TMI Blog2021 (2) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... TAR SINGH CHAWLA [ 2013 (4) TMI 499 - PUNJAB AND HARYANA HIGH COURT] , we are of the opinion that the assessee cannot be denied deduction on the ground that amount of sale consideration has not been invested in capital gain account scheme before the due date of the filing of return under section 139(1) of the Act. Eligibility of deduction 54 of the Act for booking of flat with private builders - The assessee has made entire payment within the period of three years from the date of the transfer of original asset, and therefore, the amount has to be treated as invested in purchase/construction. The provisions of section 54 nowhere prescribe construction of the house should be completed. The prime requirement is investment in new residential house within the prescribed period. Thus, respectfully following the Tribunal in the case of Ramprakash Miyav Bazaz[ 2014 (6) TMI 40 - ITAT JAIPUR] we are of the opinion that the assessee has complied the provision of section 54 of the Act in substance and therefore Ld. CIT(A) is not justified in confirming rejection of deduction under section 54 of the Act. We set aside the finding of the Learned CIT(A) on the issue in dispute and direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of ₹ 89,50,000/- made to the builder for which exemption is claimed u/s 54 of the Act is grossly erroneous and against the facts of the case as the appellant ahs duly made the said payments to the builder before the date of filing of return of income for the year under consideration. 6. Under the facts and circumstances of the case the ld. First Appellate Authority has grossly misinterpreted the beneficial provisions of sec. 54 of the Act without appreciating the intention of the legislature behind introduction of these provisions. 7. The appellant prays for leave to add, amend, alter or withdraw any grounds of appeal. 2. Briefly stated facts of the case are that the assessee was co- owner of a property located at Panchkula alongwith two other persons namely i.e. Ms. Jaswinder Kaur and Ms. Harsawar Kaur. In the case of those two co-owners, their Assessing Officer disallowed the exemption claimed by them under section 54 of the Income-Tax Act, 1961 (in short the Act ). In view of disallowance of exemption in the case of two other co-owners, assessment in the case of the assessee was reopened by way of issue of notice under section 148 of the Act. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of residential house within the stipulated period, nor deposited in capital gain scheme account within limit provided section 139(1) of the Act. (ii) The booking of flat is not purchase of flat because as per agreement to sale, construction of the flat was to be carried out and it was not completed till completion of assessment. (iii) The booking of the flat is also not construction because under CBDT Circulars No. 471 dated 15/10/1986 and No. 672 dated 16/10/1993, allotment through booking was considered as construction of residential house in the case of self financing scheme of Delhi Development Authority and similar institutions such as housing board of Central/State Governments only and not in case of private builder (iv) Construction of the flat in question was not completed and the assessee had not got possession of the flat till the completion of assessment and therefore also it was not construction of the residential house within a period of three years from the date of the original asset. 5.1 The Ld. CIT(A) concurred with the finding of the Assessing Officer. She also rejected the finding of the Ld. Commissioner of income-tax (Appeals) in the case of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court in the case of Orissa State Warehousing Corporation vs. CIT, 237 ITR 589 have held that a fiscal statute has to be interpreted on the basis of the language used therein and not de hors the same. Hon ble Supreme Court in the case of IPCA Laboratory Ltd. vs. DCIT, 266 ITR 521 have held that where there is no ambiguity in the provisions of statute, provisions cannot be interpreted to confer benefit on the Assessee and benefits which are not available cannot be conferred by ignoring or misinterpreting clear word in the section. In my view, the intent of legislature was not to allow exemption u/s 54 if none of the conditions mentioned in the Section are fulfilled even after the prescribed period or otherwise, there was no requirement for specifying the conditions for claiming exemption u/s 54 or 54F. Facts of the cases relied on by the Appellant are different. Therefore, in my view, Learned CIT(A) has not examined the facts of the case in the case of Mrs. Jasvinder Kaur and Mrs. Harsawer Kaur carefully and, therefore, I respectfully differ with her and hold that Appellant is not entitled to the claim of exemption u/s 54. 6. Before us, both the parties appeared t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed, the learned Counsel submitted that delay in receipt of possession was beyond the control of the assessee and therefore the assessee cannot be made to suffer for disallowance under section 54 of the Act, which is a beneficial section and for that purpose only thing to be ensured is that capital gains consideration arising on sale of long-term capital asset are reinvested in residential property. She further submitted that even as per section 54 of the Act, there is no requirement that the assessee should have actually received the physical possession of the flat within the prescribed time limit of 2/3 years. 9. Regarding the finding of the Learned CIT(A) that CBDT Circular No. 672 dated 16/10/1993 and Circular No. 471 dated 15/10/1986 are not applicable on booking of flat with private builder, the learned Counsel of the assessee submitted that various courts in following decisions have held that booking of flat with private builder is to be considered as case of construction for the purpose of section 54 of the Act: (a) Commissioner of Income-tax Vs RL Sood (2000) 108 taxman 227 (Delhi) (b) Commissioner of Income-tax Vs Mrs. Hilla JB Wadia (1995) 216 ITR 376 (Bombay) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 11.2 As far as condition of deposit of the sale consideration in capital gain scheme account is considered, the relevant provision of section 54 is reproduced as under: Profit on sale of property used for residence. 54. (1) .. (2) The amount of the capital gain 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 deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame 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, alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had purchased new property before the extended due date of filing of return as per s. 139(4) and filed return within such extended time. The relevant finding of the Hon ble High Court is reproduced as under: 5. It may be noticed that the assessee sold her residential house on 13th Jan., 2006 for a sum of ₹ 45 lacs and purchased another property jointly with Mr. D.P. Azad, her father-in-law on 2nd Jan., 2007 for a consideration of ₹ 95 lacs. The due date of filing of return as per s. 139(1) of the Act was 31st July, 2006, but the assessee filed her return on 28th March, 2007 and that extended due date of filing of return as per s. 139(4) is 31st March, 2007. 6. Sec. 54 of the Act contemplates that the capital gain arises from the transfer of a long-term capital asset, but if the assessee within a period of one year before or two years after the date on which the transfer took place purchases residential house, then instead of the capital gain, the income would be charged in terms of provisions of sub-s. (1) of s. 54. As per sub-s. (2), if the amount of capital gains is not appropriated by the assessee towards the purchase of new asset within one y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under sub-s. (1) of s. 139 of the Act in terms of sub-s. (2) of s. 54 of the Act. It is contended that sub-s. (4) is not applicable in respect of the assessee so as to avoid payment of long-term capital gain. 9. On the other hand, learned counsel for the respondent relies upon a Division Bench judgment of Karnataka High Court in Fathima Bai vs. ITO (2009) 32 DTR (Kar) 243 where in somewhat similar circumstances, it has been held that time-limit for deposit under scheme or utilisation can be made before the due date for filing of return under s. 139(4) of the Act. Learned counsel for the respondent also relies upon a Division Bench judgment of Gauhati High Court in CIT vs. Rajesh Kumar Jalan (2006) 206 CTR (Gau) 361 : (2006) 286 ITR 274 (Gau). 10. Having heard learned counsel for the parties, we are of the opinion that sub-s. (4) of s. 139 of the Act is, in fact, a proviso to sub-s. (1) of s. 139 of the Act. Sec. 139 of the Act fixes the different dates for filing the returns for different assessees. In the case of assessee as the respondent, it is 31st day of July of the assessment year in terms of cl. (c) of the Expln. 2 to sub-s. (1) of s. 139 of the Act, whereas sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act and that would include extended period to file return in terms of Sub Section 4 of Section 139 of the Act. The relevant finding of the Hon ble High Court is reproduced as under: 9. A Division Bench of this Court in which one of us (Hemant Gupta, J.) was a member, had an occasion to consider the provisions of Section 54(2) of the Act, wherein it has been held that sub- section(4) of Section 139 of the Act is in fact a proviso to Section 139(1) of the Act. Therefore, since the assessee has invested the sale proceeds in a residential house within the extended period of limitation, the capital gain is not payable. The judgments in Rajesh Kumar Jalan s case and Fathima Bai s case (supra) were referred to. It has been held as under:- Having heard learned counsel for the parties, we are of the opinion that sub-section (4) of Section 139 of the Act is, in fact, a proviso to sub-section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for different assesses. In the case of assessee as the respondent, it is 31st day of July, of the Assessment Year in terms of clause (c) of the Explanation 2 to sub- section 1 of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investment in yoo project 18.5.2011 RTGS before the due date u/s 139(1) 60,83,200 Amount paid for stamp duty on registration of agreement to sell 16.7.2012 Cheque No. 35875 entry in bank statement 7,50,000 Investment in yoo project 29.8.2012 RTGS 14,16,800 TOTAL: 89,50,000 11.3.1 On perusal of the paper-book pages A-57 to A-61, it is also evident that the all above payment have been cleared from the bank account of the assessee before the due date of the filing of return under section 139(4) of the Act which was 31/03/2013 in the case of the assessee. 11.4 As the investment in property has been made prior to due date of filing of return of income under section 139 (4) of the Act i.e 31/03/2013, therefore Respectfully following the decision of the Hon ble High Court reproduced above, we are of the opinion that the assessee cannot be denied deduction on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to purchase or its construction by the Delhi Development Authority on behalf of the allottee. Under the Self-Financing Scheme of the Delhi Development Authority the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the Scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking the delivery of possession is only a formality. If there is a failure on the part of the Delhi Development Authority to deliver the possession of the flat after completing the construction, the remedy for the allottee is to file a suit for recovery of possession. 3. The Board have been advised that under the above circumstances, the inference that can be drawn is that the Delhi Development Authority takes up the construction work on behalf of the allottee and that the transaction involved is not a sale. Under the Scheme, the tentative cost of construction is already determined and the Delhi Development Authority facilitates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceedings for the relevant assessment year, the AO brought the difference between the sale price of the residential flat sold by the assessee and the cost of acquisition of the said house to tax as capital gains on the ground that the assessee had failed to satisfy the conditions laid down in s. 54(1) of the Act inasmuch as he had failed to purchase the flat within the stipulated period of one year. The assessee s appeal to the CIT (A) was unsuccessful. 4. The assessee took the matter in further appeal to the Tribunal, who took the view that the assessee having purchased the new flat within one year of the sale of his old residential house, the provisions of s. 54(1) of the Act stood satisfied and, therefore, no income by way of capital gains could be taxed in the hands of the assessee. The Revenue s application under s. 256(1) having been dismissed by the Tribunal the present petition had been filed. 5. We have heard Mr. Sanjiv Khanna, the learned senior standing counsel on behalf of the Revenue. 6. In our view the Tribunal was justified in declining to make a reference on the proposed question to this Court. Admittedly, the assessee had paid a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrence of situations in the modern days where properties are booked and thereafter purchased, the CBDT in their wisdom further clarifies vide circular No. 672 dated 16/12/1993 that if any amount out of net sale consideration of the original asset is paid to any builder or developer, this amount should be considered towards the terms 'purchase/construct' for the purpose of sections 54/54F of the Act. It is not disputed by the Revenue that the assessee has not made payment for purchase of residential house in Gurgaon in view of the above clarifications of CBDT, this is enough compliance of the provision of section 54F of the Act and the assessee became entitled to this exemption. 12. We have found that section 54F of the Act is a beneficial provision aimed at promoting existence of new residential houses to further the needs of the society. Thus, the intention of the Legislator is to encourage investment in the acquisition of residential houses and section 54F of the Act prescribes and proscribes the conditions for availing its benefit. The terms/words used in this section have been very selectively prudentially used by the legislature. This benefit is against the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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