TMI Blog2020 (1) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... payment in installments and the builder was to construct an unfinished bare shell flat for finishing by the buyers. The possession was granted on 30.03.2013. The lower tax authorities after examining the terms of the agreement, the occupation certificate, and the other letters-offer to finalize the details of interiors, have come to a conclusion that the assessee had booked a semi furnished flat with the builder, namely, DLF Universal Ltd. in the residential group housing complex named as Magnolias DLF Golf Links. Accordingly, the assessee had a window of three years period from 21.12.2011 till 21.12.2014 to construct a house property, calculated from the date of transfer of original asset. The appellant has claimed deduction on amount invested till the due date of filing of return under Section 139 (1) - No cogent ground to hold that the Respondents do not fulfill the conditions laid down under Section 54 (1) of the Act so as to deny the benefit of the said provision. The apprehension expressed by the learned senior standing counsel for the Revenue is not borne from the facts on record. The provision in question is a beneficial provision for assessees, who replace the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty was being done by the tenant itself. In absence of any evidence of receipt of any amount on account of maintenance, that would contradict the books of account, the deletion made by CIT (A) has been upheld. This consistent factual finding arrived at by the CIT (A) and ITAT does not give rise to any question of law. - ITA 991/2019 - - - Dated:- 19-12-2019 - MR. VIPIN SANGHI AND MR. SANJEEV NARULA JJ. Appellant Through: Mr. Ajit Sharma, Senior Standing Counsel with Ms. Adeeba Mujahid, Advocate. Respondent Through: Mr. Salil Kapoor, Mr. Shivansh Pandya, Mr. Sumit Lalchandani and Ms. Ananya Kapoor, Advocates. SANJEEV NARULA, J. (Oral): Caveat No. 1219/2019 in ITA 992/2019 1. Learned counsel for the Respondent/caveator has appeared. 2. Accordingly, the caveat stands discharged. Caveat No. 1227/2019 in ITA 996/2019 3. Learned counsel for the Respondent/caveator has appeared. 4. Accordingly, the caveat stands discharged. C.M. No. 53570/2019 (delay) in ITA 991/2019 5. By this application the applicant seeks condonation of delay of 39 days in re-filing the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and discussed extensively, and the decision would apply mutatis mutandis in all the appeals. Brief Facts [ITA 992/2019] 14. The facts in brief giving rise to the present appeal are that the assessee is an individual, earning income from house property, business and profession, capital gains and other sources. He filed his return of income for AY 201213 on 31.10.2012, declaring total income of ₹ 8,05,34,659/-, including long term capital gains from sale of property at Jor Bagh, New Delhi on 21.12.2011 for a sale consideration of ₹ 13 crores. The said property was purchased in Financial Year (FY) 2001-02, as per sale deed dated 19.10.2001, for ₹ 36,16,000/-. After indexation, the cost of acquisition was claimed to be ₹ 66,63,286/-, resulting in capital gain of ₹ 12,33,36,714/- against which, the assessee claimed deduction under Section 54 of the Act for investment in a new house property Magnolias DLF Golf Links as per sale agreement dated 10.02.2006. Deductions were also claimed under Section 54EC of the Act. During the course of assessment proceedings, the assessee submitted a detailed computation of capital gains, showing paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction of new residential house and not purchase of a flat. It was further observed that since the construction has been completed within three years of the sale of original asset, a fact accepted by the AO, the assessee was entitled to relief under Section 54 of the Act and resultantly, the disallowance of ₹ 4,01,93,262/- was deleted. 18. The relevant portion of the order of the CIT (A) reads as under: 6. Ground no.-4 relates to disallowance of deduction u/s.54 to the extent of ₹ 4,00,97,217/- (A.No.496/14-15), 4,10,45,578/- (A.No.494/14-15) and ₹ 4,01,93,262/- (A.No.495/14-15) to the returned income of ₹ 8,05,34,650 (A.No.496/14-15), ₹ 2,75,04,910/- (A.No.495/14-15) and ₹ 72,38,440/- (A.No.494/14-15). The fact of the case is that the appellant declared long term capital gain of ₹ 52087347/- (A.Nos.494/14-15) ₹ 12,33,36,714/- (A.No.496/14-15) and ₹ 71665302/- (A.No.495/14-15) from the sale of property at 146, Jorbagh, New Delhi on 21.12.2011 on which he claimed deduction u/s 54 amounting to ₹ 4,00,97,217/- A.No.496/1415), 4,10,45,578/- (A.Nb.494/14-15) and ₹ 4,01,93,262/- A.No.495/14-15). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset. The above circulars are binding on the revenue authorities under s. 119 of the Act. He referred the decision rendered by the Honorable High Court of Bombay In the case of Mrs. Hilla J. B. Wadia (216 ITR 376), wherein the Honorable High Court has held that n is a case of Construction . Reliance was placed on the judgment of Honorable Karnataka High Court in the case of CIT Vs J.R. Sobramanya Bhatt (1887) 165 ITR 571 (Karn), wherein it has been held that it is immaterial whether the construction of the new house was started before the date of transfer, it should be completed after the date of transfer of the original house. In the present case, he had booked a semi finished flat with the builder, namely DLF Universal Limited in the residential group housing complex named as Magnolias DLF Golf Links) and as per agreement, he was to make payment in installments and the builder was to construct the unfinished bare shell of flat for finishing by the buyers on their own to make it liveable (having specifications set out in Annexure-V) as per clause 10.1 of the said agreement. It .is also pertinent to mention that Builder Company offered vide letter dated 30.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such situations, the CBDT issued a circular No. 471, dt. 15th Oct, 1986. The relief extending instructions of the CBDT, in wake of realization of practical difficulties faced by the appellants, by way of circular extending relief to even marginally non compliant appellants in its literal sense of hyper technicalities/cannot be used as a tool to interpreted instructions of the board or decision of the law Courts, to deny the very relief to the otherwise compliant appellants. In a recent reference to Honorable. Delhi High Court, in the case of CIT vs Kuldeep Singh, the Honorable Court has observed and discussed various decision of the other Honorable High Courts and Honorable Supreme Court; as follows; A. CIT Andhra Pradesh vs. T. N. Aravinda Reddy (1979) 4 SCC 721; B. Civil Appeal nos. 5899-5900/2014 titled Sh Sanjeev La I etc etc vs. CIT Chandigarh Anr decided on 01/07/2014, 2014 (8) SCALE 432 C. Reference was made to the decision of Supreme court in CIT vs J.H. Gotla [1985] 156 ITR 323 (SC). D. Moreover in CIT vs Bharati C Kothari (2000) 244 ITR 352 In the instant case, since the appellant entered into an agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere received by the Appellant, as confirmed by the tenant, verifiable from the statement of account, TDS certificates and details reflected in Form 26AS. For these reasons, the additions made by the AO, pertaining to maintenance charges, were also directed to be deleted. 20. In the appeal filed by the Revenue, the Tribunal upheld the order of CIT (A) and confirmed the deletions. 21. Mr. Ajit Sharma, learned senior standing counsel for the Appellant argues that the impugned order is perverse and the Tribunal has erred in deleting the additions/disallowances made by the AO without considering the detailed findings given in the assessment order. He argued that the AO had rightly taken the effective date of purchase as 10.02.2006 which is beyond the period of limitation prescribed under Section 54 of the Act. He further argued that since the property at Magnolias DLF was purchased prior to the sale of the long term asset, the assessee cannot take benefit of the amounts expended in the construction thereof as the sale proceeds of the long term assets have not been utilized in the construction of the said property. He argued that the property at Jor Bagh was sold on 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential house. CBDT in its circulars No. 672 dated 16.12.1993 has made it clear that the earlier circular No. 471 dated 15.10.1986 in which it was stated that acquisition of flat through allotment by DDA has to be treated as a construction of flat, would apply to cooperative societies and other institutions. The tax authorities have relied upon the said circular and held that the builder would fall in the category of other institutions and, therefore, booking of the flat with the builder has to be treated as construction of flat by the assessee. In accordance with the said agreement, the assessee was to make payment in installments and the builder was to construct an unfinished bare shell flat for finishing by the buyers. The possession was granted on 30.03.2013. The lower tax authorities after examining the terms of the agreement, the occupation certificate, and the other letters-offer to finalize the details of interiors, have come to a conclusion that the assessee had booked a semi furnished flat with the builder, namely, DLF Universal Ltd. in the residential group housing complex named as Magnolias DLF Golf Links. Accordingly, the assessee had a window of three years period fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be liberally interpreted. The Supreme Court in CCE v. Favourite Industries, [2012] 7 SCC 153 has succinctly observed:- 21. Furthermore, this Court in Associated Cement Companies Ltd. v. State of Bihar [(2004) 7 SCC 642], while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held: (SCC p. 648, para 12) 12. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act being restricted to ₹ 50,00,000/- as against ₹ 1,00,00,000/-, we may note that the said question has already been answered in the judgment relied upon by the Tribunal to uphold the deletion by CIT (A). The High Court of Madras in CIT vs. Coromandal Industries Ltd. (supra) has held as under: 4. The issue involved in this appeal is no longer res integra in view of the decision of this Court in CIT v. C. Jaichander [Order dated 15.9.2014 made in T.C.(A) Nos. 419 and 533 of 2014], to which one of us - R.Sudhakar,J. is a party). In the said decision, this Court held as under: 5. The key issue that arises for consideration is whether the first proviso to Section 54EC(1) of the Act would restrict the benefit of investment of capital gains in bonds to that financial year during which the property was sold or it applies to any financial year during the six months period. 6. For better understanding of the issue, it would be apposite to refer to Section 54EC(1) of the Act, which reads as under: Section 54EC. Capital gain not to be charged on investment in certain bonds.- (1) Where the capital gain arises from the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. 9. At this juncture, for better clarity, it would be appropriate to refer to the Notes on Clauses - Finance Bill 2014 and the Memorandum explaining the provisions in the Finance (No.2) Bill, 2014, which read as under: Notes on Clauses - Finance Bill 2014: Clause 23 of the Bill seeks to amend section 54EC of the Income-tax Act relating to capital gain not to be charged on investment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gain shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 54EC(1) of the Act by inserting a second proviso with effect from 1.4.2015.The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from 1.4.2015 in relation to assessment year 2015-16 and the subsequent years. The intention of the legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to Section 54EC(1) of the Act, as it stood in relation to the assessees. 11. In any event, from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to ₹ 50,00,000/- is incorporated in Section 54EC(1) of the Act itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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