TMI Blog2017 (6) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... DA ACCOUNTANT MEMBER, AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Assessee : Shri Rakesh Gupta, Adv Shri Somil Aggarwal, Adv. For The Revenue : Shri N.K. Bansal, Sr- DR ORDER PER R.K. PANDA, ACCOUNTANT MEMBER:- This appeal filed by the assessee is directed against the order dated 24.08.2016 of the CIT(A)-37, New Delhi relating to A.Y. 2013-14. 2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 26.03.2014 declaring total income of ₹ 14,57,120/-. The income comprised of salary, long term capital gain on sale of residential house property and interest income. During the course of assessment proceedings, the A.O observed from the various details furnished by the assessee that the assessee has sold a residential property for a consideration of ₹ 1,70,00,000/-. After claiming indexed cost of acquisition of the property at ₹ 24,19,820/-, capital gain of ₹ 1,45,80,180/- was declared. Against the long term capital gain, the assessee has claimed deduction of ₹ 1,52,14,375/- u/s 54 of the Act on account of investment made in new residential house. From the various details fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore, the assessee is entitled to deduction as claimed in the return. 6. However, the A.O was not satisfied with the explanation given by the assessee. He observed that the assessee has not kept the balance amount of capital gain in separate Capital Gain Scheme Account as per the provisions of the Act. Distinguishing the various decisions cited before him and further observing that the assessee has given sale proceeds to his wife and has no funds as on 31.3.2013 which could be utilized for investment and the assessee has made investment in new assets by borrowing funds, therefore, the assessee is not entitled to deduction u/s 54 of the entire amount and is entitled to deduction only to payments made prior to July 2014 i.e. ₹ 81,72,207/-. He accordingly allowed deduction of ₹ 81,72,207/- u/s 54 of the Act as against ₹ 1,52,14,375/- claimed by the assessee. 7. In appeal, the ld. CIT(A) upheld the action of the A.O for which the assessee is in appeal before us with the following grounds: 1. That having regard to the facts and circumstances of the case, the ld. CIT(A) has erred in law and on facts in confirming the action of the A.O in not allowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended due date of filing of return as per section 139(4) of the Act and filing return within such extended time. 10. Referring to the decision of the Hon'ble Karnataka High Court in the case of Fathima Bai Vs. ITO [2009] 32 DTR 243 [Kar], he submitted that the High Court in the said decision has held that as the assessee having utilized the entire capital gains by purchasing a house property before the extended due date u/s 139(4) of the Act, is eligible for exemption u/s 54 of the Act. He submitted that similar view has been taken by the Hon'ble Karnataka High Court in the case of Smt. Vrinda P. Isaac reported in [2011] 64 DTR 376. 11. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Kuldeep Singh reported in 270 CTR 561, he submitted that the Hon'ble High Court in the said decision has held that the word purchase used in sub-section (2) of section 54 is not restricted or confined to registered sale deed or even possession but has wider connotation. Thus, where the assessee has entered into construction linked payment plan for purchase of residential property with a builder within two years after purchase of property, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on it, too, has to be construed liberally so as to advance the objective of the section and not to frustrate it. He also relied on various decisions and submitted that the amount paid upto the date of filing of return should be allowed as deduction. 15. The ld. DR, on the other hand, strongly relied on the order of the ld. CIT(A). He submitted that the decision of the Hon'ble Bombay High Court is against the assessee and the assessee is entitled to deduction u/s 54 of the Act of the payment actually made upto the due date of filing of return u/s 139(1) of the Act. Further, the assessee had no money since he had already diverted the money somewhere else. The assessee has not deposited the balance amount in the capital gain scheme account. Therefore, the ld. CIT(A) was fully justified in upholding the action of the A.O in allowing deduction of ₹ 81,72,207/- only as against 1,45,80,180/- claimed by the assessee. 16. The ld. counsel for the assessee, in rejoinder, referring to the decision of the Hon'ble Karnataka High Court in the case of Smt. Vrinda P. Isaac [supra] submitted that investment made by the assessee being within the time specified u/s 139(4) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Suleman Merchant [supra] the amount paid/invested upto the due date of filing of return u/s 139(1) of the Act only should be allowed as deduction u/s 54 of the Act. 19. Admittedly, there is no decision of the Hon'ble jurisdictional High Court on this issue. It is the settled proposition of law that when there are two views on a particular issue and there is no decision of the Jurisdictional High Court on that issue, then the decision which is in favour of the assessee should be adopted. Since the assessee in the instant case has made payment of ₹ 1,35,16,645/- before the due date of filing of return u/s 139(4) of the Act, therefore, we are of the considered opinion that the assessee is entitled to deduction u/s 54 of the Act to the extent of ₹ 1,35,16,645/-. Payment of the above amount is not doubted. Therefore, it is immaterial as to from where the assessee has obtained the money and paid the amount. In this view of the matter, we hold that the assessee is entitled to deduction u/s 54 of the Act of ₹ 1,35,16,645/- as against ₹ 81,72,207/- allowed by the A.O. Accordingly, Ground of appeal Nos. 1 and 2 are partly allowed. In other words, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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