TaxTMI 
TaxTMI 
2020 (1) TMI 407
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....pplicant seeks condonation of delay of 34 days in re-filing the application. For the reasons stated in the application, the delay is condoned. 8. The application stands disposed of in the aforesaid terms. C.M. No. 53742/2019 (delay) in ITA 996/2019 9. By this application the applicant seeks condonation of delay of 39 days in re-filing the application. For the reasons stated in the application, the delay is condoned. 10. The application stands disposed of in the aforesaid terms. ITA 991/2019, ITA 992/2019 & ITA 996/2019 11. The present appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") emanate from the orders of ITAT in ITA No. 5900/Del/2015 and ITA No. 5901/Del/2015, both dated 10.05.2019 and ITA No. 5899/Del/2015 dated 15.05.2019 dismissing the appeals of the Revenue, and upholding the orders of the CIT (A) allowing deductions under Section 54 and 54EC of the Act, consequently deleting the additions made by the Assessing Officer (AO). 12. Though separate assessment orders were framed under Section 143 (3) of the Act in respect of each assessee, however since the issues involved were common and overlapping, the same came to be dispo....
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....owed by a notice under Section 142(1) of the Act, along with a questionnaire issued on 28.08.2014. 16. The assessee complied with the said notice and furnished the requisite details. The AO examined the records and books of account and relying upon the judgment of this Court in the case of Gulshan Malik vs. CIT in ITA No. 55/2014 and CIT v. R.L. Sood (2008) 245 ITR 727 (Delhi) framed the assessment under Section 143(3) of the Act. He made disallowance of deduction under Section 54 of the Act on the ground that the assessee entered into an agreement dated 10.02.2006 and the said date of the agreement is to be treated as date of acquisition, which falls beyond the one year period provided under Section 54 of the Act and is also prior to the date of transfer. As regards the deduction claimed by the assessee under Section 54EC of the Act amounting to Rs. 1,00,00,000/-, the AO made disallowance of Rs. 50,00,000/-. Further, AO made addition of Rs. 14,07,474/- on account of suppression of maintenance charges under the head "income from house property" received from rented property. 17. The assessee filed an appeal against the assessment orders before CIT (A), and the same was allowed vi....
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....taxman 227/245 ITR 727 (Delhi), he disallowed the claim of the appellant. According to Assessing officer, the appellant could have purchased a house property between 28.12.2010 to 28.10.2011 in order to claim deduction under section 54. Since the appellant invested in the residential House property namely Dlf Magnolia way back in F.Y. 2005-06 which is clearly outside the time period mentioned in section 54 of the Income-tax Act, it does not fit in case of exemption under section 54. The Assessing officer placed reliance on the judgement of Honorable High Court at Delhi in the case of Gulshan Malik Vs. CIT in ITA no. 55 of 2014 and CIT vs R. L. Sood [2008] 109 taxman 227/245 ITR 727 (Delhi). However, the appellant submitted that in order to avail the benefit under section 54 of Income-tax Act he is required to purchase a residential house property either one year before or within two year after the date of transfer of original asset; or within a period of three years after that date" he is required to construct a residential house. Therefore, for proper application 'of this section it has to be seen whether in the instant case is it a purchase or a construction? It has been clarif....
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....e to be considered as a case of construction of new residential house and not purchase of a flat. Since the flat has been allotted to the appellant by the builder 'who would fall in the category of other institutions mentioned in* the circulars, it has to be taken as a case of construction of the residential flat and not as a purchase of a residential flat. Therefore, he had time window of three years period available to him commencing from 21.12.2011 till 21.12.2014 to construct a house property. Having come to this conclusion that it is case of construction it is now to be seen if the appellant fulfils the conditions laid down under s. 54(1) of the Act. In the instant case; the appellant has occupied the house property during 2013 vide letter dated 30.10.2013 offering occupation of House property. Further, the appellant has claimed the deduction on amount invested till the due date of filing of return under section 139 (1) of the Income-tax Act. Further, the reliance placed by the assessing officer on the judgment of Honorable Delhi High Court in the case of Gulshan Malik Vs. CIT in ITA no. 55 of 2014 is not relevant to the facts of the case under appeal, since the issue involved....
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....fore, disallowance made under section 54 amounting to Rs. 4,00,97,217/- (A.No.496/14-15.), 4,10,45,578/- (A.No.494/14-15) and Rs. 4,01,93,262/- (A.No.495/14-15) may be deleted. After going through the facts and circumstances of the case, submissions of the appellant which include Board's circular and various case laws, I find merit in his argument. From the above discussion, it is clear that the facts of the present case indicates that it was a case of construction of flat and not purchase of flat as held by the AO. Since, the case pertains to construction, benefit of section 54 are available to the appellant. Therefore, after careful consideration to the relevant facts and law, I am of the view that booking of bare shell of a flat is a construction of house property and not purchase, therefore, the date of completion of construction is to be looked into which is as per provision of section 54 of the LT. Act., therefore, the AO is directed to allow benefit to the appellant as claimed u/s.54 of the I.T.Act. Accordingly, the appeal on this ground is allowed." 19. With respect to the challenge relating to disallowance of deduction under Section 54EC of the Act, CIT (A) relying up....
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.... Section 1 to Section 54EC of the Act was to clarify and remove any ambiguity that existed and not allow any additional benefit by removing the restriction over and above the limit of Rs. 50,00,000/- prescribed under Section 54EC Act. Lastly, he argued that the deletion of addition of Rs. 14,07,474/- was erroneous and without appreciation of the fact that as per Clause 8 (V) of the lease deed executed with DT Cinemas, the assessee had received maintenance charges as income in disguise. 22. Mr. Salil Kapoor, learned counsel for the Respondents/Caveator urges that the present appeals do not raise any question of law, much less substantial question of law which requires consideration by this Court. He urges that the precise question urged by Revenue in relation to Section 54 of the Act has already been decided by this Court in the cases of CIT v. Bharti Mishra (2014) 265 CTR 374 (Delhi) and CIT v. Kuldeep Singh (2014) 270 CTR 561(Delhi). Regarding the benefit availed by the assessee under Section 54EC pertaining to limit of investments in bonds, he relied upon the judgment of High Court of Madras in CIT v. C. Jaichander (2015) 370 ITR 579 (Madras). 23. We have given due consideratio....
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....e the original long term capital asset by a new one. In relation to Section 54F, this Court in CIT v. Bharti Mishra [2014] 265 CTR 374 (Delhi) has rejected the contention raised by the Revenue, which is similar to one urged by Mr. Sharma, in the following words: "13. For the satisfaction of the third condition, it is not stipulated or indicated in the Section that the construction must begin after the date of sale of the original/old asset. There is no condition or reason for ambiguity and confusion which requires moderation or reading the words of the said sub-section in a different manner. The apprehension of the Revenue that the entire money collected or received on transfer of the original/capital asset would not be utilised in the construction of the new capital asset, i.e., residential house, is ill-founded and misconceived. The requirement of sub-section (4) is that if consideration was not appropriated towards the purchase of the new asset one year before date of transfer of the original asset or it was not utilised for purchase or construction of the new asset before the date of filing of return under Section 139 of the Act, the balance amount shall be deposited in an au....
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....tion notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. [See CTT v. DSM Group of Industries[(2005) 1 SCC 657] (SCC para 26); TISCO Ltd. v. State of Jharkhand [(2005) 4 SCC 272] (SCC paras 42- 45); State Level Committee v. Morgardshammar India Ltd. [(1996) 1 SCC 108] ; Novopan India Ltd. v. CCE & Customs [1994 Supp (3) SCC 606] ; A.P. Steel ReRolling Mill Ltd. v. State of Kerala [(2007) 2 SCC 725] and Reiz Electrocontrols (P.) Ltd. v. CCE. [(2006) 6 SCC 213]' 15. In view of the aforesaid position, we do not find any merit in the present appeal and the same is dismissed." 25. The aforenoted findings of the tax authorities are factual and cannot be categorized as perverse. It cannot be said in the facts of the present case that the deduction claimed for the construction were not relatable to the transaction of sale of the Jor Bagh property which resulted in income by way of capital gains. There is no ground urged by Revenue before CIT (A), or before the ITAT, that the expenditure was not connected with the sale transactions. Moreover, we cannot go into the factual ques....
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....o the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45. Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.' 7. On a plain reading of the above said provision, we are of the view that Section 54EC(1) of the Act restricts the time limit for the period of investment after the property has been sold to six months. There is no cap on the investment to be made in bonds. The first proviso to Section 54EC(1) of the Act specifies the quantum of investment and it states that the investment so made on or after 1.4.2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. In other words, as per the mandate of Section 54EC(1) of the Act, the time limit for investment is six months and the benefit that flows from the first proviso is that if the assessee makes the investment of Rs. 50,00,000/- in any financial year, it would have the benefit of Section 54EC(1) of the Act. 8....
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.... and the assessee has, at any time within a period of six months, invested the whole or any part of capital gains in the long-term specified asset, out of the whole of the capital gain, shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. However, the wordings of the proviso have created an ambiguity. As a result the capital gains arising during the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second in the next year but before the expiry of six months. This resulted in the claim for relief of one crore rupees as against the intended limit for relief of fifty lakhs rupees. Accordingly, it is proposed to insert a proviso in subsection (1) so as to provide that the investment made by an assessee in the long-term specified asset, out of capital gains arising from transfer of one or more original asset, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed....