TMI Blog2015 (11) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjeev Lal vs. CIT [2014 (7) TMI 99 - SUPREME COURT] - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - Held that:- The provision made for the electricity charges is apparently for the period 14.3.2008 to 31.3.2008. This being the case, the provision for this period of ₹ 76,584 is allowable as deduction therefore the disallowance made is deleted and the ground of appeal is allowed - Decided in favour of assessee. - ITA No. 4169/Del/2011 - - - Dated:- 7-10-2015 - SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER For The Appellant : Shri Vikram Sahay, Sr.D.R. For The Respondent: Sh. Gautam Jain, C.A. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER This is an appeal filed by the Revenue and is directed against the order of Ld.CIT(A), Rohtak dated 08.07.2011 pertaining to the AY 2008-09. 2. Facts of the case:- The assessee is an individual and has income from business, house property, interest, capital gains and agricultural income. He is proprietor of two firms namely M/s New Haryana Grih Udyog and M/s New Haryana Stone Crushing Co. Both the firms are running stone crushing units. He filed return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Bank of India, Sector - 15, Gurgaon, Haryana of SB Account No. 56414003767 and, on verification of the account it has been observed that on 29.09.2008, the said bank account of the assessee shows the credit balance of ₹ 1,939/- only, however, the cheque has been issued to the tune of RS. 86.20 Lac; c) That alleged purchase of the plot was not culminated into the registration of the said plot in the name of the assessee even till the date of this order; d) That inspite of his repeated arguments and submissions that he is going to construct a residential house according to the provisions of the section 54F of the Act on the plot purchased by him from his brother, and he has also made some payments to the contractor towards the construction of the house, he has failed to file any sort of evidences in support of his own claims; e) That the said cheque has been encashed from assessee's bank account on 27.10.2008 and arrangement of the fund was done by the assessee between 20.10.2008 to 27.10.2008, which is clearly mentioned in the bank statement of account no. 56414003767, of State Bank of India, Sector -15, Gurgaon, Haryana, which is reproduced here under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the Revenue is in appeal before us on the following grounds. 1. On the facts and in circumstances of the case, Ld.CIT(A) has erred in deleting the additions made by the AO amounting to ₹ 98,13,725/- on account of rejection of claim of exemption u/s 54F of the Act. 2. On the facts and in circumstances of the case, Ld.CIT(A) has erred in deleting the additions made by the AO on account of non-deduction of TDS on an amount of ₹ 3,66,093/- paid for loading expenses and repair of JCB and addition of ₹ 76,584/- made by the A.O. on account of provision made for electricity for want of evidence. 3. That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. 5. The Ld.Sr.D.R. Mr.Vikram Sahay made elaborate submissions. He also filed written submissions before the Bench. The sum and substance of his arguments are that : (a) S.54S Sub-section (iv) uses the wording which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return u/s 139 of the Act. Hence the issue whether the assessee got the possession of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that: (i) the AO s finding that the money raised for investments in the plot of land, is not relatable to the proceeds arising out of the sale of the asset and hence deduction cannot be granted, is against the propositions of law laid down by various High Courts. The Courts have held that the requirement of law is that the assessee should purchase a residential house within the period and source of funds is quite irrelevant. 6.1. He relied on the following case law. 107 Taxman 591 (Ker.) KC Gopalan; and (b) 20 SOT 468 (Mum.) ACIT vs. Dr.P.S.Pasricha in ITA 1825/2009 vide judgement dt. 7th October,2009 by Hon ble Bombay High Court. 6.2. On the issue of utilization of net consideration he submitted that there is no requirement in law, that there should be sufficient balance in the bank account, on the date when the cheque is issued. The undisputed fact is that the cheque was presented and got encashed. Once payment is made and possession of the property is received, there is transfer. He relied on the following case laws. i. CIT vs. RL Sood reported in 245 ITR 127 (Del.) ii. Balraj vs. CIT reported in 254 ITR 22 (Del.) iii. Once the plot has been purchased on or befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income on 30.9.2008. The Tribunals and Courts have in a number of decisions held that, there is no requirement in law, that the same funds, which were obtained on the sale of a asset, should be utilized for the purchase of a plot. 9.2. The moment a cheque has been issued by a person, in pursuance of a contract of purchase, in our view, it is utilization of funds, as there is a legal commitment by the assessee. When the transaction materialized it relates back to the date of agreement and the date of encashment is of no relevance. In coming to this conclusion we rely on the following case law. 9.3. The Hon ble Supreme Court in the case of Sanjeev Lal vs. CIT and another reported in 365 ITR 389 had held as under : S.54 : Capital gains- Transfer-Profit on sale of property used for residence-If an agreement to sell is entered into within the prescribed period, there is a transfer of some rights in favour of the vendee. Fact that sale deed could not be executed within the time limit owing to supervening problem is not a bar for s. 54 exemption-Entitled exemption. [S.2(47), 45] Consequences of execution of the agreement to sell are very clear and they are to the effect that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques and in law the dates of payments were the dates of the delivery of the cheques. 9.5. Applying the propositions laid down in the above case laws to the facts of the case on hand we have to uphold the contentions of the assessee. Regarding other grounds cited by the A.O. for rejecting the claim, we uphold the finding of the Ld.CIT(A) as no infirmity could be pointed out by the Ld.D.R. in the order of the Ld.CIT(A). 9.6. Thus we uphold the finding of the First Appellate Authority and dismiss ground no.1 of the Revenue. 10. On ground no.2 the First Appellate Authority at para 7.2 had held as follows. 7.2. I have considered the issue and the submissions made by the A.R. The A.O. could not bring any material on record to show that the above mentioned payments made by the appellant is on account of a contractual obligation. In the absence of any such relationship, the provisions of section 194 C are not attracted and therefore the question of disallowing u/s 40(a)(ia) does not arise. In view of the above, the disallowance made by the AO under this head is deleted and the ground of appeal is allowed. 10.1. Further, at para 8.1 he held as follows. 8.1. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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