TaxTMI 
TaxTMI 
2013 (7) TMI 957
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeared before the Assessing Officer from time to time and submitted the requisite details. 3. On scrutiny of the accounts, it revealed to the Assessing Officer that assessee has sold shares of M/s. UFO Movies India Ltd. for a total sales consideration of Rs. 194,35,000. The indexed cost of the purchase of the shares was at Rs. 84,314. The assessee has computed long term capital gain of Rs. 193,50,686 on account of sale of the shares. The assessee has claimed exemption under sec. 54F of the Act on the ground that he has purchased a residential house property bearing Flat No. 601 at 6th floor, Pacific Height, Mumbai for a consideration of Rs. 322,49,500. It was also pointed out to the Assessing Officer that this residential house property at Mumbai is in the joint name of assessee Shri Kapil Kumar Agarwal and Smt. Bina Agarwal wife of the assessee. Learned Assessing Officer has reproduced the details of payment made by assessee for purchase of the house starting from 21st February 2008 up to 10th August 2008. He further found that assessee has taken a loan of Rs. 2,50,00,000 from the employer and this loan was invested for purchase of the house property. According to the Assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,000 Sub-registrar fees -do- 01/08/2008 2,11,900 Draft for stamp duty -do- Total 3,22,49,500 1.3 Governing Law for availing of Deduction u/s. 54F The assessee claimed a deduction of Rs. 1,93,50,686 u/s. 54F. We reproduce hereunder the sec. 54F as it stood in the relevant A.Y. 2009-10. 54F. Capital Gain on transfer of certain capital assets not to be charged in case of investment in residential house.- (1) subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or his within a period of three years after that date constructed, a residential house (hereinafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pted under this section is equal to the difference between the cost of new asset and the net consideration received from the transfer of the original assets. If the cost of the new asset is equal or more then the net consideration received in lieu of transfer of original assets, then the entire amount of capital gain is exempted under sub-section 54F(1) of the Act. But if the cost of the new asset is less then the net consideration then proportionate exemption is allowable. Thereafter, Learned CIT(Appeals) has observed that sub-section (4) of section 54F overrides sub-section 54F(1) of the Act. According to the Learned CIT(Appeals), the amount on net consideration which is not utilized for the purchase/construction of a new residential house should be deposited by the due date for filing of return of income under sec. 139(1) of the Act in an account in a specified bank under the Capital Gain Amounts Scheme, 1988 notified by the Government in the Official Gazettee. Learned CIT(Appeals) has further observed that the assessee has only utilized Rs. 74,18,050 for the purchase of new house and the remaining amount was not deposited in a capital gain account, therefore, he is not entitled....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the purchase of an assets. She pointed out that assessee took a loan of Rs. 2.5 crores. He is setting off the capital gain earned on transfer of shares against this loan for claiming exemption under sec. 54F(1) of the Act. In support of her contentions, she relied upon the order of the ITAT, Mumbai in the case of Milan Sharad Ruparel v. Asstt. CIT [2007] 27 SOT 61. 8. We have duly considered the rival contentions and gone through the record carefully. Section 54F has a direct bearing on the controversy, therefore, it is imperative upon us to take note of relevant part of this section. It reads as under: "54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.-(1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or an HUF, the capital gain arises from the transfer of long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eturn of income under section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilized 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, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be cost of the new asset: Provided that if the amount deposited under this sub-section is not utilized wholly, or partly for the purchase or construction of the new asset within the period specified in sub-section (1) then,- (i) the amount by which- (b) the amount that would not have been so charged had the amount actually utilized 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 transfer of the original asset expires; and (ii) the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the sale proceeds of long term capital gain then, before filing of a return under sec. 139, he is required to deposit the same in any capital gain account with a bank or institution specified by the Government in an official gazettee. The assessee has to file proof of such deposit along with the return for claiming exemption under sec. 54F. The idea behind incorporating these sections is that assessee should make more investment in residential house, on sale of its long term capital assets. 11. In the present case, the first date of capital gain is November 8, 2008. The assessee can acquire a house within a period November 8, 2007 up to November 2010 i.e. one year prior to transfer of original capital assets and two years after the transfer of capital assets. The assessee had made investment in between February 2008 up to August 2008 i.e. well within period. Learned Assessing Officer has also not disputed about the investment made by the assessee. His grievance is that investment was made after taking loan from the employer and, therefore, assessee cannot claim benefit under sec. 54F(1) qua the loan amount utilized for purchasing of the new house Hon'ble Kerala High Court ....