TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 715
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.... is wrong and bad in law and it is prayed that the said deduction may very kindly be allowed. 2.1 That the learned CIT(A) erred in not deciding the appropriate year of taxability of the Long Term Capital Gain as the construction period of three years envisaged u/s. 54F elapsed on 22.03.2013 making the Long Term Capital Gain taxable in A.Y. 20013-14 and not in A.Y. 2010-11. That on the facts and circumstances of the case, the year of taxability of Long Term Capital Gain being wrong, it is prayed that suitable directions be issued to the AO to tax the Long Term Capital Gain in A.Y. 2013-14. 2.2. That the learned CIT(A) erred in completely ignoring the fact that the appellant has suo-moto offered the impugned capital gain u/s. 45 as income of the previous year 2012-13 relevant to A.Y. 2013-14 in the return filed under section 139(1) as the prescribed time limit of three years expired in F.Y. 2012-13. The action of the Ld. CIT (A) of confirming the said addition in the year under appeal has in fact resulted in double taxation of the same income. 3. Without prejudice to the above, and only as alternate, if at all the said addition is confirmed in A.Y. 2010-11, it is most humbly pray....
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....led for. In view of these circumstances, the AO along with his Inspector, Shri Subhash Maheshwari, Advocate, (the ld. A.R. of the assessee), and Shri Pawan Bafana (son of the assessee), inspected the site at Indore on 19.11.2012 and found that no construction was done till the date of inspection i.e. 19.11.2012. In response to summon dtd. 19.11.2012, the assessee has attended the office of the AO, and his statement was recorded wherein he has stated that he has planned to construct a house but due to some reasons the construction could not be done. Since the conditions laid down under section 54F were not fulfilled. The AO, therefore, issued a show cause dtd. 20.12.2012 asking the assessee to show-cause as to why deduction claimed at Rs. 99,40,150/- should not be disallowed and added to income. The assessee vide letter dated 05.01.2013, replied that Town and Country Planning Department, Indore is not giving approval for construction of one big house on three plots. Unless and until, the Town and Country Planning, Indore, the Municipal Corporation approve the map, Indore did not permit construction of house. For these reasons, the construction on three plots could not be undertaken.....
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....uction under section 54F could not be allowed. It cannot be the intention of the legislature to accept whatever assessee says without proper evidence in support of that claim. Accordingly, the action of the AO was confirmed. 5. Being, aggrieved the assessee filed this appeal before the Tribunal. The Ld. A.R. submitted that the assessee has sold the plot of land on 22.03.2010 with co-owners for Rs. 2,25,00,000 against which an amount of Rs. 1,46,00,000 was received by cheque and balance Rs. 79,00,000/- was received in cash. The assessee's share being 50% was at Rs. 1,12,50,000/-. The assessee has received cheque amount of Rs. 41,00,000/- i.e. [ 11,00,000 on 19.8.2010+ 25,00,000 on 8.9.2010+ 5,00,000 on 17.2.2010] and Rs. 25,00,000/- on 10.4.2010 and balance amount of Rs. 46,50,000 was received in cash. The assessee utilized Rs. 33,00,000/- for purchase of plot, which were received by Smt. Pukhraj Bafana, wife of assessee who had received the same from the purchaser of land. Thus, the amount of Rs. 74 Lakhs [Rs. 41 Lakh +Rs. 33 Lakhs ] were available with the assessee, before 17.03.2010 for the payment of purchase price of three plot of lands and balance amount was invested out of f....
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....012 it was notified that the merger of plot of land having 500 Sq. Mts. could be allowed. Therefore, the assessee has filed a merger application on 16.01.2012 (PB- 53 to 61) but the permission for merger of plot in one was denied to vide letter dated 23.01.2012. The assessee has taken the steps for merger of plot of land, which included the application made on 16.01.2012 with Town and Country Planning Department (PB61) in pursuance to Gazette Notification dtd. 03.01.2012 and finally received a letter dtd. 07.02.2014 from Town and Country Planning Department agreeing for merger (PB72). Until this time, the prescribed time limit was already expired on 23.03.2103 and therefore, the assessee has thought it proper to pay taxes while filing return of income for A.Y. 2013-14. Thus, under unavoidable circumstances, the construction could not take place. The Ld. A.R. submitted that in such circumstances long-term capital gains in respect of Rs. 87.90 Lakh could not be disallowed. In support of this proposition, the Ld. A.R. relied in the case of Smt. V. A. Tharabai [2012] 19 taxmann.com 276 (Chennai) / [2012] 14 ITR (T) 15 (Chennai)/ 50 SOT 537 (Chennai) where the assessee has earned long t....
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....which period of 3 years expires, however, exemption already granted shall not be denied. The Ld. A.R. further submitted that the hardship should be avoided. The Ld. A.R. has cited a decision in the case of CIT v. Bharti C Kothari 254 ITR 22 (Cal) to contend that if the interpretation sought by the Department is accepted, this will lead to hardship to the assessee for no fault of the assessee. 10. The Ld. A.R. has placed reliance in the case of ITO v. K. C. Gopalan [1999] 107 Taxman 591 (Ker) where the assessee has sold a residential house and acquired new residential house, and claimed deduction u/s. 54. AO held that sale price was not utilized for construction of a house, but was deposited in private banks. The Court held that the assessee has to construct or purchase a house property. Wordings of section 54 itself make it clear that the law does not insist that sale consideration should be utilized for the purchase of property. The statutory provision is clear and does not call for a different interpretation. 11. On the other hand, the Ld. D.R. submitted that the assessee has already purchased plot of land on 15.03.2010 before the sale of original asset on 23.03.2010, hence, it....
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.... by him for the purpose 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 utilised in accordance with, any scheme which the Central Government may, by notification in the Office Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit.;" 13. We find that section 54F contains two eventualities claiming for the benefit, one, is the purchase of the residential house and the second is construction of a residential house. The provision of section provides that it require the assessee to purchase the property being a residential house either before one year of the sale of the land or after three years from date of transfer of original asset. In the case of the assessee, we find that the assessee has purchased three plot of lands for Rs. 87.90 Lakh before one year from the date of transfer, but he ha....
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....ain on transfer of certain capital assets not to be charged in case of investment in residential house (1) Subject to the provisions of sub-s. (4), where, in the case of an assessee being an individual or an HUF, 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 has within a period of three years after that date constructed, a residential house (hereafter 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, 16. Thus, the requirement of Section is that the assessee is required to appropriate the amount of net consideration towards purchase of new residential house within one year before the date on which transfer of the original asset took place, then the assessee was supposed to deposit that amount in such bank or institution as the Central Government prescribed in the official gazette. The learned Counsel relied in the case of Sri Prasad Nimmag....
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....this decision was given in the context for A.Y. 1984-85 wherein provision of section 54F (4) were introduced with effect from 01.04.1988, hence, said decision is not applicable to the facts of the case. Apart from it, the learned CIT(A) had noted that inspite of expiry of three years from the date of transfer of original asset, the assessee has not constructed any house over the plot in question and even today the assessee had not been able to show us that construction of residential house on the plot was completed. In view of this, alternative plea of the assessee is not going to help the assessee. We also find that the original asset was sold on 22.3.2010 but the assessee had not been able to construct the residential house before 22.03.2013. The learned Counsel referred decision in the case of ACIT v. Subhash Sevaram Bhavnani [2012] 23 taxmann.com 94 (Ahmedabad -Trib) where in the case of assessee, construction of residential house started before the date of transfer of capital asset, however, same was completed within prescribed time limit of three years from the date of transfer, assessee's claim for deduction under section 54 was to be allowed. However, this decision is not a....