2017 (9) TMI 961

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....facts and in the circumstances of the case, the Ld. CIT(A) erred in not allowing the entire exemption claimed u/s 54F of Rs. 20,31,839/- but only granting a part relief to the extent of Rs. 6,10,000/- only. 3. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal." 3. At the time of hearing the ld. Counsel for the assessee submitted that ground no.2 of the revised grounds of appeal alone be taken up for adjudication and the other grounds are not pressed. 4. The issue that needs our consideration is as to whether the assessee should be given the benefit of deduction u/s 54F of the Income Tax Act, 1961 (Act) as claimed by the assessee. 5. The Assessee is an individual. During the previous year she sold 16 cottah of land for a sale consideration of Rs. 20,00,000/- on 09.12.2003. The value adopted by the Registrar of Assurances for the purpose of stamp duty and registration of the property sold by the assessee was a sum of Rs. 41,00,000/-. As per the provision of section 50C of the Act the assessee had to adopt the stamp duty valuation as full value of consideration received on transfer for the purpose of computation of long term ....

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....urn 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 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 utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset" 8. It can be seen from the provision of sub-section 4 of section 54F of the Act that where the net consideration received on transfer of a capital asset is not invested in purchase of construction of a new asset before the date for filing the return of income u/s 139 of the Act, it has to be deposited in a specified bank account within the due date for filing the return of income for the relevant assessment years as is prescribed u/s 139(1) of the Act. It is not in dispute that the assessee purchased land for construction of a residential house. The date of the purchase is 29.07.2004. The consideration paid by the assessee for purch....

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.... Cheque issued from UBI savings bank a/c (deposited on 30/7/2004, Xerox of deposit slip enclosed) Rs.13,90,000/- 03/08/2014 cheque sent for clearance to UBI (-) Rs.13,90,000/- 08/-1/2005 Interest credited by bank Rs. 3,791/- 12/02/2005 New cheque issued form S.B.A/c, UBI As the earlier cheque has been misplaced by bank Rs.13,90,000/-   12/02/2005 Cheque sent for clearance to UBI (-) Rs.13,90,000/- 01/03/2005 Cheque cleared form UBI Rs.13,90,000/- 22/04/2005 Cash withdrawn for construction (-) Rs. 30,000/- 22/04/2005 Cheque issued for purchase of building materials (-) Rs. 1,79,594/- 22/04/2005 to 20/09/2005 (except 4/7/2005) Cheques issued/cash withdrawn for construction of Building/for purchase of Building materials (-) Rs. 6,17,450/- 04/07/2005 Interest received Rs. 18,120/- Closing Balance (Dr.) Rs. 8,44,867/-  13. It can be seen that the assessee had deposited on or before 31.07.2004 which was the due date of filing the return of income u/s 139(1) of the Act. Rs. 2,60,000/- to this extent the CIT(A) held that the assessee was entitled to deduction u/s 54F of the Act....

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....t is only the deposit of unutilized net consideration received on transfer of the capital gain in a specified account as is required u/s.54F(4) of the Act and the question regarding completion of the construction will have to be examined only in the AY in which the time limit for constructing a new house expires. The following were the relevant observations of CIT(A): " As per the remand reports submitted by the Ld AO it was not conclusively proved that the residential house was completed within 3 years from the date of sale of land. But the fact remains that the assessee has constructed a residential house on the land purchased by her which has not been disputed by the Ld AO. The Courts have held that exemption U/S 54F cannot be denied on the ground that the construction was not completed within the stipulated period. As the assessee has purchased land and thereafter constructed residential house thereon although Completion Certificate has not been issued by the municipal authorities the assessee is eligible for exemption U/S 54F to the extent of investment of Rs. 3,50,000/- made for purchase of land for the purpose of construction of residential house thereon. For this a....

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....e net consideration within the stipulated period. The Chennai Bench of ITAT in the case of Mrs. Seetha Subramanian vs ACIT 59 ITD 94 (Mad) also took a view that investment of the net consideration for construction of the house has alone to be seen for allowing deduction u/s 54F of the Act. 17. Having come to the conclusion that the assessee had utilised the net consideration in construction of a house within the period of three years from the date of transfer, the question would be whether the absence of deposit of unutilised net consideration in a specific bank account as is required u/s 54F(4) of the Act, should the Assessee be denied the benefit of deduction u/s 54F of the Act. On this issue the ld. Counsel for the assessee brought to our notice the decision of the Hon'ble Karnataka High Court in the case of CIT, Bangalore vs K.Ramachandra Rao (2015) 56 Taxman.com 163 (Karn). In the aforesaid decision the assessee had not deposited the unutilised net consideration in a specific bank account as is required u/s 54F of the Act. The assessee had however invested the net consideration in construction of a residential house within the period contemplated u/s 54F (1) of the Act. The....