TMI Blog2017 (9) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... thin three years from the date of transfer he cannot be denied deduction u/s 54F of the Act on the ground that he did not deposit the said amount in capital gain account scheme before the due date prescribed u/s 139(1) of the Act. As the assessee invested the sale consideration in construction of a residential house within three years from the date of transfer, we are of the view that the assessee should be given the benefit of deduction u/s 54F of the Act on the sum of ₹ 16,50,000/- also and cannot be denied the benefit the said benefit for the reason that he had not complied with the requirements of Sec.54F(4) of the Act. Thus in effect the assessee would be entitled to deduction u/s.54F of the Act of ₹ 20,31,839/- viz., for the investment of ₹ 3,50,000/- in purchase of the land, ₹ 31,839/- stamp duty and registration charges and ₹ 16,50,000/- utilised for construction of a residential house within this period specified in section 54F(1) of the Act. The AO is accordingly directed to allow deduction u/s 54F of the Act a sum of ₹ 20,31,839/-. Appeal of the assessee partly allowed. - ITA No.996/Kol/2013 - - - Dated:- 13-9-2017 - Shri N.V.Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mouza Mandalaguri 20,00,000.00 Less: Indexed cost of acquisition: 10 cottah (86-87) 43,396 x 463/140 = 1,43,517/- 06 Cottah (87-88) 20.000 x 463/150 = 61,733/- 2,05,250.00 17,94,750.00 Less : Exemption u/s 54F i) Purchase cost of Home sted Land for construction of Residence on 29.07.2004 3,81,839/- ii) Deposit with SBI, Capital Gain a/.c scheme 16,50,000/- 20,31,839.00 NIL____ 6. The AO however computed LTCG as given below by applying the provision of section 50C of the Act and substituting the value adopted for the purpose of stamp duty and registration as the full value of consideration received on transfer :- Full value of consideration of 16 cottah land sold Rs.41,00,000/- Less: Index cost of acquisition (i)10 cottah puchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be deposited in a specified bank account within the due date for filing the return of income for the relevant assessment years as is prescribed u/s 139(1) of the Act. It is not in dispute that the assessee purchased land for construction of a residential house. The date of the purchase is 29.07.2004. The consideration paid by the assessee for purchase of the property was ₹ 3,50,000/-. The assessee had paid stamp duty and registration charges of ₹ 31,839/-. The CIT(A) treated the investment in purchase of the land as eligible for deduction u/s 54F of the Act and there is no dispute before the Tribunal on this aspect. The CIT(A) had not allowed the stamp duty and registration charges of ₹ 31,839/-. In our view this sum should be considered as utilisation by the assessee in purchase or construction of a new asset. To this extent order of the AO and CIT(A) is not correct and they are directed to allow the deduction to the extent of ₹ 31,839/- u/s 54F of the Act. 9. The remaining unutilised net consideration with the assessee was a sum of ₹ 16,50,000/-. As per the provision of section 54F(4) of the Act the assessee if he wants to claim exemption u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.13,90,000/- 22/04/2005 Cash withdrawn for construction (-) ₹ 30,000/- 22/04/2005 Cheque issued for purchase of building materials (-) ₹ 1,79,594/- 22/04/2005 to 20/09/2005 (except 4/7/2005) Cheques issued/cash withdrawn for construction of Building/for purchase of Building materials (-) ₹ 6,17,450/- 04/07/2005 Interest received ₹ 18,120/- Closing Balance (Dr.) ₹ 8,44,867/- 13. It can be seen that the assessee had deposited on or before 31.07.2004 which was the due date of filing the return of income u/s 139(1) of the Act. ₹ 2,60,000/- to this extent the CIT(A) held that the assessee was entitled to deduction u/s 54F of the Act. With regard to the remaining sum of ₹ 13,90,000 (16,50,000-2,60,000) since the deposit was made after 31.07.2004 (after due date u/s 139(1) of the Act) the CIT(A) held that the assessee will not be entitled to the benefit of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only in the AY in which the time limit for constructing a new house expires. The following were the relevant observations of CIT(A): As per the remand reports submitted by the Ld AO it was not conclusively proved that the residential house was completed within 3 years from the date of sale of land. But the fact remains that the assessee has constructed a residential house on the land purchased by her which has not been disputed by the Ld AO. The Courts have held that exemption U/S 54F cannot be denied on the ground that the construction was not completed within the stipulated period. As the assessee has purchased land and thereafter constructed residential house thereon although Completion Certificate has not been issued by the municipal authorities the assessee is eligible for exemption U/S 54F to the extent of investment of ₹ 3,50,000/- made for purchase of land for the purpose of construction of residential house thereon. For this assessment year the Assessing Officer, while examining the claim of exemption under section 54F, is required to restrict himself to see whether the assessee has fulfilled the basic requirements as per the provisions of law for availing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use has alone to be seen for allowing deduction u/s 54F of the Act. 17. Having come to the conclusion that the assessee had utilised the net consideration in construction of a house within the period of three years from the date of transfer, the question would be whether the absence of deposit of unutilised net consideration in a specific bank account as is required u/s 54F(4) of the Act, should the Assessee be denied the benefit of deduction u/s 54F of the Act. On this issue the ld. Counsel for the assessee brought to our notice the decision of the Hon ble Karnataka High Court in the case of CIT, Bangalore vs K.Ramachandra Rao (2015) 56 Taxman.com 163 (Karn). In the aforesaid decision the assessee had not deposited the unutilised net consideration in a specific bank account as is required u/s 54F of the Act. The assessee had however invested the net consideration in construction of a residential house within the period contemplated u/s 54F (1) of the Act. The Hon ble Karnataka High Court had to decide whether the assessee could be given a deduction of benefit u/s 54F (1) of the Act. The Hon ble Karnataka High Court held that if the assessee invests the entire consideration in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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