TaxTMI 
TaxTMI 
2011 (1) TMI 1460
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....ption claim of ₹ 2.16 crores u/s 54F of the Act." 3. Briefly stated, during the year under dispute, the assessee had sold shares of Axess Technologies India Pvt. Ltd., for ₹ 4.18 crores and, according to the assessee, a part of the sale proceed was invested in purchase of a house property to the extent of ₹ 2.16 crores and, accordingly, claimed the same as exemption u/s 54F of the Act. However, the AO, on the basis of the report of his Inspector that the construction of the building was not complete even after an elapse of three years etc., took a view that the assessee had neither purchased the property within two years nor constructed within three years after the date of transfer of the asset on which capital gain was derived and, accordingly, denied the exemption claim u/s 54F of the Act, brushing aside the reliance placed by the assessee on the finding of the Hon'ble Tribunal, Madras Bench reported in 59 ITD 94 as well as Board's Circular Nos: 471/15.10.1986 and 672/16.12.1993 (sic) 16.3.1993. 4. Aggrieved, the assessee challenged the stand of the AO on the issue before the CIT (A). Taking into account the elaborate contentions put-forth by the assessee and....
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....aim for exemption was restricted to ₹ 2.16 crores only which was shown as investment in the residential house property in his books of account - case laws relies on: • Mrs. Seetha Subramanian v. ACIT (1996) 59 ITD 94 (Mad); • CIT v. Sardarmal Kothari (2008) 302 ITR 286 (Mad); • Asst. Collector of Central Excise v. Dunlop India Ltd. and Others 154 ITR 172 (SC) 5.1. On the other hand, the Ld. D R had vociferously supported the stand of the AO to the effect that the construction of the residential property was not completed even after elapse of three years from the date of transfer of the shares on which the capital gain was derived; that the assessee had neither purchased the property within the period of two years nor constructed the same within the period of three years after the date of transfer of the asset and as such, the assessee's case didn't fall within the purview of s.54F of the Act so as to claim the exemption. To buttress her argument, the Ld. D R drew support from the finding of the Ld. CIT (A) who had sustained the action of the AO in disallowing the assessee's claim for exemption. To sum up, it was earnestly pleaded that the stand of....
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.... the Hon'ble Tribunal was to extend the provisions in general to all the individuals contrary to the specific provisions of the Act and the Circulars of the CBDT. 6.4. When the assessee, on an appeal, had specifically drew the attention of the Ld. CIT(A) to the ruling of the Hon'ble Madras High Court in the case of CIT v. Sardarmal Kothari cited supra, the Ld. CIT (A), instead of analyzing the pros and cons of the issue dealt with by the Hon'ble Court, strangely went ahead in adding that "I observe that the ratio of Sardarmal decision is not binding in Karnataka. Secondly, with due regards humbly, I point out that I do not subscribe to the point of law enunciated by the Honourable Madras High Court." 6.5. To put the record straight, we would like to recall the well deserved observations of the Hon'ble highest judiciary of the land in the case of Asst. Collector of Central Excise v. Dunlop India Ltd. and Others 154 ITR 172 (SC) that - "We desire to add and as was said in Cassell and Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never be necessary for us to say so again that " in the hierarchical system of courts " which exists in our country, " it is ne....
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....ccupation. The contention of the assessee was that the entire net sale consideration was invested on the construction of the building, excluding a sum of ₹ 1,03,000, which was deposited in the Units of UTI (Capital Gains Scheme) within six months from the date of the sale. According to the assessee, the entire net consideration was invested in the construction of the residential house and the entire construction of the structure was completed, though a little more work is to be completed so as to make it fit for occupation. As the entire net consideration was invested in the construction of the house property, it should be considered that the assessee has complied with the conditions specified under section 54F. But, however, the CIT did not accept the assessee's plea. He therefore restored the matter to the AO for fresh consideration observing that the assessee has not complied with the conditions enumerated under section 54F. Before the Tribunal, the contention of the assessee was that the provisions of section 54F is a beneficial provision for promoting the construction of residential houses. Therefore, the said provision has to be construed liberally and for achieving....
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....e work was carried out thereafter. The said decision also supports the assessee's contention. Under the above circumstances, especially in the light of the circulars issued by the Central Board of Direct Taxes, we hold that the CIT was not justified in revising the assessment of the AO. Hence we set aside the order of the CIT and restore that of the AO." 6.7. More strikingly, the Hon'ble Madras High Court had an occasion to deal with an identical issue in the case of CIT v. Sardarmal Kothari and CIT v. Shanthilal Kothari reported in 302 ITR 286 (Mad). To be precise, the issue before the Hon'ble Court was - Whether the Tribunal was right in law in holding, when the conditions laid down in sub-cl. (1) of s. 54F and the Board Circular No. 667, dt.18-10-1993 clearly stated that the purchase/construction is to be completed within stipulated time is not mandatory for claiming exemption under the Act therefore the assessees are entitled for exemption under s. 54F of the IT Act? The issue, in brief, was that the assessees have claimed exemption of capital gains u/s. 54F of the Act. The AO rejected the same on the ground that the construction was not completed when he made a perso....
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....ion that in order to have the benefit under s. 54F of the IT Act, the construction should have been completed. 6. The Tribunal has also taken note of its own earlier order in the case of Mrs. Seetha Subramanian vs. Asstt. CIT (1996) 56 TTJ (Mad) 417 : (1996) 59 ITD 94 (Mad), wherein the Tribunal has held that, in order to get the benefit under s. 54F, the assessee need not complete the construction of the house and occupy the same. It is enough if the assessee establishes that the assessee had invested the entire net consideration within the stipulated period. The said view taken consistently by the Tribunal has been applied in these cases also. The Tribunal has distinguished the Delhi High Court judgment in the case of D.P. Mehta vs. CIT (2001) 168 CTR (Del) 321 : (2001) 251 ITR 529 (Del), relied on by the Revenue in their favour to non suit the assessees for exemption. In our view the Tribunal has distinguished the same rightly because in the cited case, there was a factual finding by the authorities that the assessee himself has admitted that the construction put up was only a garage and service quarters and it was not fit enough for occupation of the assessee. That factual f....