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2016 (10) TMI 180 - PUNJAB AND HARYANA HIGH COURT

2016 (10) TMI 180 - PUNJAB AND HARYANA HIGH COURT - TMI - Grant of extension of time to comply with the requirements of Section 54-F - year in which such deduction is claimed - failure to demonstrate compliance of Section 119 (2)(c)(ii) - Held that:- The submission is based on the erroneous presumption that the words “year in which such deduction is claimed” mean the year in which the assessee seeks and is granted extension. The words in fact mean the year in which the assessee is eligible to ta .....

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ng deduction and such claim can be made only within the time period, as prescribed under the Act for making such claim. There is nothing in Section 119 (2) of the Act which gives any power to the Board to extend the time to claim the deduction. - While applying the afore principle, to the facts of the present case, the petitioner could have applied for relaxation for claiming the benefit under Section 54-F only within the time prescribed under that Section and that too, if before making such .....

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held above, even if we assume the owner of the land to be the petitioner Hindu Undivided Family, no relief can be granted. On the issue of the petitioner having two houses, Mr. Mittal, learned counsel for the petitioner has explained that the petitioner does not own any house as alleged by the Revenue. However, we express no opinion on the same. - Decided against assessee. - C.W.P. No. 12979 of 2015 - Dated:- 28-9-2016 - MR. S. J. VAZIFDAR, & MR. DEEPAK SIBAL. JJ. Present: Mr. Alok Mittal, A .....

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- the Board), on the ground that the petitioner had failed to demonstrate compliance of Section 119 (2)(c)(ii) of the Act. The relevant facts, which need to be noticed for adjudicating upon the present petition are that on 28.06.2011, the petitioner sold 04 kanals of land in Village Kansal, U.T., Chandigarh for ₹ 2.25 crores and since this amount constituted capital gains, on 28.07.2012, such amount was deposited under the Capital Gains Tax Scheme, 1988 by way of a Fixed Deposit in the Sta .....

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m order still continues. Since the petitioner was precluded from constructing the residential house, within the period of three years, as stipulated under Section 54-F of the Act, fearing that the afore-referred amount of ₹ 2.25 crores, being capital gain from sale of a long term capital asset, would be taxed, an application was moved on its behalf for seeking condonation of delay and simultaneous grant of extension of time beyond the stipulated three years to raise the construction. No he .....

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ated 03.03.2015, a decision by way of rejection of the petitioner's application was taken by the Board. According to the Board, the petitioner had failed to demonstrate compliance with the condition stipulated in Section 119 (2)(c)(ii) of the Act. It is this order, which is impugned through the present petition. Mr. Alok Mittal - learned counsel appearing on behalf of the petitioner assailed the order impugned in the present petition on several grounds. He urged that the petitioner, in order .....

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tioner could not utilize the said amount of capital gains to construct a residential house within the stipulated time of three years, for reasons beyond its control. It was submitted that the hardship on the part of the petitioner was genuine, and therefore, the Board had erred in rejecting the application of the petitioner seeking extension of time to raise the construction after the vacation of the interim prohibitory orders enabling it to claim deduction under Section 54-F of the Act. Learned .....

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to claim such deduction beyond the prescribed period of three years. Ms. Urvashi Dugga, learned counsel appearing on behalf of the Revenue, opposed the petition on several grounds. It was submitted that the present petition had been filed by Shivinder Singh Brar, Karta HUF, whereas the revenue record appended with the petition clearly depicted the owner of the land in question to be Shivinder Singh Brar in his individual capacity. It was further submitted that Shivinder Singh Brar had been named .....

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t possible. It was further submitted that Shivinder Singh Brar was owner of two residential properties. Without prejudice to the afore submissions, it was urged on behalf of the Revenue that the impugned order was rightly passed as the petitioner had failed to comply with the provisions of Section 119 (2)(c)(ii) of the Act, which applied to the petitioner's case. The afore-referred 04 kanals of land had been sold on 28.06.2011 and as within the period of three years as prescribed under Secti .....

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f transfer of the aforesaid long term capital asset. The powers of the Board under Section 119 (2)(c)(ii) of the Act could be invoked by the petitioner only till the time that such deduction could be claimed under the provisions of Section 54-F (4) of the Act and that the petitioner could not seek extension of time to claim the deduction under Section 54-F in perpetuity. It was still further submitted that the petitioner could have constructed a residential house anywhere else than on the afore- .....

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ne year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be cha .....

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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 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 .....

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ears after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previo .....

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n [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 .....

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d under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the .....

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requirement contained in any of the provisions of Chapter IV or Chapter VI-A, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions, namely:- (i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and (ii) the assessee has complied with such requirement before the completion of assessment in relation to the previous year in which such .....

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tial house, then such capital gain is to be dealt with as under :- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, sha .....

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he date of transfer of the long term capital asset expires. Section 54-F(1) and (4), when applied to the facts of the case in hand, leaves no manner of doubt in our minds that the assessee could avail the benefit under Section 54-F on account of the capital gains arisen from the sale of the said 04 kanals of land on 28.06.2011, if it utilized the amounts for construction of a residential house within three years of its sale i.e. up to 27.06.2014. If the assessee failed to do so, the capital gain .....

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pters IV or VI-A of the Act, which requirement the assessee has failed to comply with for claiming a deduction therein. Such power of Board is subject to two riders, which are :- (i) that the default in complying with such requirement was due to circumstances beyond the control of the assessee and (ii) that the assessee had already complied with the requirements before the completion of assessment in relation to the previous year in which such deduction is claimed. Even otherwise, to claim a ded .....

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ither sub-clause (i) or (ii) of clause (c) of Section 119(2). Firstly, it cannot be said that the default in complying with the requirements of Section 54-F, necessary to claim the benefit thereunder, was due to circumstances beyond the petitioner's control. Section 54-F requires the home to be constructed within a stipulated period. It does not require the home to be constructed on the assessee's other properties, even if he has any. In a given case, an assessee may be granted an extens .....

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ied with sub-clause (ii) of clause (c) of Section 119 (2). The extension can be granted only if an assessee has complied with the requirements necessary to avail the benefit under Section 54-F before completion of assessment in relation to the previous year in which such deduction is claimed. The petitioner had admittedly not fulfilled the condition even as on date. Faced with this, Mr. Mittal submitted that the petitioner has not yet claimed the deduction. He submitted that the assessee would b .....

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