TMI Blog2015 (12) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... the new asset. Once that is so, the assessee was entitled for benefit under section 54F of the Act. It has been categorically recorded by the Tribunal that the assessee had made investment in between February 2008 upto August 2008 i.e. well within the stipulated period. The property was purchased for ₹ 3.32 crores whereas the shares which were sold had resulted in capital gain of ₹ 1.93 crores. The investment was more than the capital gain earned by him. In the present case, the investment made by the assessee being within the stipulated time and more than the capital gain earned by him, the addition of ₹ 1,21,32,636/- was rightly deleted by the Tribunal under the head long term capital gain. Learned counsel for the revenue has not been able to point out any error in the approach adopted by the Tribunal reversing the findings recorded by the CIT(A) and the Assessing Officer, warranting interference by this Court. - Decided against revenue - ITA No. 12, 26 and 161 of 2015(O&M) - - - Dated:- 4-11-2015 - MR. AJAY KUMAR MITTAL AND MR. HARI PAL VERMA, JJ. For The Appellant : Mr. Tejinder K.Joshi, Advocate, Mr. Denesh Goyal, Advocate For The Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the new asset need not be entirely sourced from capital gain. Hence the instant appeals by the revenue. 4. We have heard learned counsel for the parties. 5. Mr. Tejinder K. Joshi, learned counsel for the revenue in ITA No.12 of 2015 submitted that the shares were sold by the assessee on 8.11.2008 and 16.3.2009 and it was not from the said sale proceeds that the property worth ₹ 3.22 crores was purchased by the assessee. It was urged that in such circumstances, capital gains amounting to ₹ 1.3 crores were exigible to tax as benefit under Section 54F of the Act was not available to the assessee. Reliance was placed upon sub section 4 of Section 54F of the Act to support the contention. 6. Mr. Denesh Goyal, learned counsel for the appellant in ITA Nos.26 and 161 of 2015 submitted that the Tribunal was in error in giving the benefit of Section 54F to the assessee in view of judgment of the Kerala High Court in K.C.Gopalan's case (supra). It was contended by the learned counsel that the case of K.C.Gopalan's case (supra) was for the assessment year 1984-85 whereas the amendment was brought in the provisions of capital gains in Section 54F w.e.f 1.4.1988 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property . Explanation.-For the purposes of this section,- net consideration , in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) (3) xx xx xx xx xx xx xx xx (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the date on which the transfer takes place or within three years after the said date, construct a residential house. In other words, where an assessee purchases a residential house within a period of one year before or two years after the date on which transfer takes place or has constructed a residential house within three years after the said date, the capital gains shall be computed as per clauses (a) and (b) of sub section (1) of Section 54F of the Act. 11. Finance Act, 1987 had inserted sub section (4) of Section 54F of the Act effective from 1.4.1988. According to sub section (4) of Section 54F of the Act where the amount of net consideration is not utilized for the purchase or the construction of a new residential house, it should be deposited in an account in a specified bank under the Capital Gains Account Scheme, 1988 notified by the Central Government in the Official Gazette. This is required to be deposited by the due date for filing return of income under Section 139(1) of the Act to avail benefit under this provision. 12. The scope and effect of the amendments made in Sections 54, 54B, 54D and 54F by the Finance Act, 1987 have been elaborated in the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or construct a residential house within a period of three years after that date. In such cases, the capital gains shall be computed as per clause (a) and (b) of sub section (1). In case, the assessee is not able to appropriate the sale proceeds of long term capital gain, then before filing of a return under section 139(1) of the Act, he is required to deposit the same under any Capital Gain Account Scheme with a bank or institution specified by the Central Government in the official gazette. The assessee has to file proof of such deposit alongwith the return for claiming exemption under Section 54F of the Act. 14. The assessee has to purchase or construct a house property during the period specified under Section 54F of the Act in order to get benefit thereunder. Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilized for the purchase or construction of a house property. No provision has been made by the statute that in order to avail benefit of Section 54F of the Act, the assessee has to utilize the amount received by him on sale of original capital asset for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon an order of the ITAT reported in 27 SOT 61. In that case, the ITAT has held that if investment was made out of loan amount then exemption under section 54F(1) will not be available. In the opinion of the ITAT, the assessee has to demonstrate source of funds,if investment was made by the assessee from his own source and not from loan taken from the bank then exemption would be available. In our opinion, the section does not put any such restriction. Hon'ble Kerala High court has explained the position. Similarly, in a series of other orders, at the end of ITAT, it has been held that there is no condition that assessee should utilize the sales consideration only for the purpose of acquisition of new property. In view of the above discussion, we are of the view that learned revenue authorities have erred in holding that assessee is not entitled for exemption under section 54F(1) of the Income Tax Act, 1961 for a sum of ₹ 121,32,636/-. The investment of the assessee is more than the capital gain earned by him. Therefore, we allow the appeal of the assessee and delete the addition of ₹ 121,32,636/- in the total income of the assessee under the head long term capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich he obtained by way of sale consideration for the purpose of meeting the cost of the new asset. It was held that Section 54 only provides that the assessee has to purchase a house property for the purpose of his own residence within a period of one year before or after the date on which the transfer of his property took place or he should have constructed a house property within a period of two years after the date of transfer. It was further held that entitlement of exemption under Section 54 relates to the cost of acquisition of a new estate in the nature of a house property for the purpose of his own residence within the specified period. 18. In CIT, Bangalore vs. Anandraj, (2015) 56 Taxmann.com 176 (Karnataka), the relevant conclusion recorded by Karnataka High Court read thus:- 6. It is not in dispute that the assessee sold the agricultural land and the consideration received is in the nature of a long term capital gain. Even before the sale of the property, he had borrowed housing loan and started construction on the site belonging to him. After the sale, the amount spent towards construction of the house is more than the consideration received by the sale of agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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