TaxTMI 
TaxTMI 
2019 (7) TMI 1410
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....the purchaser. 3. That the Ld. AO failed to appreciate and the C1T(A) wrongly confirmed that the consideration received on the execution of agreement to sale dated 07/04/2014 was rightly invested by the appellant on 01/06/2013 for purchase of new residential unit which was well within 1 year prior to the date of sale. 4. That the Ld. CIT(A) has wrongly assumed that investment in a plot of land for purposes of construction of a residential property thereon did not amount to purchase of residential house within the meaning of section 54 of the IT Act, 1961. 2. The facts in brief assessee had filed his return of income on 30.12.2015 showing income of Rs. 1,99,55,220/- wherein assessee had declared long-term capital gain of Rs. 1,92,80,160/-, on sale of property at Under Hill Road, Civil Lines, Delhi on 28.11.2014 for sum of Rs. 6,10,50,000/-. While computing longterm capital gain, assessee had claimed exemption under section 54 of Rs. 1,58,00,000/- on acquisition of allotment of a residential plot No. Q-168, Kensington Park, Sector 133, Noida, DIS Gautam Budh Nagar, UP at Jaypee Green, Noida on 01.06.2013 and for Rs. 25,10,000/- deposited in Capital Gain Account No. 0115001000....
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....ithin a period of 1 year before the transfer. So, any discussion regarding whether the date of sale should be treated as the date listed in the agreement to sell or in the sale deed becomes academic. Further, after referring to various case laws, Ld. CIT(A) held that provisions of section 54 are unambiguous and has to be interpreted literally and there is no infirmity in the order of the AO. 4. Before us Ld. Counsel for the assessee submitted that, section 54 of the Act is a beneficial provision and had to be construed liberally, keeping in view the legislative intent and where substantial compliance has been made in accordance with the legislative intent, exemption deserves to be allowed and in support of this proposition, he relied on the judgment of the Hon'ble Supreme Court in the case of Sanjeev Lal Vs. CIT [2014] 365 ITR 389 (SC), wherein while interpreting the provisions of section 54 court applied the purposive interpretation. 4.1 He further submitted that till the time of agreement to sell on 07.04.2014, assessee had received Rs. 2,05,00,000/- in his bank account with HDFC and invited our attention to page 14, 15, 16 & 17 of the Paper Book and pointed out that sums so ....
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.... learned DR relied upon the order of the AO and CIT(A) and submitted that the AO has demonstrated on facts that as no residential house was constructed within the mandatory period of three years which is the condition precedent for claim of exemption under section 54. Such a condition has not been fulfilled and therefore, the disallowance of claim of deduction under 54 was rightly sustained by the CIT(A). 6. We have heard the rival submissions, perused the relevant finding given in the impugned order as well as the material referred to before us at the time of hearing. In this case the issue is, whether amount invested in the purchase of plot on 01.06.2013 for constructing residential house is eligible for claiming exemption under section 54 of the Act from the capital gain arising on the sale of house vide registered sale deed dated 28.11.2014, which was agreed to be sold vide unregistered agreement to sell dated 07.04.2014, although assessee failed to construct the new residential house within a period of three years from the date of sale i.e. up till 27.11.2017. 7. Before dealing with the issue involved in the present appeal, it will be apposite to refer the relevant provisi....
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.... 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 11 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: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the 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 such amount in accordance with the scheme aforesaid." 7.1 On perusal of aforesaid provision, the condition p....
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....K. Kapoor (Decd.) [1998] 234 ITR 753 (All). 9. The real issue in the present case is that new residential house has not been constructed within a period of three years from the date of the transfer of the residential property which resulted in the long-term capital gain. On this issue, the assessee's contention has been that inspite of having made payment for the plot, the Jaypee (Developer) failed to offer possession and execute sale deed even up till the expiry of three years from the date of sale of property by him, because of reasons beyond his control which cannot be disputed. This vital fact assumes great significance as assessee had taken all the steps to make the investment for the purchase of house, and also assessee had deposited Rs. 25,10,000/- in the capital gain account with PNB so as to construct the house. This unequivocally demonstrate that assessee really intended to construct the new residential house thereon. It was based on this bonafide intention assessee had claimed exemption under section 54 of the Act. Without the purchase of land, house could not have been constructed. The first step was to purchase the land, which was done. Thereafter the developer was t....