the assessee to purchase the land was in fact utilized for acquiring/constructing a residential house. D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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