TaxTMI 
TaxTMI 
2017 (4) TMI 1182
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....ion u/s 54F to Rs. 52,47,251/- as against assessee's claim of deduction u/s 54 of the Act at Rs. 91,86,156/-. The learned Commissioner of Income Tax (A) - 28, Mumbai failed to appreciate that it was a genuine mistake of the assessee's husband to issue cheque for a sum of Rs. 40,45,975/- on 12.8.2011 in the name of the builder of the property purchased by the assessee." 3. Brief facts of the case are that the assessee is an individual earning income from salary, house property, interest and capital gain. During course of assessment proceedings u/s 143(3) r.w.s. 143(2) of 1961 Act, the assessee was asked to furnish details of long term capital gain and exemption claimed u/s 54F of the Act. The assessee submitted copies of purchase deed of new residential property in respect of which assessee had claimed exemption u/s 54F of 1961 Act. From the reply furnished by the assessee, the A.O. observed that assessee has earned long term capital gain of Rs. 92,66,395/- arising from sale of 837 shares of Bombino Video Private Limited, against which assessee claimed that she has invested in a new residential property valued at Rs. 91,86,156/- which was claimed as exempt u/s 54F of 1961 Act. Th....
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.... of net sale consideration of shares of Rs. 93,74,400/- received by the assessee. The assessee also contended before learned CIT(A) that assessee had issued a cheque dated 12/08/2011 of Rs. 40,45,975/- which was returned back to the assessee by the builder 'Kumar Builders' a month later with the comments "cheque sent back as favoring is wrong and date is also rewritten" and the assessee should not be penalized for the act of the builder in returning the cheque and this should not be a reason to deny exemption u/s 54F of 1961 Act. The ld. CIT(A) observed that cheque was issued in the name of 'Kumar Builders' on 12-08- 2011 which date was beyond the date stipulated for filing return of income u/s 139(1) of 1961 Act, while due date of filing return of income u/s 139(1) of 1961 Act in the case of the assessee was 31-07-2011 . It was also observed by learned CIT(A) that all other cheques prior to issue of this cheque of Rs. 40,45,975/- were all correctly issued by the assessee in the name of 'Windsor Park Collection Account' and agreement dated 17th January, 2011 on page 7 clearly stipulates that payments were all to be drawn in favor of 'Windsor Park Collection Account'. Thus, ....
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.... 54F of 1961 Act. The return of income was filed belatedly on 18.8.2011 , although due date of filing of return of income u/s 139(1) of 1961 Act was 31st July, 2011. It was submitted that the authorities below allowed deduction to the tune of amount actually paid till the due date of filing of return u/s 139(1) of 1961 Act i.e. 31-07-2011 and rest of the amount paid was disallowed as the assessee did not deposit the balance unutilized net consideration received on sale of shares in capital gains account with bank or as specified by Central Government , as mandated by Dection 54F(1) of 1961 Act. It is submitted and claimed that as per section 54F of 1961 Act, the net sale proceeds can be invested in an under construction residential property within a period of three years from the date of transfer of original asset and hence the assessee was entitled for full deduction of Rs. 92,66,395/- of long term capital gains earned by the assessee u/s 54F(1) of 1961 Act as the assessee duly invested the net consideration on sale of 837 shares of Bombino Video Private Limited within three years from the date of transfer of shares towards purchase of new residential property wherein some of the ....
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....ed our attention to the decision of Hon'ble Bombay High Court in the case of Humayun Suleman Merchant v. The Chief Commissioner of Income Tax, IT Appeal No. 545 of 2002 dated 18th August, 2016 (2016) 387 ITR 421(Bombay) and submitted that Hon'ble Bombay High Court has allowed deduction u/s 54F of 1961 Act made till the filing of return by the tax-payer although filed beyond the time stipulated u/s 139(1) of 1961 Act but prior to the date stipulated for filing of belated return u/s 139(4) of 1961 Act . It was submitted that section 54F of the Act is a beneficial provision which has been brought into the Act with the object of encouraging investment in housing sector, hence, a liberal and beneficial interpretation/construction be given to section 54F of the Act and since the assessee complied with requirement of Section 54F(1) of the Act and merely non compliance with provisions of Section 54F(4) cannot disentitle the assessee from claiming exemption u/s 54F of the Act and Section 54F(1) is not subject to Section 54F(4) of 1961 Act. It is submitted that if it is held that Section 54F(1) of the Act is subject to Section 54F(4) of 1961 Act, then the whole purpose of Section 54 of the A....
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.... Humayun Suleman Merchant(supra) has decided that investment made in new residential property till the date of filing of return of income which in the instant case is 18-08-2011 shall be considered for allowing exemption u/s 54F of 1961 Act, in cases where the assessee did not deposit the unutilized amount of net consideration in capital gain account with bank or as specified by Central Government, the same shall not be allowed. It is submitted that the Hon'ble jurisdictional High Court decision in Humayun Suleman Merchant ( supra) is binding on the tribunal.It is also submitted that Section 54F(4) of 1961 Act stipulates mandatory condition of depositing the unutilized amount in capital gain account with bank or as specified by Central Government. 9. We have considered rival contentions and also perused the material available on record including case laws relied upon. We have observed that assessee transferred 837 shares of Bombino Video Private Limited for a total consideration of Rs. 93,74,400/- during previous year relevant to impugned assessment year on which long term capital gain to the tune of Rs. 92,66,395/- was earned by the assessee. The assessee purchased under construc....
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....hing of return of income within time stipulated u/s 139 of 1961 Act. We have also observed that Section 54F(1) of 1961 Act is specifically made subject to Section 54F(4) of 1961 Act by an amendment brought in by Finance Act, 1987 w.e.f. 01.04.1988. The language of section 54F of the Act is clear and unambiguous and it is fundamental principle of interpretation of statute that where the language of statute is plain, clear and unambiguous , the Courts are duty bound to follow the same and there is no need for Courts to resort to other principles of interpretation of statute such as equity, purposive or harmonious construction etc. . It is also well accepted proposition that there is no equity in taxation and provisions are to be strictly construed . If the subjects falls within taxing provisions of the statute as per clear, plain and unambiguous language used in the statute, he/she must be brought within the ambit of tax as per provision of the statute. Section 54F(1) of the Act clearly stipulates that it is subject to Section 54F(4) of 1961 Act and requirement to deposit of unutilized net consideration of the asset sold in capital gain bank account or as specified by Central Governm....
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....the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other 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 y....
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....ised 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- (a) 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 the new asset as provided in clause (a) or, as the case may be, clause (b) of sub- section (1), exceeds (b) the amount that would not have been so charged had the amount 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. Explanation.- [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]]" The provisions of section 54F of the Act has been considered by the Hon'ble Bombay High Court in detail in the case of Humayun Suleman Merchant (supra) wherein similar issue arose before Hon'ble Bombay High Court and decis....
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.... of the original asset, or purchases, within the period of one year after such date, 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. (2) & (3)** ** ** (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-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 su....
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....ded to two years) or construct a residential house within a period of 3 years from the date on which capital asset has been sold. However, while implementing Section 54F of the Act, it was noticed that at times assessments were completed prior to the expiry of above period of two/three years from the date of sale of the Capital Asset and the assessee had not utilized the amount within the prescribed period provided in Section 54F of the Act. This would lead to Assessment orders being rectified by appropriate orders, to determine the availability of benefit of exemption under Section 54F of the Act. (g) This led to the introduction of sub-section (4) to Section 54F of the Act by the Finance Act, 1987 with effect from 1st April, 1988. Besides introducing sub-section (4) to Section 54F the Finance Act, 1978, also amended Sub-section (1) of Section 54F of the Act to make it subject to provision of sub-section (4) thereof. (h) As we are concerned with Assessment Year 1996-97, it is the amended provision which applies. Therefore, now Section 54F(1) of the Act which grants exemption from Capital gain tax where a flat is purchased either within one year prior to the sale of capital ass....
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.... Act is available. Before us it is an undisputed position that except Rs. 35 lakhs, the balance of the amounts subject to capital gains tax has not been utilized before date of furnishing of return of income i.e. 4th November, 1996 under Section 139 of the Act. Therefore, on plain interpretation of Section 54F of the Act, it appears that the impugned order of the Tribunal cannot be faulted. (j) However, the aforesaid view would be subject to the result of our examination of the submissions and case laws relied upon by Mr. Chatterji in support of the appeal to urge a view contrary to the plain meaning of Section 54F of the Act. (k) Reliance placed by the Appellant upon the decision of this Court in Mrs. Hilla J. B. Wadia's case (supra) to contend that the issue stands concluded in favour of the appellant- assessee is not acceptable. This for the reason that the only issue for consideration before the Court in the above case was the interpretation of Section 54 of the Act. In the above case the assessee had sold her residential property and invested a substantial amount in a Society for construction of a residential flat in the building to be constructed. The assessee therein....
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....s dated 15th October, 1986 and 16th December, 1993 would govern the issue so as to conclude the issue in favour of the Appellant. (m) The reliance upon the decision of the M.P. High Court in Smt. Shashi Varma's case (supra), also does not advance the case of the Appellant. We find that the facts in the above case are similar to the one in Mrs. Hilla J.B. Wadia's case (supra) and for the same reasons, will not govern the present dispute. In fact, the issue stood covered by the Circular dated 15th October, 1986 as the property purchased therein was of the Delhi Development Authority. Thus, the above decision has no application to the present facts. (n) Mr. Chatterji, learned Senior Counsel appearing for the appellant assessee then contended on the basis of the two Circulars dated 15th October, 1986 and 16th December, 1993 of the Central Board of Direct Taxes that once an allotment letter has been issued to the assessee, then it follows that the title of the constructed house has passed on to the assessee. Therefore the payment made subsequent to allotment letter in instalments would not in any manner affect the assessee having satisfied Section 54F(1) of the Act. This sub....
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.... taken by another High Court on an issue arising for our consideration. This on consideration of certainty and consistency in law. However, the view of the other High Courts are not binding upon us unlike a decision of the Apex Court or of Larger or a Co-ordinate Bench of this Court. Thus if on an examination of the decisions of the other High Court we are unable to accept the same, we are not bound to follow/accept the interpretation of the other High Courts leading to a particular conclusion. In this case we find that the decision of the Karnataka High Court in K. Ramachandra Rao's case (supra) was rendered sub-silentio i.e. no argument was made with regard to the requirement of deposit in notified bank account in terms of Section 54F(4) of the Act before the due date as provided in Section 139(1) of the Act. As observed in Salmond's Jurisprudence 12th Edition : "The rule that a precedent sub silentio is not authoritative goes back at least to 1661(m) when Counsel said : 'An hundred precedents sub-silentio are not material'; and Twisden J agreed : 'precedents sub-silentio and without argument are of no moment'. This rule has ever since been followed." ....
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...."In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statute be interpreted on any presumption or assumptions....It must interpret a taxing statute in the light of what is clearly expressed . . ." Recently, the Supreme Court in Mathuram Agrawal v. State of Madhya Pradesh [1999] 8 SCC 667 has observed as under :- "The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the Legislature . . . " (Emphasis Supplied) Similarly this Court in Thana Electricity Supply Ltd's case (supra) had observed as under :- "If th....
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....e assessee. Section 54F(4) of the Act itself clearly states that the amount not utilized in purchase/construction of flat/house should be deposited in the specified Bank notified by the Government. Thus the plain language employed in Section 54F(4) of the Act makes a clear distinction between cases of appropriation (purchase prior to sale of capital asset) and utilization (purchase/construction after the sale of capital asset). Therefore the word "appropriated" would have no application in cases of purchase/construction of a house after the sale of capital asset with which we are concerned. (v) Lastly and in the alternative, it is submitted by Mr. Chatterji, that as the entire amount has been paid to the developer/builder before the last date to file the return of Income under Section 139 of the Act, the exemption is available to the appellant under section 54F(4) of the Act. In support, the decision of Gauhati High Court in Rajesh Kumar Jalan's case (supra) is relied upon. The Gauhati High Court in the above case was concerned with the interpretation of Section 54 of the Act. It construed the provision of sub-Section (2) of Section 54 of the Act which is identically worded t....
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.... has not been invested by the assessee in the purchase/construction of new residential house property at Mahabaleshwar till the date of filing of return on 18-08-2011 nor the same has been deposited by the assessee in capital gain account with bank as stipulated u/s 54F(4) of 1961 Act. The assessee had claimed that she issued cheque to the Builder to the tune of Rs. 40,45,975/- dated 12th August, 2011 which was returned back to the assessee by the said builder namely 'Kumar Builders' a month later on 12-09-2011 with the comments "cheque sent back as favoring is wrong and date is also rewritten". The assessee has prayed that benefit of said cheque amount of Rs. 40,45,975/- should be granted to assessee u/s 54F of 1961 Act as it shows that the assessee made the payment on 12-08-2011 but due to some technical errors , cheque was returned by builder after one month . As per agreement dated 17-01-2011 , the assessee was required to issue the cheques in favour of 'Windsor Park Collection account'. All other cheque were issued by the assessee in favour of 'Windsor Park Collection account' except this cheque which was stated to be returned by builder after one month due to technical reason....