TMI Blog2020 (9) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 on the file of the Income Tax Appellate Tribunal, Chennai D Bench (for brevity, the Tribunal) for the assessment year 2013-14. 2. The appeal has been admitted on 25.2.2019 on the following substantial question of law : Whether, for the purpose of Section 54 of the Income Tax Act, the advance payment made by the assessee for the purchase of a residential flat would constitute a part of purchase or not, when such advance is made to the seller of flat prior to the date of sale of capital asset in question ? 3. We have heard Mr.Ramanakumar, learned counsel appearing for the appellant assessee and Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the respondent Revenue. 4. The facts, which are necessary for answering the substantial question of law framed for consideration, are as follows : The assessee, who is an individual, filed her return of income for the assessment year under consideration namely 2013-14 on 07.4.2014 for a total income of ₹ 2,52,480/-. The return of income was processed under Section 143(1) of the Act. Subsequently, the case was selected for scrutiny and the assessment was completed under Section 143(3) of the Act b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the view that the assessee is entitled to the relief under Section 54F and confirm the concurrent findings given by both the appellate authorities. The learned counsel appearing for the Revenue is also unable to furnish any material or evidence or case law or compelling reason to take a contrary view of the Tribunal. 11. For the foregoing reasons, we are of the view that the order of the Tribunal is in conformity with law. Under these circumstances, we are of the view that no question of law, much less substantial question of law, arises for consideration. Accordingly, the tax case appeal is devoid of merits and the same is dismissed. And (ii) in the case of C.Aryama Sundaram Vs. CIT [reported in (2018) TaxCorp (DT) 73811] wherein one of the substantial questions of law framed for consideration was when capital gain arises from sale of building and/or land appurtenant thereto and a residential house is constructed within three years from the date of such sale, whether the cost of the new asset, which is eligible for set-off against capital gain, would include the cost of the land, if such land had been purchased three years prior to sale of the property from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential house in India either one year before or two years after the date of transfer of the residential house which resulted in capital gain or alternatively constructed a new residential house in India within a period of three years from the date of the transfer of the residential property which resulted in the capital gain. (ii)If the amount of capital gain is greater than the cost of the residential house so purchased or constructed, the difference between the amount of the capital gain and the cost of the new asset is to be charged under Section 45 as the income of the previous year. (iii)If the amount of the capital gain is equal to or less than the cost of the new residential house, the capital gain shall not be charged under Section 45. 20. What has to be adjusted and/or set off against the capital gain is, the cost of the residential house that is purchased or constructed. Section 54(1) of the said Act is specific and clear. It is the cost of the new residential house and not just the cost of construction of the new residential house, which is to be adjusted. The cost of the new residential house would necessarily include the cost of the land, the cost of mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 45 as the income of the previous year. If the amount of capital gain is equal to or less than the cost of the new residential house, including the land on which the residential house is constructed, the capital gain is not to be charged under Section 45 of the said Act. 8. The Constitution Bench judgment of the Hon ble Supreme Court in the case of Dilip Kumar dealt with the aspect as to how the exemption provisions were to be construed and it has been held that the provisions had to be construed strictly and the benefit of any ambiguity should lean in favour of the Revenue. 9. The Hon ble Supreme Court in the case of Sh.Sanjeev Lal Vs. CIT [reported (2014) 365 ITR 0389] considered the scope of Section 54 of the Act and held as follows : In addition to the fact that the term transfer has been defined under Section 2(47) of the Act, even if looked at the provisions of Section 54 of the Act which gives relief to a person who has transferred his one residential house and is purchasing another residential house either before one year of the transfer or even two years after the transfer, the intention of the Legislature is to give him relief in the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. K.Ramachandra Rao [reported in (2015) 277 CTR 0522], the entire scheme of Section 54 of the Act was explained and it was held that there was no prohibition for the assessee for putting up construction out of the sale consideration received by such transfer of site, which was owned by him as it was clear from the language of the provision. It was further held that though the original asset was sold much after purchase of vacant site, still the beneficial provision should be extended to the assessee. 13. In another decision of the Karnataka High Court in the case of CIT Vs. J.R.Subramanya Bhat [reported in (1987) 165 ITR 0571], the Income Tax Officer rejected the claim of the assessee on the ground that construction of the new building had commenced much earlier to the sale of the old building. This finding was reversed by the Court by holding that the date of sale of the old building was immaterial, that what was required to be seen was as to whether the assessee constructed the building within two years from the date of sale of the old building and that he was entitled to the relief under Section 54F of the Act. The same effect is in the decision of the Punjab Haryan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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