TMI Blog2017 (6) TMI 771X X X X Extracts X X X X X X X X Extracts X X X X ..... erchant (2016 (9) TMI 70 - BOMBAY HIGH COURT) - Decided against assessee. - ITA NO.4174/Mum/2015 - - - Dated:- 3-4-2017 - Shri Joginder Singh, Judicial Member, And Shri N.K. Pradhan, Accountant Member For The Assessee : Shri Sanjay Kapadia For The Revenue : Shri Purushottam Kumar-DR ORDER Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 31/03/2014 of the Ld. First Appellate Authority, Mumbai. The only ground raised by the assessee pertains to upholding the disallowance of exemption u/s 54 of the Income Tax Act, 1961 (hereinafter the Act) amounting to ₹ 59,58,733/-. 2. During hearing, Shri Sanjay Kapadia, ld. counsel for the assessee, explained that the assessee sold house property on 18/02/2008 and the last date of utilization of the amount was 31/03/2008. The assessee did not utilized the money and the capital gain amount of ₹ 60 lakh was to be deposited on or before 31/03/2009, which is the last date of utilization. It was contended that the assessee deposited the amount on 17/11/2008. It was submitted that the assessee is entitled to exemption. Reliance was placed upon the decision in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT in ITA No.545 of 2002, order dated 18/08/2016. Therefore, we are reproducing hereunder the relevant portion of the aforesaid order for ready reference and analysis:- 1 This appeal under Section 260A of the Income Tax Act, 1961 (for short 'the Act') challenges the order dated 17th May, 2002 passed by the Income Tax Appellate Tribunal (for short 'the Tribunal). The impugned order relates to Assessment Year 1996-97. This appeal was admitted on 25th August, 2004 on the following substantial questions of law (a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in applying the provisions of Section 54(1) (4) of the Income Tax Act, 1961? (b) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Assessing Officer has rightly computed the deduction u/s. 54F of the Income Tax Act, 1961, restricting the investment in the new asset at ₹ 35,00,000/- and thus restricting the exemption u/s. 54F of the Act proportionately to the amount invested? 3 The undisputed facts leading to this appeal are as under: - (a) On 29th April, 1995, the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. Further, the balance of the net consideration had not been deposited in the specified bank account as mandated by Section 54F(4) of the Act. Thus dismissing the appeal of the appellant-assessee. 4. It is in the backdrop of the above facts that the two substantial questions of law arise for our consideration: 5. Regarding question No.1:- (a) No submissions were made specifically by the appellant in support of the question raised herein i.e. applicability of Section 54F(4) of the Act to the present controversy. In fact it is an agreed position between Counsel for the parties that Section 54F(4) of the Act applies to the present facts. The only issue for consideration is its appropriate interpretation. (b) In view of the above agreed position, question no.1 is answered in the affirmative i.e. in favour of the respondent-revenue and against the appellant- assessee. 6 Regarding Question No.2: (a) The facts leading to this question have been set out in Para 2 herein above. Therefore not repeated here. (b) Mr.Chatterji, learned Senior Counsel in support of the appeal submits as under:- (1)The issue arising herein is no longer res-integra as it standscove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed (ii) The decision of this Court in Mrs.Hilla J.B.Wadia (Supra) as well as the Circulars dated 15th October, 1986 and 16th December, 1993 issued by the Central Board of Direct Taxes would have no application to the present facts. This in view of the fact that neither the decisions rendered nor the Circular were issued in the context of Section 54F(4) of the Act as it was not in the Act, at the relevant time; (iii) The word appropriation towards purchase of the new flat used in Section 54F(4)of the Act only covers cases where the flat has already been purchased within one year before date on which capital gains arose on the transfer of the asset. In the present facts, there is no purchase of a flat prior to the sale of the capital asset but the purchase is post sale of the capital asset. This requires utilization and deposit in specified account to the extent not utilized; and (iv) The decision of Gauhati High Court in Rajesh Kumar Jalan (supra) would have no application in the present facts as admittedly the amounts have not been utilized or deposited in the specified bank account before the assessee filed his return of income on November, 1996. (d) For a proper appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall he accompanied by proof of such deposit; and for the purposes of sub-Section(1), the amount, if any, already utilized 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 subSection is not utilized wholly or party for the purchase or construction of the new asset within the period specified in sub Section (1), then - (i) the amount by which - (a) 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 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 utilized by the assessee for the purchase or construction of the new asset within the period specified in subSection(1) been the cost of the new asset, shall be charged und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (4) thereof. (h) As we are concerned with Assessment Year 1996- 97, it is the amended provision which applies. Therefore, now Section 54F(1) of the Act which grants exemption from Capital gain tax where a flat is purchased either within one year prior to the sale of capital asset or within 2 years after the date of sale of the capital asset or where a residential house is constructed within 3 years from the date of sale of the capital asset, is now subject to the provisions of Section 54F(4) of the Act. Thus, where the consideration received on sale of capital asset is not appropriated (where purchase was earlier than sale)or utilized (where purchase is after the sale) then the same would be subject to the charge of capital gain tax, unless the un-utilized amounts are deposited in specified bank account as notified in terms of Section 54F(4) of the Act. The exemption would be available to the unutilized amounts only if the mandate of sub-section(4) of Section 54F of the Act is complied with. Further the proviso to sub-section(4) of Section 54P of the Act, safe guards the Revenue where the assessee had not invested the amounts chargeable to Capital Gains within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion before the Court in the above case was the interpretation of Section 54 of the Act. In the above case the assessee had sold her residential property and invested a substantial amount in a Society for construction of a residential flat in the building to be constructed. The assessee therein had paid substantial amounts to the society and also acquired domain over the flat within a period of 2 years from the date of the sale of her house. At that point of time i.e. for the Assessment Year 197374 there was no requirement of depositing any unutilized amount in a specified bank account as now provided under Section 54(2) of the Act (similar to Section 54P(4) of the Act). Therefore the Court had no occasion to consider the provisions of Section 54(2) of the Act which is similar to Section 54F(4) of the Act, with which we are concerned. (I) Mr. Chatterji, then placed reliance on the observation of this Court in Mrs. Hilla J. B. Wadia (supra) that the Circular issued by the Central Board of Direct Taxes dated lS1h October, 1986 in relation to construction of a home by Delhi Development Authority should also be extended to cities like Mumbai, as there is no control over the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen it follows that the title of the constructed house has passed on to the assessee. Therefore the payment made subsequent to allotment letter in installments would not in any manner affect the assessee having satisfied Section 54F(1) of the Act. This submission ignores the fact that Sub Section (1) of Section 54F has been made subject to Sub Section (4) of the Act. The requirement under Section 54F(4) of the Act is the deposit of the unutilized amount in the specified bank account till it is utilized. This requirement has not been done away with in either of the above two Circulars dated 15110ctober, 1986 and 16111 December, 1993 relied upon by the Appellant-Assessee. (0) Mr. Chatterji, learned Senior Counsel next submitted that in any case the issue now stands concluded in favour of the Appellant by the decision of the Karnataka High Court in K. Ramchandra Rao (supra) wherein an identical question came up for consideration and it was held that even where the assessee had not deposited the un-utilized Capital Gain in an account which was duly notified by the Central Government in terms of Section 54F(4) of the Act, the benefit of Section 54F(1) of the Act would still be ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel said : 'An hundred precedents sub silentio are not material, and Twisden J agreed: 'precedents sub-silentio and without argument are of no moment'. This rule has ever since been followed. (q) In fact this Court in Commissioner of Income Tax vs. Thana Electricity Supply Ltd. 206 ITR 727 has observed that a decision of one High Court is not binding as a precedent on another High Court unlike a decision of the Apex Court. In support, reliance was placed in the above order upon the decision of the Apex court in Valliamma Champaka Pillai vs. Sivathanu Pillai AIR 1137 1979 (SC) 1937 to hold that it is well settled that decision of one High Court is not a binding precedent upon another High Court and at best can only have persuasive value. However, at the cost of repetition we must emphasize that the decision of another High court rendered in the context of an all India Act would have persuasive value and normally to maintain uniformity and certainty we would adopt the view of the other High Court. However, with the greatest respect, we find that the decision of Karnataka High Court in K.Ranichandra Rao (supra) has been rendered sub-silentio. Therefore, we canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning to the statute which will serve the spirit and intention of the Legislature.......(emphasis supplied) Similarly this Court in Thana Electricity (Supra) had observed as under: If the provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favorable to the assessee has got to be accepted. This is a we// accepted view of law. It is the satisfaction of the court interpreting the law that the language of the taxing statute is ambiguous or reasonably capable of more meanings than one, which is material. If the court does not think so, the fact that two different views have been advanced by the parties and argued forcefully or that one such view which is favorable to the assessee has been accepted by some Tribunal or High Court, by itself will not be sufficient to attract the principle of beneficial interpretation In the present facts the provision of Section 54F(4) of the Act are very clear. There is no ambiguity. Thus, there is no occasion to apply liberalIbeneficial construction while interpreting the Section as contended by the Appellant. (t) It was next contended by Mr. Chatterji, learned Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Jalan (Supra) is relied upon. The Gauhati High Court in the above case was concerned with the interpretation of Section 54 of the Act. It construed the provision of sub Section (2) of Section 54 of the Act which is identically worded to sub section (4) of Section 54F of the Act The Court in the aforesaid decision held that the requirement of depositing before the date of furnishing of return of Income under Section 139 of the Act has not to be restricted only to the date specified in Section 139(1) of the Act but would include all sub section of Section 139 Including sub section (4) of the Act. On the above basis it concluded that i1 the amount is utilized before the last date of filing of the return under Section 139 of the Act then the provision of Section 54(2) of the Act would not hit the assessee before it. It is not very clear in the above case whether the amounts were utilized before the assessee filed its return of income or not. (w) However, the factual situation arising in the present case is different. The return of income is admittedly filed on 4th November, 1996. In terms of Section 54F(4) of the Act as interpreted by the Gauhati High Court in Rajesh Kumar J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment is not made by the assessee in the purchase/construction of new asset within the time stipulated for filing of return u/s 139 of the Act, the said unutilized amount is compulsory required to be deposited in the specified capital gain account maintained with the bank and as specified by the Central Government. The tax laws are to be strictly construed if the language of statute is plain, clear and unambiguous. The provisions of section 54 are clear and unambiguous. Hon ble Bombay High Court in the case of Humayun Suleman Merchant (supra) has laid down the said proposition that assessee will be entitled for claiming deduction u/s 54/54F of the Act to the extent assessee had made investment in the new asset before the date of filing of the return of income u/s 139 of the Act and if the said amount is not utilized towards investment in the new asset, the assessee is required to deposit the unutilized amount with the specified capital gain account or as specified by the Central Government before the due date of furnishing of return as specified u/s 139(1) of the Act. Exemption provisions are to be strictly construed at the first stage to determine the eligibility of tax payer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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