TaxTMI 
TaxTMI 
2014 (6) TMI 40
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....cquired are as under:- Khasara No. Area Date of purchase Amount Share of the assessee 731 0.43 feet 25.01.1991 42000 ½ share / Rs. 21000 28 0.63 feet 31.05.1994 151200 ½ share / Rs. 75600 27.29 1.51 feet 01.06.1994 362400 ¼ share of Rs. 90600 2.1 Income under the head 'long term capital gain' of Rs. 77,23,448/-has been computed by the assessee as under:- Sale consideration of Vimalpura Land on 03/10/2008 Rs. 20881079 Less: Vimalpura land - 1. Indexed cost of acquisition F.Y. 1991-92 42000/199 x 582 = 122834 2. Vimalpura Land F.Y. 1991-92 170000/259x582 = 382008 Rs. 504842 Long term capital gain Rs. 20376237 Deduction u/s 54F Rs. 12652789 (Investment in house property u/s 54F Of Rs. 12966275) taxable LTCG Rs. 7723448 3. The assessee has claimed exemption under section 54F of the I.T. Act, 1961 (hereinafter referred to as 'the Act' in short). The Assessing Officer has called for the complete details regarding this claim. The assessee filed reply dated 18/07/2011 stating that he had utilized Rs. 1,29,66,275/- in terms of section 54F of the Act. He had deposited Rs. 40 Lac un....
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....ential house. The other alleged flats are not residential flats as appearing in balance sheet as assessee has never occupied them for residential purposes, as these are for investment purposes, according also shown under investments is balance sheet. The assessee has invested in ATS Paradiso, Greater Noida (U.P.) amounting to Rs. 51,23,000/- and possession of it has been taken on 10/07/2010, copy enclosed. The another investment was in ATS prelude - Golf Medow Chandigarh amounting to Rs. 29,90,000/- its possession is pending. The heritage city flat was jointly owned by brother Om Prakash possession taken on 08/03/1999 it was also for investment purposes letter enclosed. 3. It has already been explained that assessee has utilized amount of capital gain for purchase of new residential house i.e. amounting to Rs. 79,66,275/- given to builder and further Rs. 10 lac against supervision and interior work. Thus total amounting to Rs. 89,66,275/- and balance Rs. 40 lac has been deposited in capital gain account, evident of same has been filed. Thus total investment u/s 54F is of Rs. 1,29,66,275/- as claimed in computation of income and on balance amount assessee has paid capital gain ta....
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....sources 1,34,63,204/- Gross Total Income 3,39,00,858/- Deduction under Chapter VIA (i) u/s 80C 1,00,000/- (ii) u/s 80 G (Eligible for 50% of contribution Rs.. 8,00,000/-) 4,00,000/- 5,00,000/- Total income 3,44,00,858/- Rounded of 3,34,00,860/- 4.1 Aggrieved, assessee preferred appeal before Ld. CIT(A) against the order of Assessing Officer. After making lengthy discussions, Ld. CIT(A) has also dismissed the appeal of the assessee. The assessee is further aggrieved. He has filed this second appeal by raising the following grounds:- 1. The Ld. CIT(A) had denied the claim of assessee u/s 54F of I.T. Act and had erred in holding that assessee owned to 'Residential Houses' (ATS-Noida Flat and ATS-Chandigarh Flat) on the date of transfer of original asset, under proviso (a)(i) to section 54F(1) by overlooking the apparent fact that the assessee neither had possession nor ownership of these so called flats on the date of transfer of original asset (i.e. 05/06/2008). 2. That Ld. CIT(A) had ignored the fact that income from so called two 'Residential Houses' (ATS-Noida Flat a....
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.... Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) on 05/06/2008 and has earned the long term capital gain (LTCG) of Rs. 203.76 Lac in this process. (2) that the assessee invested his share of compensation of Rs. 208.81 Lac before 30/09/2009 (i.e. due date of filing of ROI for A.Y. 2009-10). The details of entire investment are as under:- 1. Investment under section 54F Rupees (a) Payment for residential flat of Emaar - MGF (a builder) at Gurgaon 89.66 Lac (b) Deposit in Capital Gain account with BOB 40.00 Lac 2. Offered for Tax as LTCG 77.23 Lac Assessee had following houses & bookings as on 05/06/2008:- S. No. Properties and their address Year of acquisition Share of the assessee Whether assessed under section 22 1 Residential House S-225, Mahaveer Nagar, Jaipur Around 15 years back 100% YES, as self occupied house 2 Business office Flat No. 101, Block NO. 43, Heritage City, Gurgaon Since June 1998 50% Property used for business & exempted u/s 22 3 Bookings of Flat ATS-Noida and ATS-Chandigarh Advance bookings on the date of transfer i.e. 05/06/2008 100% In absence of ownership, possession etc. the question does not arise.....
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....than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property". Explanation.-For the purposes of this section,- "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, ....
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....actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as 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 the unutilised amount in accordance with the scheme aforesaid. From the plain and normal reading of the above sections one can easily construe that this provision aims at encouraging either construction or purchase of a residential house out of a capital gain arising from the sale of certain capital assets. The title above the main section is very clear in this direction. We would like to repeat this title to emphasize our point of view:- "54F. Capital gain on the transfer of certain capital assets not to be charged in case of investment in residential house" This section describes vendors of the capital gain, as an individual or a HUF. All other entities like a firm, a company etc. have been excluded from its ambit. This fact also clear....
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....contradictory at the first sight. But, when this issue is examined it is not noticed that there is neither contradiction in assessee's claim nor there is inherent contradiction in the Act. The Act is very clear. It speaks about 'investment' in the new-asset (refer the title of this section). The term 'purchased' or 'constructed' used in section 54F(1) may not necessarily mean that the new-asset must have been transferred in the name of the assessee and the investment made by way of booking a flat and if such investment is proved it must be treated as an ample compliance of this proviso when it is examined in the light of the aim and object with which the legislators have enacted this beneficial provision. On the other hand the "transfer of ownership" in other flats is material because the section uses the term 'owns' in the proviso. Thus investment & ownership are two distinct terms which have their meanings and connotations in different ways. The investment of capital gains is a beneficial provision and 'ownership' at the time of transfer of the original asset is to be interpreted strictly as per law. In our considered opinion both these....
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.....e. after the date of 05/06/2008. The assessee has treated this new residential house at MGF, Jaipur as a new asset and the house at Mahaveer Nagar, Jaipur, as his sole residential house. Regarding two flats booked, one each at Noida and Chandigarh, the case of the assessee is that assessee has not become owner of those houses until 05/06/2008 as neither possession of the same had been given to him. According to him, on 05/06/2008 he owned only one residential house and therefore, he is entitled for exemption under section 54F of the Act in respect of new asset booked at Emaar-MGF, Gurgaon. It is stated that in those two flats, assessee has only 'Right to Acquire Flat'. 9. On the other hand, the case of Ld. Sr. D.R. who has relied on the orders of the authorities below, is that these two flats one each at Noida and Chandigarh would be included in the term 'owns' on 05/06/2008 as both these flats had been booked by that date. Still further, the case of the assessee is that even the booking of a flat in a buildings under construction tantamount to utilization of capital gain in the purchase of a residential house and the amount paid in advance till the flat (house) i....
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....spect of proviso (a)(i) to section 54F of the Act that the residential house mentioned therein has a different connotation because 'house' means building in its normal residential conditions which is found fit for living by human-beings and not a house under construction' and this house should be completely owned by the assessee at the relevant time. The Legislators in their wisdom have used two different terms to refer to the original residential house sold as 'old asset' and by referring to the new residential house to be purchased or constructed as the case may be, as 'new asset'. The collective reading of this section makes it clear that two conditions should be satisfied and both are co-exist at the relevant time of transfer of original asset (1) the assessee must owned the residential house on the date of transfer and (2) income from such residential house should be chargeable under the head 'income from other house property'. If the above two conditions co-exist, the assessee becomes disentitled to the exemption section 54F of the Act, particularly when, the assessee owns such a house other than the original asset and its income is chargea....
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....tiate between the nature of asset owned by the assessee when a flat is booked he has a 'right to acquire' and this 'right to acquire', is not equivalent to 'own' a house. On the other hand the parameters which apply to investment of 'capital gain' in the construction - purchase of a house within two years of sale of the original asset. That is why the CBDT has issued circular Nos. 471 dated 15/10/1986 and circular No. 672 dated 06/12/1993 which clarify that the amount paid towards booking as to be treated towards 'construction' for the purpose of section 54/54F. This assessee made payment to the builder Emaar - MGF Gurgaon before 30/09/2009 for buying a II residential house. Builder has promised to give possession of the house before 05/06/2010 i.e. within 2 years of the sale of the original asset but could not give possession by that time. Section 54F is a beneficial provision for promoting the construction of residential houses and requires an assessee to construct houses and for achieving that purpose to intent of the Legislature is to encourage investments in the acquisition of a residential house and completion of construction or occupat....
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....in constructing the same within the period prescribed in this section. However, if the assessee owned more than one residential house other than the new asset on the date of transfer of the original asset, this benefit is not available to him. In the given case, undisputedly, the assessee had sold a capital asset in the form of land on 03/10/2008 and earned long term capital gain of Rs. 2,03,76,237/- (this LTCG has been calculated by the Assessing Officer at Rs. 2,04,37,654/-) as there was some error in the computation filed by the assessee with the return because in the indexing of the cost of land in F.Y. 1991-92, the assessee's half share was not considered. The assessee has claimed exemption under section 54F (1)(b) of the Act to the extent of Rs. 1,26,52,789/- as against total investment of Rs. 1,29,66,275/-. Thus, by now we have come to the conclusion that the assessee did not own more than one residential house on the date of transfer of the original asset. Therefore, one condition of this provision stands satisfied. 13. As we have already held that owning of a residential house at the time of transfer of the original asset has different meaning and connotation and acqu....