TMI Blog2018 (1) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... after the sale of the property for the purposes of claiming the deduction u/s 54F(4) of the Act. Thus, the disallowance of assessee’s claim u/s 54F is confirmed and the assessee’s grounds on this issue are rejected. Unexplained cash deposits - addition u/s 68 - Held that:- From the details filed by the assessee, it is seen that the assessee had agricultural income and also income from other sources and house property from the A.Ys 2012-13 to 2014-15 sufficient to explain the sources for the deposit of ₹ 6.00 lakhs. Therefore, the source for the deposit of ₹ 6.00 lakhs is accepted. However, as regards the source for the deposit of ₹ 20.00 lakhs, being the amount claimed to be withdrawn for purchase of property in the earlier year and re-deposited the same after the period of one year due to the transaction not materializing, is not acceptable. Therefore, the addition of ₹ 20.00 lakhs is confirmed. - Decided partly in favour of assessee - ITA No.1021/Hyd/2017 - - - Dated:- 25-1-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For The Assessee : Shri D.V. Anjaneyulu For The Revenue : Shri N. Ravi Babu, DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during the financial year 2013-14 and asked the assessee to explain the sources for the deposits of ₹ 30.00 lakhs and ₹ 20.00 lakhs on 5.11.2013. In reply to the said show cause notice, the assessee submitted that he had entered into the agreement of sale on 3.7.2013 and has paid ₹ 1.00 crores, whereas the assessee had sold the property on 7.11.2013 and has deposited the sale consideration of ₹ 1.00 crores into his Bank A/c and that both the transactions are independent and are not related to each other. As regards the claim of exemption u/s 54F, he submitted that the sale agreement for purchase of residential house is well within the one year period before the transfer of the property and therefore, submitted that the capital gains arising out of the sale of the property on 3.7.2013 i.e. ₹ 96,73,930, is eligible for exemption u/s 54F of the Act as he had complied with all the necessary conditions. During the course of the assessment proceedings, the copies of the sale deed dated 7.11.2013 and agreement of sale dated 3.7.2013 were filed and verified. The AO observed that the assessee had made payment of ₹ 63,83,000 vide cheque No.994653, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illed the conditions and it can be brought to tax only in the year in which the assessee fails to get the property registered i.e. after two years of the sale of an original asset. In support of this contention, he placed reliance upon the decision of the Coordinate Bench of the Tribunal (to which both of us are signatory) in the case of Vikas Kumar vs. DCIT reported in (2017) 166 ITD 481. In support of his contention that the law does not compel the assessee to perform the impossible, the learned Counsel for the assessee placed reliance upon the decisions of the Hon'ble Supreme Court in the case of LIC vs. CIT (1996) 219 ITR 410 (S.C), Krishnaswamy S.Pd and Anr. Vs. Union of India Ors (2006) 281 ITR 313 and Manish Maheshwari vs. ACIT Anr (2007) 289 ITR 341. Thus, according to the learned Counsel for the assessee, the assessee having made investment in the property bonafidely, cannot be expected to get the document registered when the other party was not cooperating with the assessee with an intention to cheat the assessee. 8. The learned DR, on the other hand, submitted that even if the contentions of the assessee are accepted that his vendor was not cooperating with hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of three years after the sale of the original asset, the DR has placed much reliance on the words purchased/constructed used in the said section to mean that the transaction has to be concluded within the specified period to be eligible for deduction u/s 54F of the Act. 11. Let us therefore, consider the judicial precedents relied upon by the learned Counsel for the assessee on the issue. The Hon ble Karnataka High Court in the case of CIT vs. Shakuntala Devi (Decd.) Others reported in (2016) 389 ITR 366 (Kar.) has held that where the capital gains has been invested in either purchase of residential building or spent on construction of residential building, the assessee would be entitled to the benefit flowing from section 54 of the Act irrespective of the fact of the transaction not being complete in all respects. Further, in the case of Pr. CIT v. C. Gopala Swamy (Kar.) reported in (2016) 384 ITR 307 (Kar.), the Hon'ble Karnataka High Court has held that the fact that the builder has not handed over the possession within a period of three years after the sale of the original asset, would not disentitle the assessee from claiming benefit u/s 54F and that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen from the said document that on 31.8.2015, the HSBC Bank Ltd has executed a registered sale deed in favour of one Mr. Daggumati Koti Reddy by auctioning the property since the vendor had not cleared the dues to the Bank and committed default. Thus, on 31.8.2015, the agreement of sale has become impossible to be honoured as the property itself has been auctioned and sold to another party. The assessee has filed the return of income on 25.7.2014 i.e. after issuance of the legal notice dt. 5.4.2014 to the vendor calling upon him to execute the registered sale deed in favour of the assessee by clearing the bank loan and receiving the balance sale consideration of ₹ 3.4 crores. Therefore, as far as the assessee is concerned, he was aware of the bank loan and also the default committed by the vendor in repaying the loan. Thus, the property was not without an encumbrance as on the date of filing of the return and there was no certainty of the transaction going through. In a case where the sale is not concluded or the agreement of sale is not certain to be honoured, the assessee could not have claimed to have purchased the residential property within one year before or within tw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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