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TMI Blog2024 (8) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... fter claiming deduction under Chapter-VIA of Rs. 1 lakh, the total income was arrived at Rs. 31,70,459/-. Later, the RoI was selected for scrutiny under CASS, and the AO completed the assessment on 30.03.2015 by making following additions: * LTCG re-computed at Rs. 66,53,379/- * Savings bank interest Rs. 20,218/- * Unexplained cash credit u/s. 68 of the Act Rs. 59,90,000/- And thus, the AO assessed the total income of the assessee at Rs. 1,54,19,580/- as against the returned income of Rs. 31,70,459/-. 4. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), wherein, he agitated only two issues i.e. (i) disallowance of claim u/s. 54F of the Act & (ii) addition u/s. 68 of the Act. 5. First, we will consider the disallowance of claim made by the assessee u/s. 54F of the Act. 6. We have heard both the parties and perused the records and it is noted that during the year under consideration, the assessee had sold the land at Noombal Village, for a consideration of Rs. 78,48,000/- on 29.02.2012 and admitted LTCG and claimed deduction u/s. 54F of the Act to the tune of Rs. 57,41,274/- on the investment of Rs. 70,53,806/- made in the new constructed house. However, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of property in question and is well within the time stipulated u/s. 54(1) of the Act. For taking such a view, we rely on the decision of the Hon'ble Madras High Court in the case of C. Aryama v. CIT in Tax Case Appeal No.520 of 2017 dated 06.08.2018, wherein, the Hon'ble Madras High Court on similar issues has held as under: 14. Under Section 54(1) of the said Act, the capital gain arising from transfer of a residential house is not to be charged to income tax as income of the previous year, if the assessee has within a period of one year before or two years after the date of transfer of that residential house purchased another residential house in India or has within a period of three years after the date of transfer constructed a residential house in India and if the amount of the cost of the residential house so purchased or constructed is equal to or less than the amount of capital gain. 15. It is a well settled principle of construction and interpretation of statutes that statutory provisions should, to the extent feasible, be interpreted and/or construed in accordance with plain meaning of the language used in those provisions. 16. On a plain reading of Section 54(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or alternatively, a new residential house has been constructed in India, within three years from the date of the transfer, which resulted in the capital gain. The said section does not exclude the cost of land from the cost of residential house. 22. It is axiomatic that Section 54(1) of the said Act does not contemplate that the same money received from the sale of a residential house should be used in the acquisition of new residential house. Had it been the intention of the Legislature that the very same money that had been received as consideration for transfer of a residential house should be used for acquisition of the new asset, Section 54(1) would not have allowed adjustment and/or exemption in respect of property purchased one year prior to the transfer, which gave rise to the capital gain or may be in the alternative have expressly made the exemption in case of prior purchase, subject to purchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain. 23. At the cost of repetition, it it reiterated that exemption of capital gain from being charged to income tax as income of the previous year is attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in [2007] 290 ITR 90 [Mad.HC] which has been relied by the AO to deny the claim u/s. 54F of the Act. In the case of Pradeep Kumar (supra), there was a definite finding of fact that there was no tangible material to form a belief that a residential house/dwelling unit was constructed; and it was found that it was only an extension of existing building by 382 feet that too after demolishing an existing ACC roofed out-house. In such factual circumstances, the Hon'ble Madras High Court held that assessee couldn't claim deduction u/s. 54F of the Act. Therefore, according to us, in the present case, the AO erred in relying on the decision of the Hon'ble High Court in the case of Shri V. Pradeed Kumar, because, the facts were entirely different. Likewise, the decision of the Hon'ble Kerala High Court in the case of Pushpa v. ITO reported in [2013] 31 taxmann.com 33 (Ker) is also not applicable, because, in that case there is a finding of fact that assessee had only extended the first floor construction; meaning no new dwelling unit was constructed. Therefore, both case laws are not applicable in the facts of the present case. 8. Instead, in the present case, we note that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper book), wherein, the details of cheques and payments in cash are given. According to the Ld.AR, since the property in question (6.15 acres at KVB Puram Village) had dispute relating to title/ownership i.e. with the assessee's brothers & sisters, the said agreement/transaction didn't fructify; and therefore, the assessee received back Rs. 75 lakhs, out of which, Rs. 59.90 lakhs were in cash which was used for construction of new building which was referred to at Ground No.1 (supra). The AO has conceded after verification that assessee had received the sale consideration of Rs. 78.48 lakhs on 21st October, 2011 (i.e. '4' months before Sale Deed was executed) which fact is noted by the AO at Para No.4.5 of his assessment order. However, his allegation was that since assessee had started the construction of the first floor before October, 2021, what was the source of money ? [i.e, for starting the construction before 21st October, 2011]. As noted, that assessee had in his hands Rs. 78.48 lakhs on 21st October, 2011. And the AO has added u/s. 68 of the Act Rs. 59.90 lakhs without making any enquiry even after the assessee had placed on record the agreement of sale of 6.15 acres of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purchase of 6.15 acres at K. V. Puram], sec.68 addition be deleted. 11. We note from the bank statement of assessee that he had withdrawn an amount of Rs. 21 lakhs on 25.09.2007 and an amount of Rs. 9 lakhs on 09.11.2007, and Rs. 16 lakhs on 10.11.2007. Thus, we find that assessee had withdrawn Rs. 46 lakhs between 25th July to 10th November, 2007; and during the hearing, we had called for the original sale agreement dated 25.07.2007 [between assessee and his father] and finds that sale agreement dated 25.07.2007 was indeed executed between assessee and his father Shri C. Krishma Naidu (vendor) for the schedule property admeasuring 6.15 acres at KVB Puram Village, for a total consideration of Rs. 75 lakhs (copy found placed at Page Nos.43-50 of the Paper Book); and we also find the details of payment made (which details are found recorded at the reverse side of Page No.43 i.e. Page No.44 of the Paper Book and at Page Nos.47 & 49 of Paper Book). The veracity of the agreement for sale (though not registered) is proved by perusal of the original Sale agreement; and it was brought to our notice that the Stamp Vendor has also corroborated the genuineness of the sale of stamp paper ..... X X X X Extracts X X X X X X X X Extracts X X X X
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