TMI Blog2015 (4) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... 62,317/- (Rs. 47,42,255/- - ₹ 20,79,938/-). We, therefore, considering the totality of the facts as discussed here in above are of the view that the ld. CIT(A) was not justified in directing the AO to sustain the addition on account of Long Term Capital Gains for a sum of ₹ 46,63,324/-. Accordingly, we delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee Entitlement to deduction u/s 80C - in the absence of complete documentary evidences AO allowed the deduction in part - Held that:- Considering the submissions of both the parties and the material on record, we deem it appropriate to remand this issue back to the file of the AO for verification and if it is found that the assessee invested ₹ 88,341/- in LIC and the tuition fees of the children then the claim may be allowed in accordance with law.- Decided in favour of assessee for statistical purposes. - ITA No. 4914/Del/2012, ITA No. 5326/Del/2012 - - - Dated:- 30-3-2015 - Sh. N. K. Saini And Sh. George George K. JJ For the Assessee by : Sh. Sanat Kapoor, C. S. and Vikas Jain, Advs. For the Revenue by : Smt. Parwinder Kaur, DR ORDER Per N. K. Saini, AM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption u/s 54F of the Income Tax Act, 1961 (hereinafter referred to as the Act). 5. Facts related to this issue in brief are that the assessee filed his return of income on 25.03.2010 declaring an income of ₹ 28,46,986/-, out of this the assessee claimed deduction under Chapter VI-A to the extent of ₹ 88,341/-. The said return was processed u/s 143(1) of the Act and subsequently, the case was selected for scrutiny through CASS. 6. During the course of assessment proceedings the AO noticed that the assessee had declared income under the head Long Term Capital Gains for a sum of ₹ 25,56,756/- and claimed capital gain as exempt u/s 54F of the Act. The AO also noticed that the assessee had sold one vacant plot divisible into two units vide two separate sale deeds for a total sale consideration of ₹ 94,73,002/- with the resultant total Long Term Capital Gains of ₹ 93,35,656/- which was claimed as exempt u/s 54 of the Act on account of buying two residential houses vide two separate sale deeds one from Smt. Rajrani and other from a builder as per following details: Investment made to acquire New Asset 'D' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to say- a) If the cost of the new assets 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 assets 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 new asset bears to the net consideration, shall not be charged under section 45. 2. That the declaration by the assessee that he has not have any residential house on the date of transfer of property is enclosed. Keeping in view of the above said facts your goodself is kindly requested to allow the exemption u/s 54F instead of 54(1) of the Income Tax Act, 1961. 8. The AO again asked the assessee to show cause as to why claim of exemption u/s 54F be not denied and the capital gains arising on the transfer of original asset be added back to the income for the reason that the sale proceeds had been reinvested in the acquisition of two house properties which violates the conditions of section 54F. The assessee vide letter dated 05.12.2011 explained to the AO as under: I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration 47,30,747 Date 20.12.2007 9,50,000 06.02.2008 10,00,000 18.03.2008 20,00,000 07.04.2008 7,25,000 15.04.2008 55,747 47,30.747 Less: Indexed Cost of Acquisition 459000*582/389 68,673 46,62,074 Long-Term Capital Gains Investment made to acquire New Asset C Date 08.01.2008 22.01.2008 5,00,000 09.02.2008 5,00,000 19.03.2008 6,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable Long Term Capital Gain on sale of Property 'B' 2,662,317 Total 2,792,432 9. The AO, however was not convinced with the explanation given by the assessee and made the addition of ₹ 65,43,224/- by stating that the assessee did not fulfill the eligibility conditions prescribed by section 54F of the Act. The reliance was placed on the following case laws: CIT Vs Ajax Products Ltd. 55 ITR 741 (SC) CIT Vs Indo-Mercantile Bank Ltd. (1959) 36 ITR 1(SC) S. C. Cambatta and Co. Ltd. Vs CIT (1952) 21 ITR 121(Bom.) Tarulata Shyam Vs CIT 108 ITR 318 Mc Dowell Co. Ltd. (1985) 154 ITR 148(SC) Workment of Associated Rubber Industry Ltd. Vs Associated Rubber Industry Ltd. (1986) 157 ITR 77 (SC) CIT Vs Durga Prasad More 82 ITR 540(SC) Bombay Oil Industries Ltd. VS DCIT (2000) 82 ITD 626(Mumbai) 10. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that there was no violation of the provisions of proviso (a)(ii) to section 54F of the Act. It was further stated that the assessee had not purchased any residential house other than the new assets whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54F of the Act, the exemption is available to the assessee if the Long Term Capital Gains are invested in the purchase/construction of residential house and that the clause (a)(ii) of the proviso of section 54F provides that if the assessee purchases any residential house other than the new asset within a period of one year after the date of transfer of original asset, then exemption u/s 54F(1) is not available to the assessee. The ld. CIT(A) pointed out that the assessee first purchased a residential house property (asset 'C') on 10.05.2008 and subsequently purchased another house property (asset 'D') on 02.09.2008 and apart from these two residential houses, the assessee did not have any other residential house i.e. on the date of transfer of the original asset on 09.04.2008, the assessee did not have any residential house. Therefore, if the asset 'C' is considered as the new asset then exemption u/s 54F cannot be allowed to the assessee in terms of clause (ii) of the proviso as the assessee purchased a residential house asset 'D' other than the new asset within one year of the date of transfer of the original asset. The ld. CIT(A) further stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT Mumbai Bench in the case of ITO Vs Ms. Sushila M. Jhaveri (2007) 292 ITR 1 (A.T) (Mum.) 14. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee purchased a Plot No. 12A situated in the Village Mandoli, Delhi. The said plot was divided into two plots and separate numbers were given to those plots i.e. 12A and 11A. The Plot No. 12A was measuring 413 sq. yds. i.e. 345.31 sq meter which is evident form page nos. 25 26 of the assessee's paper book. The another Plot No. 11A was measuring 414 sq. yds. i.e. 346.15 sq meter. The Plot No. 12A was sold to Sh. Pradeep Gupta for a sum of ₹ 47,30,747/- and the another plot i.e. 11A was sold to Smt. Sarita Gupta for a sum of ₹ 47,42,255/-. The assessee claimed the exemption u/s 54F in respect of two residential houses purchased for ₹ 46,68,400/- and ₹ 21,10,500/- from the sale proceeds of Plot Nos. 11A and 12A respectively. In the instant case to resolve the present controversy, it is relevant to discuss the provisions contained in section 54F(1) of the Act which read as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 54F of the Act shall not apply where the assessee owns more than one residential house other than the new asset. In the present case the assessee sold Plot No. 11A for ₹ 47,30,747/- and the indexed cost of acquisition of the said plot was of ₹ 68,673/-. As such the Long Term Capital Gains worked out to ₹ 46,62,074/-. The said Long Term Capital Gains was invested by the assessee in purchasing the residential house for a sum of ₹ 46,68,400/- as per following details: Investment made to acquire New Asset C Date 08.01.2008 5,00,0000 22.01.2008 5,00,0000 09.02.2008 6,00,000 19.03.2008 14,12,480 10.05.2008 9,00,000 Expenses on dalali, documentation Development finishing 7,55,920 46,68,400 The exemption u/s 54F of the Act in respect of this plot worked out to ₹ 46,00,630/-. From the above details it would be clear that the assessee purchased the new residential house on 10.05.2008 and the Plot No. 12A was sold to Sh. Pradeep Gupta on 11.04.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Gains for a sum of ₹ 46,63,324/-. Accordingly, we delete the addition confirmed by the ld. CIT(A). 17. The next issue vide Ground No. 2 of the assessee's appeal relates to the deduction u/s 80C of the Act. The facts related to this issue in brief are that the assessee claimed deduction u/s 80C of the Act for a sum of ₹ 88,341/-. The AO, however, in the absence of complete documentary evidences allowed the deduction for a sum of ₹ 59,576/-. When the matter was taken to the ld. CIT(A), the action of the AO was confirmed. 18. Now the assessee is in appeal. The ld. Counsel for the assessee submitted that the assessee claimed the deduction as per following details: DATE AMOUNT PAID TO REMARKS 02/05/2008 3,193.00 LIC of India Deduction allo wed 17/05/2008 15,000.00 Max Ne w York Life Ins. Co. Ltd. Deduction not (on a/c of want of proof) 05/08/2008 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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