TaxTMI 
TaxTMI 
2018 (10) TMI 60
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....f the assessee. Sale consideration was disclosed at Rs. 2,07,00,000/- whereas the market value adopted by the Ld.A.O was at Rs. 4,75,00,000/- invoking the povisions of Section 50C and Long Term Capital Gain recomputed. Benefit of exemption u/s 54F was also limited to the amount applied up to the due date of filing of return as the assessee could not deposit the remaining amount under the Capital Gain Account Scheme. Ld. AO further restricted the exemption u/s 54F of the Act to the extent of assessee's share on the proportionate basis as the residential flat purchased was in joint name of the assessee, Shri Rajesh Sharma and M/s. R & J Chemicals. Ld.A.O accordingly computed the Long Term Capital Gain in following manner; Sale consideration as per fair market price Rs.4,75,00,000/- Less: Index cost of acquisition Rs. 37,53,485/- Less: Index cost of improvement Rs. 33,09,589/- Less: Transfer expenses Rs. 33,49,170/- Total Rs. 3,70,87,756/- Less: Exemption u/s 54F Rs. 23,82,116/- Long Term Capital Gain Rs.3,47,05,640/- The above sum of Long Term Capital Gain was added to the income disclosed in the income tax return at Rs. 12,79,190/- and in....
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....to an amount of Rs. 71,46,348/- i.e. by allowing the investment made only up till the date of filling of return on 30.03.2013, ignoring the fact that the required amount was validly reinvested within the statutory time limit of 2 years as contemplated u/s 54F. 5. Ld. Counsel for the assessee submitted as follows; "7.1. That, vide ground no. 1 and ground No.2 raised it is argued that the actual transaction value of the property sold is Rs. 2,07,00,000/- and the value referred by Ld. DVO was Rs. 2,15,96,882/-thus there is a very marginal variation of Rs. 8,96,882/- i.e. only of 4.33% between the actual transaction value and valuation referred by Ld. DVO, hence it is humbly prayed that actual transaction value should not be rejected just on estimation basis more particularly when the variation between the actual value and the one adopted is less than 10%. Reliance is placed on following judicial pronouncement in support of our above argument. C.B. Gautam Vs. Union of lndia, [1992165 Taxman 440 (SC) CIT Vs. Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar [1992164 TAXMAN 585 (RAT.) Honest Group of Hotels P. Ltd. Vs. CIT TAXMAN 464 (J&K)) ....
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.... ITAT Indore, Gurnam Singh Vs. CIT (2008) 170 TAXMAN 160 (PUNT. & HAR.), Mukesh R. Thaveri Vs. Dy. CIT (2008) 10 ITT 305 (Trib. Indore) Further, appellant relies on various decision in support of its claim, that when consideration flows from assessee, the benefit of investment should be allowed to him, Ravindra Kumar Arora Vs. CIT [20111 15 Taxmann.com 307 (Delhi), CIT Vs. Shri Kamal Wahal ITA 4/2013, Director Of IT Vs. Mrs. Jennifer Bhide ITA 169/2011. 8. That, it is also submitted respectfully before your Honor's that in construing a beneficial enactment, the view that advances the object of the enactment and serves its purpose must be preferred to the one which obstructs the object and paralyses the purpose of the beneficial enactment, reliance is placed on CIT Vs. Rajesh Kumar Talan 286 ITR M274 (Gau. H.C.) 9. That, looking to the facts and circumstances of the case, case laws on the issue cited above, it is humbly requested your Honor's to kindly decide the issue on merit and delete the addition sustained by Ld. CIT-A. 6. The Ld. Departmental Representative vehemently argued, supporting the findings of Ld. CIT(A). 7. We have heard rival....
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....easons as the valuation report is prepared on the basis of norms prescribed by the CPWD for the construction of buildings and the difference may be with regard to the quality of the materials etc." The Income Tax Officer could have examined the matter in detail with regard to the books of accounts in order to say that the books are not reliable. Simply because the valuation report is of higher amount, difference cannot be said to be not reliable unless any defect is found in the accounts of books of accounts. Tribunal was therefore justified in dealing the addition". 12. We therefore respectfully following the above referred judgments and decisions as well as in the given facts and circumstances of the case where the alleged difference between the valuation made by the Ld. DVO and the sale consideration shown by the assessee is only 4.33%, Ld. CIT(A) erred in sustaining the addition of Rs. 8,89,882/-. We therefore direct the Ld.A.O to compute the Long Term Capital Gain on the basis of sale consideration of Rs. 2,07,00,000/- disclosed by the assessee. In the result Ground No.1, 2 & 3 of assessee's appeal are allowed to the extent of deletion of addition of Rs. 8,89,882/-. 1....
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.... name of the family members viz son, wife, husband etc. In the case of the appellant the reinvestment has been made in the name of partnership firm and the other partner in the firm. The reason given b) the appellant is stated to be on account of safety and security. The appellant has not elaborated upon the reasons as to how this was achieved. 0'1. the contrary the purchase in the name of firm and partner Shri Rajesh Sharma could lead to insecurity in view of the legal claims that could be raised by the co-owners in whose name the property has been registered. In this context it is pertinent to note the observations of the Bombay High Court in the case of Prakash Vs ITO wherein the court did not approve the claim of exemption u/ s 54F on property purchased in the name of adopted son. "The concepts of the "assessee", "own", "owned" "owner", "ownership", "co- owner", "owner of house property" or "ownership of property" as elaborated in s. 22 to 27 and 32 of the IT Act, are very much interlinked and connected for granting the benefit under the 11' Act. The word and phrase "owner" in the context of s. 22 of the IT Act has been elaborated in CIT vs. Podar Cement (P) Lt....
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.... one residential house only by the assessee and to encourage to have one residential house of the assessee. Therefore, right from the sale of original asset till the purchase and/ or construction of the residential house i. e., the "new asset", the ownership and domain over the new asset is a must. The new property must be owned by the assessee and/ or having legal title over the same. T1e ethers may use and occupy the same along with the assessee but the ownership should be of the assessee of the residential house so purchased from the net consideration/sale proceeds of the sale of original asset by the assessee. Having observed above and in view of the undisputed position on the record that the deceased assessee, admittedly, though sold the property owned by him yet purchased the new property in the name of adopted son and paid consideration out of the sale proceeds in question, with clear intention to transfer the property to the adopted son. He, therefore, utilised the sale proceeds to construct a house by transferring the property and submitting plan in the name of the son only. The intention was very clear from the day one to transfer the property even before the con....
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....has not purchased the new house in the name of a stranger or somebody who is unconnected with him. He has purchased it only in the name of his wife. There is also no dispute that the entire investment has come out of the sale proceeds, and that there was no contribution from the assessee's wife. 15. From perusal of above judgments we find that Hon'ble Courts have held that in cases where for the purpose of claiming deduction u/s 54/54F/54B the investment in purchase of residential house/ agriculture land etc is made in the name of his wife or legal heir the benefit should not be denied because the persons are not strangers to the assessee. However in the instant case the other co-owners are not the relatives of the assessee but are partners in the partnership firm. Therefore in the given circumstances Ld.A.O has rightly limited the benefit to 33.33% of the amount invested in purchase of residential house at Rs. 71,46,348/-. We find no reason to interfere in the findings of Ld.CIT(A). Ground No.4 of the assessee is dismissed. 16. Now we take up Ground No.5 of the assessee wherein assessee has assailed the findings of Ld. CIT(A) pleading that both the lower authorities erre....
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....rs within which limit the entire sale consideration was reinvested. The appellant has relied on several judgments in support of the above proposition which are already noted in Para 3 above. From the material available on record it is an admitted fact that the appellant did not make the investment in the period specified in section 54F(4) of The Act and did not deposit the amount in the Capital Gains Account Scheme within the specified period. The perusal of the decisions cited by the appellant shows that in these decisions it has been held that the due date for furnishing of return of income as per section 139(1) of the Act is subject to the extended period provided under subsection 4 of section 139 of the Act implying that the investment could have been made at any time before filing of return up to the due date as per section 139(4). The decision of the jurisdictional ITAT in the case of Aftab Mohammad has also been relied upon by the appellant. The said decision is distinguishable on facts as in that case no return of come was filed by the assessee u/s 139(1)/139(4) of The Act and there was filed only in response to notice u/s 148 and the reinvestment was made before that date ....
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....ssessee in cash or deposited the same in terms of cl. 4 of section 54F with any nationalized bank or institution. Consequently, the assessee did not have the sale proceeds available for investment in terms of scheme under section 54F (3). In order to qualify for exemption under section 54F(3), the assessee should have first deposited the sale proceeds of the property in any bank account and the construction of the house to qualify for exemption under s. 54F should have been completed by utilizing the sale proceeds also available with the assessee. In this case, though the assessee constructed new building within the period of three years from the date of sale, it was with. funds borrowed from HDFC. The assessee is not entitled to exemption under section 54F because the assessee neither deposited the sale proceeds for construction of the building in the bank in terms of sub-section (4) before the date of filing returns nor was the sale proceeds utilized for construction in terms of section 54F(3). So much so, the assessee was not entitled to claim exemption on capital gains under section 54F of the Act which the AO rightly declined." As has already been no....
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....in 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 years after the date of the transfer of the original asset, 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, 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 such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be....
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....lly 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.] 20. From perusal of the findings of Ld.CIT(A) as well as going to the provisions of Section 54F Sub-Section 4 of the Act which contemplates that if the net consideration is not appropriated by the assessee towards the purchase of new asset either within one year before the date on which the transfer of original asset took place or which is not utilized by him for the purchase/construction of the new asset before the date of furnishing the return of income u/s 139(1) of the Act, then in order to claim the benefit, the remaining amount needs to be deposited in the capital gain account in accordance with the scheme which the Central Government notify through notification fr....