TMI Blog2011 (1) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... es u/s 54F of the Act. 3. Briefly stated, during the year under dispute, the assessee had sold shares of Axess Technologies India Pvt. Ltd., for ₹ 4.18 crores and, according to the assessee, a part of the sale proceed was invested in purchase of a house property to the extent of ₹ 2.16 crores and, accordingly, claimed the same as exemption u/s 54F of the Act. However, the AO, on the basis of the report of his Inspector that the construction of the building was not complete even after an elapse of three years etc., took a view that the assessee had neither purchased the property within two years nor constructed within three years after the date of transfer of the asset on which capital gain was derived and, accordingly, denied the exemption claim u/s 54F of the Act, brushing aside the reliance placed by the assessee on the finding of the Hon ble Tribunal, Madras Bench reported in 59 ITD 94 as well as Board s Circular Nos: 471/15.10.1986 and 672/16.12.1993 (sic) 16.3.1993. 4. Aggrieved, the assessee challenged the stand of the AO on the issue before the CIT (A). Taking into account the elaborate contentions put-forth by the assessee and also distinguishing the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption was restricted to ₹ 2.16 crores only which was shown as investment in the residential house property in his books of account - case laws relies on: Mrs. Seetha Subramanian v. ACIT (1996) 59 ITD 94 (Mad); CIT v. Sardarmal Kothari (2008) 302 ITR 286 (Mad); Asst. Collector of Central Excise v. Dunlop India Ltd. and Others 154 ITR 172 (SC) 5.1. On the other hand, the Ld. D R had vociferously supported the stand of the AO to the effect that the construction of the residential property was not completed even after elapse of three years from the date of transfer of the shares on which the capital gain was derived; that the assessee had neither purchased the property within the period of two years nor constructed the same within the period of three years after the date of transfer of the asset and as such, the assessee s case didn t fall within the purview of s.54F of the Act so as to claim the exemption. To buttress her argument, the Ld. D R drew support from the finding of the Ld. CIT (A) who had sustained the action of the AO in disallowing the assessee s claim for exemption. To sum up, it was earnestly pleaded that the stand of the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.05.2006 1058 470489 28,73,340/- 28.10.2006 4905 470503 29,23,340/- 31.10.2006 4942 470505 29,23,340/- Total 2,02,04,570/- Date of payment Receipt No. Cheque no. Amount paid 23.01.2006 258 96346 8,41,500/-- 18.05.2006 73 470490 2,14,200/- 28.10.2006 1295 470504 2,14,200/- 31.10.2006 1294 470506 2,14,200/- Total 14,84,100/- 6.3 However, the bone of contention of the Revenue was that the assessee had neither purchased nor constructed the property within the time frame as stipulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d themselves able to disregard the decision of this House in Rookes v. Barnard by applying to it the label per incuriam. That label is relevant only to the right of an appellate court to decline to follow one of its own previous decisions, not to its right to disregard a decision of a higher appellate court or to the right of a judge of the High Court to disregard a decision of the Court of Appeal. We shall leave the issue at it. 6.6. Reverting back to the issue on hand, the Hon ble Tribunal, Madras Bench, in the case of Mrs. Seetha Subramanian cited supra, had an occasion to deal with a similar issue to that of the case on hand. After deliberating the issue in depth, it was pleased to observe that 5. We have heard the rival submissions and perused the material on record. From the material on record it is clear that the assessee claimed that the sale proceeds of the capital asset was invested in the construction of a residential house and in fact, the entire consideration was invested within the stipulated period of three years as per the provisions of section 54F. Therefore, the assessee is entitled for exemption under the said provision. This was accepted by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the Legislature was to invest in the acquisition of a residential house and completion of construction or occupation is not required. We find force in the argument of the learned counsel for the assessee. The said intention is very clear from the two circulars issued by the CBDT, where it was held that an assessee is entitled to the benefit of sections 54 and 54F, if an assessee gets an allotment under the selffinancing scheme and pays the first instalment of the cost of construction. From that it is clear that in order to get the benefit under section 54F the assessee need not complete the construction of the house and occupy the same. Admittedly in the present case, the assessee had invested the entire net consideration within the stipulated period and in fact has even constructed the entire residential property, except some finishing to make it fit for occupation. As the assessee has substantially completed all the work of construction and has invested the entire net consideration, it has to be inferred that the assessee has complied with the conditions provided under section 54F. A similar case was considered by the Delhi Bench of this Tribunal in the case of Satish C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 3. There is no dispute about the fact that the assessees have invested the entire net consideration of sale of capital asset in the land itself and subsequently the assessees have invested large sums of money in the construction of the house. The cost of investment in land and the cost of expenditure towards the construction of the houses are not in dispute. The one and only ground on which the AO has non-suited the assessees for the claim of exemption was that the houses have not been completed. There remains some more construction to be made. 4. The requirement of the provision is that the assessee, within a period of three years after the date of transfer, has to construct a residential house in order to become eligible for exemption. In the cases on hand, it is not in dispute that the assessees have purchased the lands by investing the capital gain and they have also constructed residential houses. The assessees have also produced the completion certificates from the municipal authority on 30th Jan., 2004. On the basis of the above documents, the CIT(A) concluded that the requirement of the statutory provision has been complied with by the assessees and that was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishes that the assessee had invested the entire net consideration within the stipulated period. This finding of the Hon ble Tribunal got the seal of approval from the Hon ble Madras High Court in the case of Sardarmal Kothari referred above; 6.7.2 In the present case, the builder has given a letter detailing the payments made. In the said letter, it also stated that substantial construction was completed as on 12.11.08 (3 year period from the date of sale of share giving rise to capital gain) and only minor fitting like window shutters and some electrical work were required to be made. In other words, the Villas were substantially ready and habitable with water connection and also temporary electrical connection. However, to sustain the stand of the AO, the Ld. CIT (A) took sanctuary in the ruling of the Hon ble jurisdictional High Court in the case of DCIT v. Yellamma Dasappa Hospital reported in (2007) 290 ITR 353 (Kar). The issue before the Hon ble Court was that Whether the Tribunal was correct in law in holding that the respondent-assessee was entitled to claim depreciation allowance as the machinery were ready for use? Due consideration of the issue in detail, the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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