TaxTMI 
TaxTMI 
2026 (1) TMI 78
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.... facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that such exemption was not available to the assessee, by virtue of the Joint Development Agreement entered into by the assessee? 3. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in refusing to permit the assessee to raise the alternate contention regarding exemption under Section 54F of the Act, inspite of the well laid down law that the respondent, in any appeal before the Tribunal, could defend the order appealed against not only for reasons set out in the order appealed against, but on other factual and legal aspects also?' 2. Mr.Arvind P.Datar, learned Senior Counsel appearing for Mr.S.Raghunathan, learned counsel for the assessee, assails the impugned order of the Income Tax Appellate Tribunal ('ITAT'/'Tribunal'), which is a common order for both years making the following submissions. 3. The appellant had returned capital gains for both years arising out of the sale of a residential property at No.25, Cathedral Road, Chennai - 600 086 ('property'/'property in question'). The appellant had been a confirming....
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....e assessee was rejected on various grounds. 9. Firstly, the Tribunal held, by way of common order for both years, that (i) Section 54 was not applicable to the facts of the case, as re-investment had not been made under Section 54(2), (ii) the residential property had been demolished in year ending 31.03.1995 itself, and hence, there was no residential house that stood on the property in the financial years relevant to assessment years when capital gains benefit had been claimed, (iii) the appellant had taken clearance from the competent authority in 1994 itself and the date of transfer for the purpose of computation of capital gains must be taken to be 1994 as that was the date, according to the Tribunal, that the assessee had itself adopted. It is as against the aforesaid order that the present appeals have been filed, laying the substantial questions of law that have been extracted in paragraph 1 supra. 10. Per contra, Mr.J.Narayanaswamy, learned Senior Standing Counsel for the Department defends the impugned order, pointing out that the Tribunal was factually correct in stating that Section 54 is not applicable to the facts of the instant case. He submits that Section 54 ....
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....tation of capital gain in the present case is concerned. 17. At the relevant point in time, Chapter XXC of the Income Tax Act required an assessee intending to sell immovable property to obtain Income Tax clearance in Form 37-I of the Income Tax Rules, 1962, and the JDA provided for Income Tax clearance to be obtained by the owners. We have been given a copy of order under Section 269-UL(1) of the Act dated 15.12.1994 on an application made by C.R.Sundaram (HUF), C.R.Sundaram and Kamakshi Sundaram in respect of the proposed sale of the subject property for a consideration of Rs. 2,99,42,600/-. 18. To this extent, the finding of the Tribunal at paragraph 7 that 'the assessee at that stage took clearance from the competent authority. Copy of Form 37-I of the Income-Tax Rules, 1962 filed before the Appropriate Authority of the Income-tax Department was placed before us' is incorrect, as the application had been filed by the owners and the appellant was, in 1994, not an owner of the property, he having inherited a portion of the property only post the demise of C.R.Sundaram on 03.11.2006. 19. In the order of assessment for AY 1999-2000, the Assessing Authority has proceeded on....
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....ted 30.01.2001, residential property had been purchased at Plot No.137 in Block No.171, Sunder Nagar, New Delhi, admeasuring 0.179 acres (870 sq. yards). 24. The order records that the xerox copies of the sale deed had been produced (see paragraph 2.3, internal page 5 of order of CIT(A) dated 07.11.2003 for AY 1999-2000). It is the aforesaid order that has been followed for the subsequent year as well. Hence, and as the conditions under Section 54 of the Act has been satisfied, the appeal came to be allowed. 25. Coming to the order of the Tribunal, there is an error at paragraph 7 thereof, where the Tribunal observes that, according to the assessee, the date of transfer for the purpose of capital gain should be 15.12.1994. This runs contrary to the admitted factual position that sale deeds had been executed by the appellant and his mother only in March, 1999 in favour of M/s.VVA Constructions Pvt. for transfer of undivided interest in the subject property (See paragraph 6 internal page 3 of the order of the Tribunal dated 27.10.2006). Hence, the date of transfer should be taken to be 1999 only, and it could not have been the contention of the assessee that the transfer took p....
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....titution 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, subject to the third proviso to sub-section (1) be deemed to be the cost of the new asset:' 27. In our considered view, the transaction must be seen in a wholistic conspectus. The admitted sequence of the events is that, the JDA was executed on 15.12.1994, and enter-upon permission granted to the builders/developers. Demolition of the house was in early 1995. The appellant's father passed away on 03.11.1996. It is true that development continued and the appellant and his mother executed deeds in March, 1999 for the sale of their shares of the property. 28. Section 54 requires the satisfaction of the conditions that, firstly, that the property transferred is one, wherefrom the income would be assessable under the head 'house property' and second, the gain fro....
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....cumstances, the date of transfer ought to be taken as March 1999 only, and capital gains has rightly been offered for AYs 1999-2000 and 2001-02. 33. One of the reasons for the rejection of the claim under Section 54, by the Tribunal is that the assessee has not invested the gain in Capital gains in a Scheme under Section 54(2). Section 54(2) states that if the amount of capital gain has not been appropriated in a new asset, then it shall be deposited in the Bank or Institution as specified under the Capital Gains Scheme by the Central Government, as notified in the Official Gazette. 34. In the present case, the circumstance adumbrated under Section 54(2) does not stand attracted, as the assessee has exercised the option of re-investment in residential property within the time stipulated under Section 54(1) of the Act. Section 54(2) cannot be insisted upon effacing the option available to an assessee to either invest the gain in a Scheme, or re-invest/construct a new property. The assessee in this case has availed the option of re-investment in property within the stipulated time, and that would suffice. 35. According to Mr.Narayanaswamy, the transfer is spread over a perio....
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.... are plenary and wide. Referring to the judgments of the Supreme Court in Commissioner of Police, Bombay V. Gordhandas Bhanji [AIR 1952 SC 16], of this Court in Commissioner of Income-Tax (Central), Madras V. Indian Express (Madurai) Pvt. Ltd. [140 ITR 705] and of the Bombay High Court in Ciba of India Ltd. V. Commissioner of Income-Tax [202 ITR 1], he argues that there is a duty cast upon the Tribunal to make a proper determination of the tax arising in a particular case. 41. Specific reference is made to the observations in the decision in Indian Express (Madurai) Pvt. Ltd. (Foot Note supra (2)) to state that an assessment is a continuous process involving the Assessing Officer, CIT(A) and the Tribunal, and of those of Earl Cairns L.C. in the House of Lord in Julius V. Lord Bishop of Oxford [5 APP. Cas. 214] that we will refer to shortly. Hence, according to the appellant, it was incumbent upon the Tribunal to have decided the alternate plea for relief under Section 54F and the rejection of the request, amounts to shirking of the duty cast upon the Tribunal which calls for interference by the Court. 42. Per contra, Mr.Narayanaswamy would submit that there is nothing erroneo....
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....ain conditions which the assessee must satisfy in order to be entitled to the claim. We extract below Section 54F(1) and the proviso: '54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of th....
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....s a matter where the Court was concerned with the non-performance of certain duties (issuance of a licence) by a statutory authority, and at paragraph 47, the Supreme Court states as follows: '47. .... '"It was objected as to this that there is no specific law which compels him to exercise the discretion. Rule 250 merely vests a discretion in him but does not require him to exercise it. That is easily met by the observations of Earl Cairns L.C. in the House of Lord in Julius V. Lord Bishop of Oxford 5 App. Cas. 214 at 222, 223, observations which have our full and respectful concurrence:- "There may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so."' 52. The sum and substance of the above observations is that there is a discretion that vests in the Commissioner of Police for performance....