TMI Blog2019 (7) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. H.K. Kapoor (Decd.) [ 1997 (8) TMI 44 - ALLAHABAD HIGH COURT] . The first step was to purchase the land, which was done. Thereafter the developer was to handover the plot, so that assessee could have constructed the house within time allowed of 2 years. However, no step could be put forward thereafter because possession of land was not given by the Developer, for reasons beyond the control of the assessee. If an assessee sells his house property and utilises the money for acquiring a plot for the construction of the house and if facts and circumstances point out that assessee intended to construct the house, which has been found so, then it is clear that he wants to avail exemption as provided under the law. Now if the developer after receiving the money could not fulfill the obligation within time, then can assessee be held responsible for not complying the law. The Hon ble Supreme Court in the case of Sanjeev Lal Vs. CIT [ 2014 (7) TMI 99 - SUPREME COURT] has laid down the purposive interpretation of section 54 to give a liberal approach to the assessee who clearly intended to claim benefit of section 54. Thus amount utilized by the assessee in the acquisition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,92,80,160/-, on sale of property at Under Hill Road, Civil Lines, Delhi on 28.11.2014 for sum of ₹ 6,10,50,000/-. While computing longterm capital gain, assessee had claimed exemption under section 54 of ₹ 1,58,00,000/- on acquisition of allotment of a residential plot No. Q-168, Kensington Park, Sector 133, Noida, DIS Gautam Budh Nagar, UP at Jaypee Green, Noida on 01.06.2013 and for ₹ 25,10,000/- deposited in Capital Gain Account No. 0115001000443162 with PNB, Civil Lines, Delhi to be utilized in the construction of new residential house thereon. 2.1 The case was selected for scrutiny through CASS and in the assessment order, Ld. Assessing Officer allowed the exemption for ₹ 25,10,000/- deposited in Capital Gain Account No. 0115001000443162 with PNB, however, he denied the exemption of ₹ 1,58,00,000/- for the investment made in Plot No. Q-168 at Jaypee Green, Noida for the reasons given in paragraph 6 of his order, which can be summarised as under:- ( a) In the given case assessee neither purchased a house nor constructed a house within the stipulated time u/s 54 which expired on 28-11-2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly, keeping in view the legislative intent and where substantial compliance has been made in accordance with the legislative intent, exemption deserves to be allowed and in support of this proposition, he relied on the judgment of the Hon ble Supreme Court in the case of Sanjeev Lal Vs. CIT [2014] 365 ITR 389 (SC), wherein while interpreting the provisions of section 54 court applied the purposive interpretation. 4.1 He further submitted that till the time of agreement to sell on 07.04.2014, assessee had received ₹ 2,05,00,000/- in his bank account with HDFC and invited our attention to page 14, 15, 16 17 of the Paper Book and pointed out that sums so received as advance, assessee invested ₹ 1,58,00,000/- in the acquisition of allotment of a residential plot No. Q-168 at Jaypee Green, Noida (a township developed by JP Group) as evidenced by communication dated 01.06.2013 of Jaiprakash Associates Limited (Pg. 6 of the PB). However, due to delay in the handing over of the possession of the plot by the developer for the reasons which were beyond the control of the assessee, he could not construct residential house within a period of three years. In suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the relevant finding given in the impugned order as well as the material referred to before us at the time of hearing. In this case the issue is, whether amount invested in the purchase of plot on 01.06.2013 for constructing residential house is eligible for claiming exemption under section 54 of the Act from the capital gain arising on the sale of house vide registered sale deed dated 28.11.2014, which was agreed to be sold vide unregistered agreement to sell dated 07.04.2014, although assessee failed to construct the new residential house within a period of three years from the date of sale i.e. up till 27.11.2017. 7. Before dealing with the issue involved in the present appeal, it will be apposite to refer the relevant provisions of section 54 of the Act which reads as under: Profit on sale of property used for residence . 54. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in this behalf and such return shall be accompanied by proof of such deposit; and, for the 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: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- ( i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and ( ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 7.1 On perusal of aforesaid provision, the condition precedent for exemption of capital gain from being charged to income-tax are as under: - ( i) The assessee should have purchased a residential house in India either one year before or two years after the date of tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed within a period of three years from the date of the transfer of the residential property which resulted in the long-term capital gain. On this issue, the assessee s contention has been that inspite of having made payment for the plot, the Jaypee (Developer) failed to offer possession and execute sale deed even up till the expiry of three years from the date of sale of property by him, because of reasons beyond his control which cannot be disputed. This vital fact assumes great significance as assessee had taken all the steps to make the investment for the purchase of house, and also assessee had deposited ₹ 25,10,000/- in the capital gain account with PNB so as to construct the house. This unequivocally demonstrate that assessee really intended to construct the new residential house thereon. It was based on this bonafide intention assessee had claimed exemption under section 54 of the Act. Without the purchase of land, house could not have been constructed. The first step was to purchase the land, which was done. Thereafter the developer was to handover the plot, so that assessee could have constructed the house within time allowed of 2 years. However, no step could be put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court has often observed that purposive interpretation should be given to the provisions of the Act. In the case of Oxford University Press v. CIT [2001] 3 SCC 359 this court has observed that a purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax. It has also been said that harmonious construction of the provisions which sub-serve the object and purpose should also be made while construing any of the provisions of the Act and more particularly when one is concerned with exemption from payment of tax. Considering the afore stated observations and the principles with regard to the interpretation of statute pertaining to the tax laws, one can very well interpret the provisions of section 54 read with section 2(47) of the Act, i.e., the definition of transfer , which would enable the appellants to get the benefit under section 54 of the Act. [ Emphasis in bold is ours] 11. If we apply the law as clarified by the Hon ble Apex Court, on the facts of the instant case, then we are of the opinion that the amount utilized by the assessee in the acquisition of land should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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