TaxTMI 
TaxTMI 
2016 (1) TMI 656
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....cer noticed that assessee during the financial year relevant to the assessment year 2010-11 sold immovable property on 22.03.2010 for Rs. 1,13,82,850/-. It was also noticed that assessee has claimed indexed cost of acquisition at Rs. 30,77,839/- out of which a sum of Rs. 13,04,063/- was towards cost of improvement . This cost of improvement claimed by the assessee was disallowed by the Assessing Officer while computing the long term capital gains, as the assessee has not produced evidence for the expenses met. The Assessing Officer after allowing balance indexed cost of acquisition of Rs. 17,73,776/- computed the net long term capital gains at Rs. 96,09,084/-. The Assessing Officer noticed that the assessee paid Rs. 30,14,850/- to the builder before the due date for filing of return of income under section 139(1) of the Act and balance amount of long term capital gains to the extent of Rs. 65,94,234/- is not deposited in any capital gain account scheme as per section 54F(4) before filing the return of income under section 139(1) of the Act though it was paid subsequent to the filing of return. The Assessing Officer denied exemption under section 54 on such long term capital gains o....
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....r of Income Tax (Appeals) rejected the claim of the assessee in respect of the improvement stating that there are discrepancies in the dates of bills. He further overlooked the fact that construction of compound wall, erection of iron gate, leveling of land, digging of well and erection of shed all happened at two different points of time in the year. Therefore, the discrepancy pointed out by the Commissioner of Income Tax (Appeals) factually did not exist and he has not properly appreciated the ground realities. Counsel for the assessee further submits that Assessing Officer computed the long term capital gains on sale of land at Rs. 96,09,084/- by deducting only indexed cost of purchase on sale proceeds and he had also allowed Rs. 30,19,850/- under section 54F of the Act being the amount paid towards acquisition of another property before the due date of filing of return under section 139(4) of the Act. He submits that assessee filed return for the relevant year under section 139(4) of the Act on 04.03.2011 . The Commissioner of Income Tax (Appeals) allowed further deduction of Rs. 10,04,950/- being the amount paid upto the date of filing of the return. Counsel submits that the a....
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....o.2485/Mds/2004 dated 17th October, 2005, counsel submits that an identical issue has come up before the Tribunal, wherein it was held that non-deposit of capital gain amount into capital gain account scheme in the bank is only a technical fault and it should not be extended to such an extent as to deny exemption under section 54F when ultimate purpose of this section is achieved. He also places reliance on the decision of Jodhpur Bench of the Tribunal in the case of Jagan Nath Singh Lodha Vs. ITO (85 TTJ 173). He also places reliance on the decision of Mumbai Bench of the Tribunal in the case of Kishore H.Galaiya Vs. ITO (150 TTJ 444). 8. Departmental Representative vehemently supports the orders of lower authorities in denying exemption under section 54F of the Act in its entirety. He submits that Commissioner of Income Tax (Appeals) is very much justified in restricting the deduction only to the extent of amount paid to the builder till the date of return of income filed by the assessee thus entire exemption cannot be granted to the assessee. 9. Heard both sides. Perused orders of lower authorities and the decisions relied on. The Assessing Officer while completing the assessm....
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.... so as to give a full and correct disclosure. Under these circumstances we are not inclined to agree with the submission of the learned AR that there has been a complete disclosure and that the reopening is not valid. The appellant has not made the disclosure as contemplated by law and a mere indication which could give rise to a suspicion cannot be a full disclosure so as to consider the submission that the reopening is not valid. The application for a clearance u/s.230A or an application for a NOC can also not be treated as a full disclosure with the return and therefore we hold that the assessment has been correctly reopened and that the Assessing Officer was justified in reopening the assessment. 8. On the merits of the case, we have gone through the orders of the Tribunal cited by the learned AR. In the case reported in 85 TTJ 173, the assessee had advanced a sum of Rs. 2 lakhs for the purchase of the house and the advance was received back by the assessee since the transaction did not materialize. The assessee in this case had sold the property on 4th January, 1995 and advanced a sum of Rs. 2 lakhs on 16th April, 1995 for purchase of the house. The advance was received bac....
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....e alter the end of the previous year and before the time allowed for filing the return and commenced construction later on the said land which was completed within the time allowed u/s.54(1). These acts of the appellant clearly go to show that the appellant always intended to invest in a residential house by way of construction. It therefore appears that the failure to invest in the capital gains account scheme is only a technical default which given the circumstances and the peculiar facts shold not be extended to such an extent as to deny the exemption u/s.54 when the ultimate purpose of the provision is achieved. To hold that the exemption should be forfeited for a technical breach does not appear to be the correct proposition particularly since *the .appellant pleads that he was not aware of the requirement to invest in the capital gains account scheme and also states that his objective was to invest in a residential house which is apparent from the fact that he has purchased a land and also constructed a house thereon. It is also seen that section 54E (since deleted) and sections 54EC and 54ED which require investment of the proceeds in specified assets) specifically provides ....
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....fficient compliance of the provisions of the Act. It is not necessary that the possession of the flat should also be taken within the period of three years. The taking of the possession may be delayed because of many factors not under the control of the assessee due to default on the part of the builder and, therefore, merely because the possession had not been taken within the period of three years, the exemption cannot be denied. Within the period of three years, the assessee had invested more than the amount of capital gain in the construction of new residential house. Therefore, the claim of the exemption in this case cannot be denied on the ground that the possession of the flat had not been taken within the period of three years. The other objection raised by the Revenue is that the assessee had paid/utilised only a sum of Rs. 1 lakh towards the construction of flat till the due date of filing of the return of income u/s. 139(1) for the relevant ear and, therefore, the balance amount of capital gain was required to be deposited in the Capital Gains Account Scheme which had not been done. This is only a technical default and on this ground, the claim of exemption cannot be ....
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.... (SC) wherein it has held by the Hon'ble Supreme Court that a provision in taxing statute granting incentives for promoting growth and development should be construed liberally. 2. CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. (1992) 196 ITR 149 (SC) wherein it was held by the Hon'ble Supreme Court that it is a settled law that the expressions used in the taxing statutes would ordinarily be understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative intention. 3. M.A.C. Khaleeli v. Dy. CIT (1993) 47 ITJ (Mad) 639 : (1994) 48 ITD 191 (Mad). The facts were that the assessee's claim for exemption under Section 54F was denied in respect of capital gains as surplus was not deposited under Section 54F( 4) in a specified bank account but deposited in a housing division of assessee's business to be utilised for construction of residential accommodation. The Madras Bench of the Tribunal, while answering the question in positive, held that the act of the assessee amounted to utilisation of consideration for construction of residential house within the meaning of Section 54F(1). It was further held that the purpose of....