TaxTMI 
TaxTMI 
2019 (1) TMI 342
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....see claimed that there was a typographical error in the computation of income, inasmuch as, the purchase of a plot of land was wrongly reflected as purchase of flat. The Assessing Officer disbelieved him on the ground that the alleged mistake that was sought to be rectified was after issual of notice. The said plot of land was purchased for Rs. 32,40,000/-. Enquiries made by the Assessing Officer through the inspector revealed that the plot of land is vacant. After considering the replies of the assessee along with evidence that she had entered into an agreement with M/s. Hill View Builders on 20/06/2014, for construction of phase one of her residential house on this plot in Darjeeling and that she had already paid Rs. 20,01,000/- to the said developer M/s. Hill View Builders, the Assessing Officer came to a conclusion that this agreement and payments cannot be believed for the reasons given in his order. He rejected the claim for deduction u/s 54F of the Act, for Rs. 52,40,000/- made by the assessee. He further held that the assessee's claim of exemption u/s 54F of the Act of Rs. 20,00,000/-, for the deposit made by her in the Capital Gains Account Scheme (CGAS), the Assessing Of....
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....and has to be considered as good evidence and cannot be rejected as an afterthought. b) Evidence of the assessee having entered into a development agreement for construction of a house and of having paid the builder/developer Rs. 20 Lakhs/-, cannot be rejected without investigation or collection of contrary evidence. c) Borrowed money can be used for deposit in Capital Gain Account Scheme. d) Value as per Section 50C of the Act, cannot be applied for computing deduction u/s 54F of the Act. He relied on a number of case-law in support of each of the above contentions. Written submissions were also filed. 4.1. The ld. D/R, on the other hand, controverted the arguments of the ld. Counsel for the assessee. He relied on the order of the Assessing Officer as well as of the ld. CIT(A). The case law relied upon by the ld. CIT(A) as well as the assessment order were relied upon and were explained by the ld. D/R and he prayed that the order of the ld. CIT(A) be upheld. 5. After hearing both sides, considering the facts on record and perusing the orders of the authorities below as well as case law cited we hold as follows:- 6. The first issue that arises for our consideration is whe....
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....e expression 'deem' is used a great deal and for many purposes. It is at times used to introduce artificial conceptions which are intended to go beyond legal principles or to give an artificial construction of a word for phrase, Thus the artificial meaning of full value of the consideration has been given in s. 50C for the purpose of s, 48. One is entitled to ascertain the purpose for creating a statutory fiction. After ascertaining the purpose, full effect must be to the statutory fiction and it should be carried to its logical conclusion and to that end, it be proper and even necessary to assume all those facts on which alone fiction can operate legislature in its wisdom has referred to s. 48 in s. 50C for adopting the same value market value. Hence, the deeming fiction as provided in s. 50C in respect of the word value of consideration' is to be applied only for s. 48. The words 'full value of consideration mentioned in other provisions of the Act are not governed by the meaning of full value consideration as contained in s. 50C. The natural meaning of full value of consideration refers to consideration specified in the sale deed. Hence, for the meaning of full v....
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....w that the assessee is eligible for exemption u/s 54 of the Act, if the net sale consideration is invested in construction or purchase of new residential house. In the present case on hand, the assessee has invested net sale consideration for construction of new residential house property. Though, the full value of consideration as defined u/s 50C of the Act is more than the net sale consideration as referred in section 54F(1) of the Act, once the net sale consideration has been fully applied under the provisions of section 54 of the Act, then the deeming consideration as defined u/s 50C of the Act cannot be brought into the assessee is eligible for exemption u/s 54 of the Act, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value as per the provision of section 50C of the Act. Therefore, we direct the A.O. to allow the exemption u/s 54 of the Act." 6.1. The ld. D/R, relied on the decision of the Bangalore Bench of the ITAT in the case of Shri Gouli Mahadevappa v. Income-tax Officer, Ward-2, Hospet [2011] 128 ITD 503 (Bang.). 6.2. The Jaipur Bench of the Tribunal in the case of Prakash Karnawat v. Income-tax Off....
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....ansfer has to be invested in the new asset. In the instant case, undisputedly, the consideration which has accrued to the assessee as per the sale deed is Rs. 24,60,000 and the whole of the said consideration has been invested in the capital gains accounts scheme for purchase of the new house property which is again not been disputed by the Revenue. The consideration as determined under section 50C based on the stamp duty authority valuation is not a consideration which has been received by or has accrued to the assessee. Rather, it is a value which has been deemed as full value of consideration for the limited purposes of determining the income chargeable as capital gains under section 48 of the Act. Therefore, in the instant case, the provisions of section 54F(1)(a) are complied with by the assessee and the assessee shall be eligible for deduction in respect of the whole of the capital gains so computed under section 45 read with section 48 and section 50C of the Act. The decisions of the Coordinate Benches as referred supra support the case of the assessee. The subject issue was not for consideration before the Hon'ble Karnataka High Court and hence, the same doesn't sup....
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....is eligible for the claim of deduction u/s 54F of the Act. 7.2. The Hon'ble Madhya Pradesh High Court in the case of Sashi Verma vs. CIT, 1997 224 ITR 107 MP, held as follows:- "Section 54 of the Act of 1961 only says that within two years, the assessee should have constructed the house but that does not mean that the construction of house should necessarily be complete within two years. What it means is that the construction of house should be completed as far as possible within two years. In the modern days, it is not easy to construct a house within the time-limit of two years and under the Government schemes, construction takes years and years, Therefore, confining to two years' period for construction and handing over possession thereof is impossible and unworkable under Section 54 of the Act. If substantial investment is made in the construction of house, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of Section 54. Therefore, the view taken by the Tribunal is not correct. Hence, we answer the question in favour of the assessee and against the Revenue." 7.3. The Hon'ble Karnataka High Court in the case of Commissione....
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....9;constructed' and held that the condition precedent for claiming benefit under such provision is the capital gain realized from sale of a Long-Term capital asset should have been parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. It has also been held that if the assessee has invested money in constructing the residential house, merely because the construction was not complete in all respects or such building is yet to be completed fully or the building not being in a fit condition for being occupied, would by itself not be a ground for the assessee to be denied the benefit under Section 54F of the Act. It has been held by the coordinate bench as under: "The intention of the legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement of law. The words used in the section are 'purchased' or 'constructed'. For such purpose, the capital gain realized should have been invested in a residential house. The condition precedent for claiming benefit under the said provision is the capital gain realized from sale....
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....chase of a residential property or for the construction of a residential property though the construction of the house property is not completed within the stipulated period of three years. This view is also supported by the Circular No. 667 issued by the CBDT. In this case the assessee has investment the net sale consideration in a plot of land and had advanced money to the builder for construction. This action as per the propositions of the Courts is sufficient compliance of Section 54F of the Act. Mere investment would be enough. 7.6. The Assessing Officer without any material holds the agreement entered into by the assessee with M/s. Hill View Builders as an afterthought. No investigation is done nor any material contrary to the evidence produced by the assessee is brought on record. Such an action of the Assessing Officer cannot be countenanced. The assessee in our view has discharged the burden of proof that lay on her. The onus shifted to the revenue and this burden is not discharged by the revenue. Thus, in view of the above discussion, we hold that the Assessing Officer was wrong in denying the claim of the assessee for deduction u/s 54F of the Act of Rs. 52,40,000/- 8. ....
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.... to be utilized for purposes of meeting cost of new asset. It held that investment made by the assessee may be sourced other than entirely from the capital gains. The propositions laid down in these case-law, when applied to the facts of the case on hand, has to lead to a conclusion that this objection of the revenue authorities cannot be sustained. 9. The last issue is as to whether the assessee, at the time of claim of exemption u/s 54F of the Act was already in possession of two residential properties i.e., a house in Gurgaon and a pent house. 9.1. The assessee was owner of 1/4th share in a residential house in Gurgaon. The undisputed fact is that she transferred the above asset by way of registering a general power of attorney dt. 08/09/2003, supported by a possession affidavit of even date in favour of the purchaser. The registration of the sale of said property had not taken place. The Assessing Officer invoked the decision of the Hon'ble Apex Court in the case of Suraj Lamp & Industries Ltd. vs. State of Haryana; 340 ITR 1 (SC), and held that registration of general power of attorney cannot convey the title nor does it tantamount to a valid mode of transfer of immovable pr....