TMI Blog2016 (3) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, of the considered opinion, that the assessee ought not have been denied the claim u/s 54 of the IT Act, 1961. The disallowance of such claim stands deleted. Since we have allowed the claim u/s 54 of the Act, the question of computation of cost of purchase of the property sold becomes academic. - Decided in favour of assessee - ITA No. 323(BNG.)/2015 - - - Dated:- 19-2-2016 - Shri Abraham P George, Accountant Member And Shri Vijaypal Rao, Judicial Member For the Petitioner : Shri C. Ramesh, CA For the Respondent : Smt. S. Praveena, Addl. CIT ORDER Per Shri Abraham P George, AM In this appeal filed by the assessee it has altogether raised six grounds of which ground no.6 is general in nature and ground no.4 5 are consequential. Main grievance of the assessee raised through its grounds 1 to 3 is regarding an addition of ₹ 40,50,000/- made under long term capital gain denying the claim u/s 54 of the IT Act, 1961 and also not considering the cost of acquisition of ₹ 23.80 lakhs claimed by the assessee. 2. The appeal has been filed with a delay of 333 days. Pleading of the assessee in the affidavit filed is that he was pursuing a procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs. It is to be noted that Shri T.Vijayakumar, was summoned by the AO and examined and the said person had confirmed the oral agreement he had entered with the assessee for selling his house to the assessee. Nevertheless, as per the AO the version of the having an agreement with Shri T.Vijayakumar, was only an afterthought. In sofaras the deposit of ₹ 40.00 lakhs refunded by Shri T.Vijayakumar in capital gains deposit account was concerned, learned AO made enquiries with the bank and as per the learned AO, the bank had confirmed that there was no such deposit made by the assessee. 5. As for the claim of the assessee that he had entered into an agreement with Mrs Mary Susan on 10-03-2010 for acquiring property at No.828, 2nd Block, 4th Stage, BTM Layout, Bangalore, learned AO was of the opinion that the schedule of the agreement mentioned the property to be a semi-finished building. As per the AO the addendum dated 30-03-2011 was only for overcoming this lacunae. In any case, according to learned AO, even the last mentioned property was never registered in the name of assessee. He therefore, denied the exemption claimed u/s 54 of the Act, 1961. 6. While computing the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from him. When his brother was reluctant to transfer the house he got a refund from his brother. Such refunded money was deposited by him in the capital gains account scheme and later used for paying advance to Mrs.Mary Susan for acquiring a residential house from her. It might be true that residential house was not fully completed when the assessee paid the money to Mrs Mary Susan. However, there was still time left for completing the construction. In any case, according to him, assessee had entered into a construction agreement with M/s Shobha Developers Ltd on 24-03-2011. Assessee had on 30-11-2010 paid a sum of ₹ 7,80,000/- and on 12-10-2011 paid a sum of ₹ 11,76,600/- to M/s Shobha Developers Ltd. Thus, according to him, the failure of the persons to whom assessee had in good faith paid money for acquiring a residential premise to honour their commitments, could not fastened on the assessee as a reason for denying a legitimate claim made u/s 54 of the IT Act, 1961. 9. We have perused the orders and heard the rival contentions. 10. The date of which the transfer giving rise to the capital gains was effected on 15-04-2008. Section 54 of the IT Act, 1961 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs has been placed on record. It is clearly mentioned therein that assessee had issued a cheque dated 02-12-2010 to Mrs Mary Susan for ₹ 40.00 lakhs. The bank account of the assessee placed at paper book page no.47 show that the above cheque was encashed by Mrs.Mary Susan on 18-12-2010. The agreement clearly mentions the intention of the seller to sell a building situated at site no.828, 2nd block, 4th stage, BTM layout, Bangalore. It is also mentioned therein that the reduction in the consideration was due to vendors inability to complete the work of the residence before the agreed date. The agreement also mentions that the vendor had delivered to the assessee the original documents of title and the vacant possession of the scheduled property. How the term purchase has to be construed in relation to interpretation of sec.54 of the IT Act, 1961 had come up before the Hon ble Delhi High Court in the case of CIT Vs Kuldeep Singh in ITA No.117/2014. Their Lordship held at paras 8 to 10 of judgment dated 12-08-2014 8. The word purchase can be given both restrictive and wider meaning. A restrictive meaning would mean transactions by which legal title is finally transferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court allowing the appeal noticed that the agreement to sell was executed on 27th December, 2002 but the sale deed could not be executed because of inter-se litigation between the legal heirs, as one of them had challenged the will under which the assessee had inherited the property. The agreement to sell, it was held had given some rights to the vendor and reduced or extinguished rights of the assessee. This, it was observed was sufficient for the purpose of Section 2(47), which defines the term transfer in relation to a capital asset. In the light of the factual matrix, it was observed that the intention behind Section 54 was to give relief to a person who had transferred his residential house and had purchased another residential house within two years of transfer or had purchased a residential house one year before transfer. It was only the excess amount not used for making purchase or construction of the property within the stipulated period, which was taxable as long term capital gain while on the amount spent, relief should be granted. Principle of purposive interpretation should be applied to subserve the object and more particularly when one was concerned with exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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