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Sunayana Devi Versus I.T.O., Ward-2 (4) , Siliguri

2017 (9) TMI 961 - ITAT KOLKATA

Benefit of deduction u/s 54F - construction of a residential house completion by the assessee - absence of completion certificate - whether the absence of deposit of unutilised net consideration in a specific bank account as is required u/s 54F(4)should the Assessee be denied the benefit of deduction u/s 54F of the Act? - Held that:- The construction of a residential house was completed by the assessee within the period of three years from the date of transfer as is required u/s 54F(1) of the Ac .....

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COURT] held that if the assessee invests the entire consideration in construction of the residential house within 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 t .....

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0/- 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.Vasudevan, JM And Shri Waseem Ahmed, AM For The Appellant : Shri Subash Agarwal, Advocate For The Respondent : Shri Arindam Bhattacharya, Addl. CIT, Sr.DR ORDER PER N.V.VASUDEVAN, JM: This is an ap .....

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s of sec 54F is more than the value of net consideration received amounting to ₹ 20 lacs, Ld. CIT(A) ought to have deleted the entire addition of ₹ 21 lacs made u/s 50C. 2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not allowing the entire exemption claimed u/s 54F of ₹ 20,31,839/- but only granting a part relief to the extent of ₹ 6,10,000/- only. 3. That the appellant craves leave to add, alter or delete all or any of the grounds .....

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f ₹ 20,00,000/- on 09.12.2003. The value adopted by the Registrar of Assurances for the purpose of stamp duty and registration of the property sold by the assessee was a sum of ₹ 41,00,000/-. As per the provision of section 50C of the Act the assessee had to adopt the stamp duty valuation as full value of consideration received on transfer for the purpose of computation of long term capital gain. The computation of long term capital gain as given by the assessee was as follows :- C. .....

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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 on 09.09.1996 (43,396/- X 463/140) Rs.1,43,517/- (ii)6 cotah purchas on 21.04.1987 (20,000 X 463/150) ₹ 71,733/- ₹ 2,05,250/- Long Term capital Gain Rs.38,94,750/- 7. It can b .....

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F of the Act impose another condition for claiming deduction u/s.54F(1) of the Act. provides as follows :- Section 54F (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposit .....

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he purposes of sub-section (1), the amount, if any, already utilised 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 8. It can be seen from the provision of sub-section 4 of section 54F of the Act that where the net consideration received on transfer of a capital asset is not invested in purchase of construction of a new asset before the date for filing the return of income u/s 139 of the Act, .....

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ed 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 t .....

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f date for such deposit for A.Y.2004-05 is 31.07.2004. 10. The AO with a view verify the date by which the unutilized net consideration on transfer of the property which gave rise to long term capital gain was invested in a specified bank account, called upon the assessee to file the required details. The assessee did not file the required details. In such situation the AO proceeded to compute long term capital gain at a sum of ₹ 38,94,750/-, which we have set out in paragraph 6 of this or .....

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aid sum in specific bank account as is required u/s 54F(4) of the Act. The details of the various dates of deposits as furnished by the assessee before CIT(A) reveal the following decision :- 31/07/2004 Cash deposited out of sale proceeds of land ₹ 2,60,000/- 02/08/2004 Cheque issued from UBI savings bank a/c (deposited on 30/7/2004, Xerox of deposit slip enclosed) Rs.13,90,000/- 03/08/2014 cheque sent for clearance to UBI (-) Rs.13,90,000/- 08/-1/2005 Interest credited by bank ₹ 3,7 .....

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ng 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. .....

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. This would be clear from the annexure to the remand report dated 02.06.2009 viz., the spot inquiry conducted by the Inspector of the Income Tax. In the inquiry report dated 30.03.2009 of the Inspector of the Income Tax it has been stated as follows :- As per your direction, I visited the locality in which the building property of the assessee stands which is found located at the bye-lane of Sister Nivedita Road at Gurung Busty, Pradhan Nagar, Siliguri and which is also found can be viewed oppo .....

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cillor certifying the completion of building. As per the documents and also of the replies of the query regarding the construction and completion period of the building, it was told by the assessee that she had started constructing the residential house building during the period 2005 and completed during the period 2006. To ascertain the same, further discreet enquiries were made with the locals of the locality and the consequence of all reply were found in the affirmative. During my spot enqui .....

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to be examined 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/ .....

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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 such exemption. Only after expiry of the stipulated period from the date of transfer of asset as per the provisions of section 54F the Assessing Officer should examine whether the assessee has fully complied with the requirement of purchase of new house or construction of new house. If the ass .....

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the assessee is entitled to 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 and deposit of ₹ 2,60,000/- made in the Capital Gains Account Scheme by the assessee by the due date of filing of return U/S 139(1) of the Act. Thus the assessee is allowed exemption of ₹ 6,10,000/- U/S 54F of the Act. The disallowance of exemption U/S 54F of the Act of the entire Capital Gain by the Ld .....

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l for the assessee in this regard has placed reliance on the decision of the Hon ble Madras High Court in the case of CIT vs Sardarmal Kothari 302 ITR 286 (Mad). The Hon ble Madras High Court in the aforesaid decision in the context of deduction u/s 54F of the Act came to the conclusion that it would be enough if the assessee establishes that he has invested the entire net consideration within the stipulated period. The Chennai Bench of ITAT in the case of Mrs. Seetha Subramanian vs ACIT 59 ITD .....

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ssee 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 residenti .....

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