TMI Blog2013 (1) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proviso. Not only construction never commenced but the assessee could not show any evidence that the assessee wanted to start the construction. If the tax is allowed to be postponed merely on the basis of purchase of plot then no assessee would pay correct taxes during the year and postpone the payment of taxes by merely purchasing the plot and that cannot be intention of the provisions of section 54F. Therefore, CIT(A) is right in denying the deduction u/s 54F to the assessee. Double taxation of income - Held that:- No doubt as decided in Murlidhar Bhagwandas case (1964 (1) TMI 5 - SUPREME COURT) has held that the Tribunal has no power to give direction in respect of any other year which is not before the Tribunal. However, at the same time there is cardinal principle of taxation particularly in view of the Article 265 of the Constitution that the taxes can be collected only by process of law and therefore, no income can be taxed twice. As in the present case the assessee has voluntarily filed return declaring capital gain in AY 2011-12, therefore, the tax paid in that year would amount to double taxation if the capital gain is also taxed in AY 2008-09. Agreeing with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowed deduction u/s 54F. 4. On appeal before the ld. CIT(A) it was mainly submitted that the assessee had purchased plot on which construction was to be done. Only proportionate deduction amounting to Rs. 5,32,207/- out of the total capital gain of Rs. 7,22,500/- was claimed and tax was paid on balance of the capital gain. Since the assessee could not complete the construction, therefore, the addition can be made only after the period of three years expired and period of three years expired in AY 2011-2012. It was further submitted that it was a matter of common sense that whether the property has been constructed or not, would be known only in the year when the time is to expire. Reliance was also placed on the decision of Hon'ble Allahabad High Court in case of Ranjit Narang v. CIT [2009] 317 ITR 332. 5. The ld. CIT(A) after considering the submissions observed that the assessee has not started the work of construction on the said plot, therefore, the claim of deduction u/s 54F was not acceptable. Accordingly he upheld the action of the AO. 6. Before us, the ld. counsel of the assessee submitted that after the sale of the property on which some capital gain arose a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in respect of any other year in view of the decision of Hon'ble Supreme Court in case of ITO v. Murlidhar Bhagwandas [1964] 52 ITR 335. 8. We have heard the rival submissions carefully in the light of material on record as well as the decision cited by the parties. Section 54F reads as under: "54F. (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 cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sset 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 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, alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in specified period. It is further noticed that the proviso has been placed under sub-section (4) which means it would control interpretation only of sub-section (4). In any case the proviso makes it clear that this is applicable where the amount has been deposited in the bank under this sub-section. This means it cannot change the situations under other parts of the section. 8 (1) Coming to the case law cited by the ld. counsel of the assessee, the facts in first case of Ranjit Narang (supra), were that the assessee had sold certain shares in AY 1990-91 and wanted to available benefit of Section 54F and in terms of sub-section (4) of Section 54F deposited net consideration in the bank. However, later the assessee failed to utilize the amount for the purchase or construction of new asset and capital gain became liable to be charged u/s 45 of the Act. The same was chargeable in AY 1993-94 because of the proviso. In the return of income filed by the assessee for AY 1993-94 while computing the capital gain the assessee claimed basic exemption of Rs. 10,000/- and further deduction of 60% of the amount of capitalgain in excess of Rs. 10,000/- as per provisions of section 48(1) (b) r.w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case relied on the ld. counsel of the assessee is that of Smt. Ranjit Sandhu's case (supra). The facts of that case are that the assessee sold her agricultural land in 2006. The assessee had purchased plot in Gurgaon out of the said sale consideration and claimed deduction u/s 54F. During assessment proceedings it was noticed that the construction had not been completed and therefore, the deduction was denied. On appeal before the ld. CIT(A), action of the AO was confirmed. When the assessee came before the Tribunal it was noted that the requirement of Section 54F to be available was either purchase of residential house being a new asset with in the stipulated period or to construct a residential house within a period of three years from the date of transfer. Section does not prescribe the completion of the construction of residential house and thrust was on the investment of the net consideration received on the sale of new residential house. Accordingly claim was allowed. Thus it is very clear that in this cased that the construction had already commenced but not completed that is why deduction was allowed whereas in case before us not only construction never commenced but the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is allowed to be postponed merely on the basis of purchase of plot then no assessee would pay correct taxes during the year and postpone the payment of taxes by merely purchasing the plot and that cannot be intention of the provisions of section 54F. Therefore, in our opinion, the ld. CIT(A) is right in denying the deduction u/s 54F to the assessee and accordingly we uphold his order. 9. Coming to the alternative submissions, no doubt the Hon'ble Supreme Court in case of Murlidhar Bhagwandas case (supra) has held that the Tribunal has no power to give direction in respect of any other year which is not before the Tribunal. However, at the same time there is cardinal principle of taxation particularly in view of the Article 265 of the Constitution that the taxes can be collected only by process of law and therefore, no income can be taxed twice. In case before us, the assessee has voluntarily filed return declaring capital gain in AY 2011-12, therefore, the tax paid in that year would amount to double taxation if the capital gain is also taxed in AY 2008-09. We agree with the submissions that the taxes paid in 2011-12 needs to be adjusted against the capital gain liability du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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