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2017 (9) TMI 2060
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....tion of Ld. AO in respect of not allowing deduction u/s 54 on following items : 2.1 Aggregate payments of Rs. 18,52,650/- made to builder for a residential flat during the period of more than 1 year but less than 2 years prior to the date of sale of residential house from which taxable long capital gain arose. 2.2 Aggregate payments of Rs. 25,40,389/- made to builder for a residential flat during the period of 1 year prior to the date of sale of residential house. 2.3 Amount of Rs. 2,00,000/- deposited in capital gain scheme account on 27.09.2013 and subsequently utilized for payment of Rs. 2,06,000/- to builder for a residential flat, by erroneously interpreting that the amount in capital gain scheme account should have been deposited before the due date of filing of ITR u/s 139(1) and not u/s 139(4)." 3. The only issue in the present appeal pertains to denial of exemption claimed under section 54 of the Income Tax Act, 1961 (in short 'the Act') to the extent of investment made in construction of new house prior to the date of sale of original asset and on account of deposit made in Capital Gain Account scheme after the due date of filing of r....
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....n 7.11.2012; and iii) not getting the possession of flat within three years from date of sale. 6. The matter was carried in appeal before the Ld. CIT(Appeals) where the assessee contested the disallowance on various grounds i.e .: a) merely not handing over of possession within three years was not sufficient reason to make disallowance even while the assessee had made substantial payment within two years; b) the acquisition of flat tantamounted to construction of flat and not purchase; c) that there was no time limit for commencement of construction though the section prescribed time limit for completing the same. 7. The Ld. CIT(Appeals) after considering the assessee's submissions narrowed down the points of dispute as under; a) whether the new house acquired should be taken as purchase or construction and; b) What is the period within which the investment could have been made. and held that the present was a case of construction of residential house and not purchase and that out of the total investment of Rs. 53,94,520/-, the amount invested before the date of sale i.e. Rs.43,93,039/- could not be allowed as deduc....
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....." 8. Aggrieved by the same, the assessee has now come up in appeal before us. The Ld. counsel for the assessee during the course of arguments before us first drew our attention to the facts of the case and pointed out first the payments made towards construction of the residential house, which are reproduced at page 73 of the Paper Book as under: Date Paid Amount Paid in Rs. Remarks 12.01.2011 304,600.00 Paid to Builder 12.01.2011 500,000.00 Paid to Builder 29.06.2011 500,000.00 Paid to Builder 03.08.2011 500,000.00 Paid to Builder 03.08.2011 48,050.00 Paid to Builder 30.11.2011 57,402.50 Paid to Builder 30.11.2011 39,862.00 Paid to Builder 28.12.2011 262,012.00 Paid to Builder 18.02.2012 262,013.00 Paid to Builder 22.02.2012 6,746.82 Paid to Builder 07.06.2012 262,012.50 Paid to Builder 07.06.2012 8,096.00 Paid to Builder 11.08.2012 1,048,050.00 Paid to Builder 13.08.2012 32,385.00 Paid to Builder 15.09.2012 262,012.50 Paid to Builder 17.09.2012 14,843.14 Paid to Builder 11.10.2012 262,012.50 Paid to Builder 11.10.....
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....0 (Chen Trib.) ii) ACIT Vs. Shri Subhash Sevaram Bhavnani ITA No. 928/Ahd/2012 dated 29.6.2012 11 The Ld. counsel for assessee further pointed out that vis-à-vis denial of claim of exemption u/s 54 of the Act on account of deposits made in the capital gain account scheme after the due date of filing return of income u/s 139(1) of the Act, the Hon'ble jurisdictional High Court in the case of CIT vs Jagrati Aggarwal reported in 339 ITR 610 (P&H) had held the date of filing of delayed return u/s 139(4) of the Act as the due date and deposits made in capital gain account scheme up to that date were allowed deduction. The Ld. counsel for assessee, therefore, stated that the denial of deduction by the Ld. CIT(Appeals) was not in accordance with law. 12. The Ld. DR, on the other hand, relied upon the order of the Ld. CIT(Appeals). 13. We have heard the contentions of both the parties, perused the orders of the authorities below and gone through the documents referred to before us. 14. The only issue in the present appeal, we find, can be narrowed down as under; i) whether the amounts invested in construction of residential flat prior to the date of....
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....wed for the reason that the same was deposited beyond the date prescribed u/s 54 of the Act which was by due date of filing of return of income u/s 139(1) of the Act. 18. The main argument of the Ld. counsel for assessee has been that having accepted the fact that the amount invested in new flat by virtue of agreement entered into with the builder tantamounted to construction of the residential house, the only limitation prescribed by section 54 of the Act was that the construction ought to have been completed within a period of three years and the said section did not prescribe any condition vis-a-vis the commencement of construction. The Ld. counsel for assessee has relied upon several case laws in this regard. 19. We have gone through the decisions relied upon by the Ld. counsel for assessee and find merit in the contention of the Ld. Counsel for the assessee. The Hon'ble Delhi High Court in the case of Bharati Mishra ((supra) has categorically held that the condition stipulated by section 54F which is identical to that in section 54 of constructing a residential house within three years for the purpose of claiming deduction does not stipulate that the construction mus....
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....rthermore, this Court in Associated Cement Companies Ltd. v. State of Bihar [(2004) 7 SCC 642], while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held: (SCC p. 648, para 12) "12. Literally 'exemption' is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted a....
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....the assessee or a parent of his mainly for the purposes of his own or the parent's own residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purposes of his own residence, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, .. " Under this section, if the assessee has within a period of one year after the date on which the transfer took place purchased or has within a period of two years after that date constructed a residential house, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the other provisions set out in the said section. The Tribunal on an appreciation of the evidence has firstly found that the building was used by the assessee mainly for his residential purpose. Taking into consideration the area of the building under the occupation of ....
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....e filed u/s 139(4) is 31.5.2015 i.e. one year after the end of the relevant assessment year. The deposit in the capital gain account scheme has been made on 27.9.2013 which is well before the due date for filing the return of income u/s 139(4). The Hon'ble jurisdictional High Court in the case of Jagriti Aggarwal (supra), while dealing with an identical issue held that though section 54 stipulates deposit of amount in the capital gain account scheme before the due date specified u/s 139(1), section 139(4) which extends the date of filing of return of income was held to be a proviso to sub-section (1) of section 139 of the Act and not an independent provision and thus the Hon'ble Court held that the due date of furnishing of return of income as per section 139(1) was to be subjected to the extended period provided under sub- section (4) of section 139 of the Act. The relevant findings of the Hon'ble Court are as under: "10. Having heard learned counsel for the parties, we are of the opinion that sub-s. (4) of s. 139 of the Act is, in fact, a proviso to sub-s. (1) of s. 139 of the Act. Sec. 139 of the Act fixes the different dates for filing the returns for diffe....