TMI Blog2013 (7) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 capital gain". - IT Appeal No. 2975/DEL/2013 - - - Dated:- 16-7-2013 - SH. RAJPAL YADAV, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER Ajay Vohra and Ms. Anuja Garg for the Appellant Ms. Renuka Jain for the Respondent ORDER Rajpal Yadav, Judicial Member The present appeal is directed at the instance of assessee against the order of Learned CIT(Appeals) dated 21.03.2013 passed for assessment year 2009-10. The solitary grievance of the assessee is that Learned CIT(Appeals) has erred in upholding the denial of exemption claimed under sec. 54F of the Income-tax Act, 1961 amounting of ₹ 121,32,636. 2. The brief facts of the case are that assessee has filed his return of income on 29.7.2009 declaring total income of ₹ 127,04,920. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) of the Income-tax Act, 1961 was issued on 25.8.2010 which was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) has reproduced the letter submitted by the assessee in paragraph No. 4.1. This letter explains the case of the assessee explicitly and it is worth to take note of this letter in order to appreciate the facts and circumstances in more scientific way. Relevant part of this letter reads as under: 1. Facts of the Case 1.1 Date of Capital Gains Date Amount (Rs.) Remarks Nov. 8, 2008 14,68,066 As shown in Computation of income enclosed at P. No. 5 of submission dated Sep. 3,2012. March 16,2009 1,78,82,620 -Do- Total Capital Gain 1,93,50,686 1.2 Date of Investment in House Property. The assessee purchased a hour property situated at Flat No. 601, 6th Floor, Pacific Heights, Village Danda, Sherly Rajan, Bandra (West), Mumbai-400050 at a total cost of ₹ 322.49 lacs and the details of payment are given hereunder: Date Amount Paid to Source of Fund 21/02/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears to the net consideration, shall not be charged under section 45: 1.4 Window of Investment available u/s 54F Starts at One year before the date of Capital Gains i.e. Nov. 8, 2007 Ends at Two year after the date of Capital Gains i.e. Nov. 7,2010 in this case, as the date of First Capital Gain in Nov. 8, 2008. 1.5 Whether Assessee Falls into this time period The assessee has made its investments between Feb.21, 2008 to Aug. 1, 2008 which is well within the Window of Nov. 2010 and hence is fully eligible for this deduction. 1.6 Relevant Case law of jurisdictional Tribunal (Dr. Smita Swaroop v. ITO, Gurgaon. We enclose as Annexure A, decision of jurisdictional H'ble Delhi ITAT dated 28.2012 against the decision of ITO Gurgaon dealing with same subject, same facts where the CIT Appeal Faridabad and later on ITAT Delhi held: I have carefully considered the submission made by the appellant, it is seen that the property in question has been purchased by making payments from the period starting 7th November 2004 to August 2008. The offer of possession of the apartment was given on 29 January, 2008. The property has been registered on 05.05.2008. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that in first eight lines, Learned First Appellate Authority has construed the section in right perspective. Without applying this interpretation on the facts of the assessee's case, he jumped to section 54F(4) of the Act. The assessee has no dispute that if he has unutilized amount of capital gain available with him and not deposited in a capital gain account, then same is taxable. The case of the assessee is that he has purchased a house prior to one year of sale of capital assets. The Act does not provide that same amount which was received on sale of capital assets is to be used. He further submitted that this aspect has been examined in a number of cases. He, for buttressing his contentions, relied upon the following judgments and placed on record copies of these orders in the paper book: 1. Order of ITAT, Delhi in the case of Sunil Sachdeva v. CIT [2013] 31 taxmann.com 86 2. Decision of the Hon'ble Kerala High Court in the case of ITO v. KC Gopalan [1999] 107 Taxman 591 3. Order of ITAT, Chennai in the case of Parkside holding Ltd. v. Dy. CIT [2003] 86 ITD 252; 4. Order of ITAT, Mumbai in the case of Bombay Housing Corpn. v. Asstt. CIT [2002] 81 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the new 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 : Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset within a period of one 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 3 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investment in the new assets was made within the stipulated period provided in section 54F(1) of the Act because the Assessing Officer has himself granted the benefit of ₹ 72,49,500. 10. A bare perusal of sec. 54F, it would reveal that sub-section (1) and sub-section (4) have the bearing on the controversy in hand. Sub-section (l) allows the benefit of exemption to the individual or an HUF in which case the capital gain arises from transfer of any long term capital assets not being a residential house and assessee has, within the period of one year before or two years after the date on which the transfer took place purchase or has within a period of three years after the date, construct a residential house, the capital gain shall be dealt with in accordance with the provisions laid down in sec. 54F of the Act. Sub-section (4) contemplates that amount of net consideration which is not appropriate by the assessee towards the purchase of the new assets made within one year before the date of transfer of the original assets or not utilized by him for purchase or construction of the new assets then before the date of filing of the return of income under sec. 139, shall be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gain within the specified time, the assessee may use such funds for other purposes and may find resources from other source for investment in time. The section provides investment in a house prior to one year of the transfer of long term capital assets. It will make it clear that if the transfer has not taken place then from where the funds would come for making the investment. The investment must be from some other sources and when assessee would receive sales consideration on transfer of a long term capital assets, he will claim set off of the capital gains against the investment already made for the purpose of exemption under sec. 54F. Learned DR has relied upon an order of the ITAT Milan Sharad Ruparel (supra). In that case, the ITAT has held that if investment was made out of loan amount then exemption under sec. 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. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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