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2015 (11) TMI 1062 - ITAT DELHI

2015 (11) TMI 1062 - ITAT DELHI - TMI - Disallowance of exemption u/s 54F - CIT(A) allowed part claim - Held that:- Claim of deduction u/s 54F cannot be denied for the sole reason that the assessee did not have sufficient balance in his bank account as on the date of issue of cheque for purchase of a plot of land for the reason that the cheque was honoured as and when it was presented; this is a beneficial provision and has to be liberally construed; factually it cannot be stated that the assess .....

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by the assessee. When the transaction materialized it relates back to the date of agreement and the date of encashment is of no relevance. See 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 disallow .....

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ts 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 income for the A.Y. 2008-09 on 30.9.2008 declaring total income of ₹ 8,51,320/-. The solitary issue involved in the instant appeal is regarding, disallowance of ₹ 98,13,725/-, .....

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wing manner. Sl.No. Particulars Amount (Rs.) 1. Amount invested on 29.9.2008 in purchase of residential plot no.282, Sector 1, IMT Manewar 86,20,000/- 2. Amount deposited on 29.9.2008 in Capital Gain account with SBI, Sector 15, Gurgaon 2,01,00,000/- Total 2,86,20,000/- The A.O. has not accepted the claim of investment in purchase of residential plot at ₹ 86,20,000/- and, computed the amount eligible for deduction u/s 54F of the Act at ₹ 1,87,86,275/- in the following manner. Long te .....

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asons:- a) That agreement for purchase of plot situated at Sector - 1, Manesar, Haryana was executed by the assessee on 29.09.2008 with his brother Mr.Ram Niwas Yadav; b) That towards payment of the purchase consideration assessee issued cheque no. 291081 drawn on State 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 ₹ 1,9 .....

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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:- Date Narration Deposit(Rs.) Withdrawal (Rs.) Ba .....

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,00,000 To Cash 9,90,000 86,61,438 By Residential Plot in Manesar 86,20,000 f) That assessee's brother Mr. Ram Niwas Yadav, seems to have not shown capital gain on sale of the subject plot in his return of income of A. Y.2009-20 1 0, relevant to financial year 2008-2009. 3. On appeal the First Appellate Authority granted relief. 4. Aggrieved 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 addit .....

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rmission 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 possessi .....

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. (c ) The only issue is whether the asseee has utilized, the balance amount of ₹ 86,20,000/- towards purchase of new asset, before furnishing the return of income u/s 139 of the Act. (d) The assessee issued a cheque in favour of his brother for ₹ 86,20,000/- on 29.9.2008, for purchase of a plot of land, when the balance in the account was only ₹ 1,939/-. (e) The realization had taken place only on 27.10.2010, when the cheque was realized. When the balance was only ₹ 1939 .....

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ts are made, for purchase of an asset, within one year of the sale of the old asset, the assessee would be entitled to claim the deduction under this section. However, he pointed out that in this case the assessee has not paid any amount and hence there is no utilization within the stipulated period under the Act. hi) On the submission of the assessee that the due date of furnishing the return of income u/s 139, would include the due date specified under S.139(4), by relying on various case laws .....

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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,20 .....

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eported in 254 ITR 22 (Del.) iii. Once the plot has been purchased on or before the due date of filing of the return of income, the investment so made is eligible for deduction u/s 54F of the Act. iv. That the section is a beneficial provision to encourage assesses to invest in house properties and keeping in view the object, the technical objections of the Ld.Sr.D.R. are devoid of merit. v. Incentive granting provisions have to be liberally interpreted. 6.3. He relied on the order and finding o .....

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eal nature of the business of the assessee. 7.1. Regarding provision of a sum of ₹ 76,584/-,he submits that this was actually liability. 7.2. Ld.Sr.D.R. relied on the orders of the A.O. on the second and third issues. He distinguished the case law relied upon by the assessee. 8. After hearing rival contentions, perusing the material placed on record, orders of the lower authorities and case laws cited, we hold as follows. 9. The entire objections of the Ld.Sr.D.R. are on the fact that, the .....

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annot be denied for the sole reason that the assessee did not have sufficient balance in his bank account as on the date of issue of cheque for purchase of a plot of land for the reason that the cheque was honoured as and when it was presented; this is a beneficial provision and has to be liberally construed; factually it cannot be stated that the assessee has not invested the said amount in the purchase of a plot, before the filing of the return of income on 30.9.2008. The Tribunals and Courts .....

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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 e .....

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avour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. A right in respect of the capital asset, viz. the property in question had been transferred by the appe .....

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read with Section 2(47) of the Act, i.e. definition of transfer , which would enable the appellants to get the benefit under Section 54 of the Act.(AY.2005-06). 9.4. Further in the case of CIT vs. M/s Ogale Glass Works Ltd. (1954) reported in 25 ITR 529 (S.C.) the Hon ble Supreme Court observed as under. In the case before us none of the cheques has been dishonoured on presentation and payment cannot, therefore, be said to have been defeated by the happening of the condition subsequent, namely, .....

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