TaxTMI 
TaxTMI 
2017 (6) TMI 771
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....08. It was submitted that the assessee is entitled to exemption. Reliance was placed upon the decision in the case of Smt. Rita Chetan Naik vs Income Tax Officer (ITA No.3986/Mum/2012) order dated 10/07/2013, CIT vs Ms. Jagriti Agarwal (2011) 15 taxman.com 146 (P & H), CIT vs Rajesh Kumar Jalan (2006) 157 taxman.398 (Gauhati), Miss. Esther Christopher Mascarenhas vs Income Tax Officer (2011) 9 taxman.com 99 (Mum. ITAT), Income Tax Officer vs Smt. Swarnambal Dayashankar (ITA No.1472/Mds/2012) order dated 24/01/2013, Kishore H. Galaiya vs Income Tax Officer (2012) 24 taxman.com (Mum. Trib.). On the other hand, the ld. DR, Shri Purushottam Kumar, strongly defended the conclusion of the Ld. Commissioner of Income Tax (Appeal) by contending that the assessee was to utilize/deposit the amount before filing of return. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee HUF sold residential property on 18/02/2008 for a consideration of Rs. 85 lakh and thus earned capital gain of Rs. 59,58,733/-. The assessee claimed exemption of the capital gain amount u/s 54F of the Act. The amount of Rs. 60 lakh was dep....
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....33,250/-. (b) On 161h July, 1996, the appellant entered into an agreement to purchase a flat for a consideration of Rs. 69,60,000/-. (c) The appellant paid two installments of Rs. 10,00,000/- each on 17th July, 1996 and 23''' October, 1996 to the developer / builder i.e. before the due date for filing of return of Income under Section 139(1) of the Act i.e. 313' October, 1996. (d) On 1s' November, 1996 the petitioner paid to the developer a further installment of Rs. 15,00,000/- for purchase of flat pursuant to the agreement dated 16111July, 1996. (e) On 4'h November, 1996 the appellant filed his return of income for the Assessment year 1996-97. This was after the due date of filing the return of income. (f) On 13t h March, 2001, the Assessing Officer passed an Assessment Order under Section 143(3) read with Section 147 of the Act. The Assessment Order determined the net consideration at Rs. 75.39 lakhs. Thereafter the Assessing Officer allowed a proportionate exemption of Rs. 31.55 lakhs (out- of Rs. 35 lakhs paid till the filing of return) from Capital Gain Tax in terms of Section 54F of the Act. However, the balance consideration of Rs. 43,....
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....read with Circulars dated 15 1h October, 1986 and 161h December, 1993 issued by the Central Board of Direct Taxes. So also the decision of Madhya Pradesh High Court in Smt. Shashi Varma Vs. Commissioner of Income Tax [1997] 224 !TR 106. In any event, the decision of the Karnataka High Court in Commissioner of Income Tax vs K. Ramchandra Rao(2015) 277 CTR 0522 also covers the issue; (ii) Section 54F of the Act has been brought into the Act with the object of encouraging the housing sector. Therefore a liberal /beneficial interpretation/construction be given to Section 54F(4) of the Act. In support reliance is placed upon the decision of the Delhi High Court in Commissioner of Income Tax vs. Ravinder Kumar Arora [2012] 342 ITR 38; (iii) Section 54F(4) of the Act has deliberately used the word "appropriation" while extending its benefit. It is used in addition to be utilized with a view to extend the scope of its benefit. The word "appropriation" means setting apart. Therefore once an agreement to purchase the flat was executed on 16th July, 1996 and the consideration was set aside though not paid it would be considered to be appropriated (set apart) towards the purchase of the ....
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.... Act which arises for our consideration "54F(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 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, that is to say - (a)if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under Section 45; (b)if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charge....
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....e original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilized amount in accordance with the scheme aforesaid." (e) We shall first examine the scheme of Section 54F of the Act. Section 54F is part of Chapter IV of the Act which inter alia provides for computation of total Income and for that purpose, sets out the various heads of income. Part E of Chapter VI deals with the head of income viz. Capital Gains. It provides for Computation of Capital gains and also for exemption available there under. Section 54F of the Act introduced into the Act with effect from l April, 1983 by the Finance Act, 1982 provides exemption from Capital gain on transter of any long term capital asset in case the same is invested in a residential house. However, the Section when introduced provided that any capital gain arising from transfer of long term capital asset would not be chargeable to capital gains tax, it the same were utilized for purchase of an housing accommodation within a year before or after the date on which the transfer of an capital asset took place or was used for construction of a residential house within a period of three years from the date of tran....
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.... of the Act would be charged on the unutilized amount as Income of the previous year in which the period of three years from the date of transfer of the capital asset expires. (i) On the basis of the above broad analysis, we shall now examine the facts of the present case. The sale of capital asset took place on 29th April, 1995 for a consideration of Rs. 85.33 lakhs. The agreement for purchase of construction of flat for consideration of Rs. 69.90 lakhs was entered into by the appellant on 16th July, 1996. An amount of Rs. 35 Iakhs were utilized by the Appellant in purchase of flat before the return of income was filed on 41 November, 1996 under Section 139 of the Act. However, the mandate under sub Section (4) of Section 541 of the Act is that the amount not utilized towards the purchase of the flat has to be deposited before the due date of filing return of Income under Section 139(1) of the Act in the specified bank account. In this case admittedly the entire amount of capital gains on sale of asset which is not utilized has not been deposited in a specified bank account before due date of filing of return under Section 139(1) of the Act. Therefore where the amounts of capit....
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.... October, 1986 was issued only in the context of Section 54 and 54(F) of the Act to clarify that an investment in a flat under the self finance scheme of Delhi Development Authority would be treated as construction for the purpose of capital gain, where an allotment letter has been issued by the Authority and facility of payment in installment is provided for the purchase of flat. It did not even remotely concern itself with the provision of Section 54(2) and/or 541(4) of the Act with which we are concerned. The Circular only extended the meaning of constructing a residential house within a period of three years from the sale of the capital asset. The subsequent Circular issued in 16t h December1993 by the Central Board of Direct Taxes relied upon by the Appellant, only extended the meaning of "constructed within a period of three years" to allotment letters issued by the Cooperative Housing Society or other similar institution for the purpose of 54F of the Act. Therefore, it does not in any manner do away with and I or relax the statutory mandate of depositing the unutilized amount in the specified bank account as required by sub section (4) of Section 54E of the Act. Therefore, n....
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....ection (1) of Section 54(E) of the Act then Section 54E(4) of the Act is not at all attracted. We are with respect unable to accept the reasoning adopted by Karnataka High Court in K. Ramchandra Rao (supra). The mandate of Section 54F(4) of the Act is clear that amount which has not been utilized in construction and/or purchase of property before filing the return of income, must necessarily be deposited in an account duly notified by the Central Government, so as to be exempted. (P) Further, Section 54P(4) of the Act specifically provides that the amounts which have not been invested either in purchase construction of house have to be deposited in the specified accounts before the due date of filing of return of income under Section 139(1) of the Act. The aforesaid aspect it appears was not noticed by the Karnataka High Court. In any case, the entire basis of the decision of the Karnataka High Court in K. Ramchandra Rao (supra) is the intent of the parties. In interpreting a fiscal statute one must have regard to the strict letter of law and intent can never override the plain and unambiguous letter of the law. It is true that normally while construing an all India Statute like....
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....e given to the provision of Section 54F of the Act as its object was to encourage the housing sector which would result in the benefit being extended to the appellant assessee. In support, reliance was placed upon the decision of Delhi High Court in Ravindra Kumar Arora (supra). We find that observation of the Delhi High Court in Ravindra Kumar Arora (supra) that Section 54P of the Act should be liberally construed was in the context of the benefit being denied as the name of the wife was added to purchase made by the assessee of a new flat. This denial was even though all the requirements of Section 54P of the Act stood satisfied. Therefore the observation of the Delhi High Court would have no application to the present facts. (s) It is a settled position in law that no occasion to give a beneficial construction to a statute can arise when there is no ambiguity in the provision of law which is subject to interpretation. Thus in the face of the clear words of the Statute the intent of parties and/or beneficial construction is irrelevant. In fact, the Apex court in Sales Tax Commissioner vs. Modi Sugar Mills [1961] 12 STC 182 reiterated the well settled principle of interpretatio....
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.... be invested in construction of house. A plain reading of Section 54F(4) of the Act militates against it. As pointed out by Mr.Malhotra, learned Counsel appearing for the revenue, Section 54F(4) of the Act deals with two classes of cases, one where purchase of new residential house is within a period of one year before the date on which capital asset is sold by assessee and second class of cases where the amount subjected to capital gains are utilized for purchase/ constructing a flat, post the sale of the capital asset. In the present facts we are concerned with the second class i.e. purchase post the sale of the capital asset. (u) The parliament has used the word "appropriated" in the first class of cases i.e. where property has already been purchased prior to the sale of capital asset and the amount received on sale of capital asset is appropriated towards consideration which has been paid for purchase of the flat. In this case we are concerned with the purchase I construction of residential housing, after the sale of capital asset. This requires the amount -which is to be subjected to capital gain has to be utilized before the date of filing of return of Income under Section....
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....mber, 1996 is the date of filing the return of Income. It is not disputed that on 411 November, 1996 when the return of income was filed, the entire amount which was subject to capital gain tax had not been utilized for the purpose of construction of new house nor were the unutilized amounts deposited in the notified Bank Accounts in terms of Section 54F(4) of the Act before filing the return of income. It is also to be noted that in line with the interpretation of Gauhati High Court on Section 54F(4) of the Act, the Assessing Officer had taken into account all amounts utilized for construction of a house before filing the return of income on 4th November, 1996 for extending the benefit of exemption under Section 54F of the Act. Therefore, in the present facts, the decision of the Gauhati High Court in Rajesh Kumar Jalan (supra) would not apply so as to hold that the appellant had complied with the Section 54F(4) of the Act. (x) In the above view question no. 2 is also answered in the affirmative i.e. in favour of the Revenue and against the appellant assessee. 7. In the above view, the Appeal is dismissed. No order as to costs." 2.4. We note that the Hon'ble jurisd....