TaxTMI 
TaxTMI 
2026 (5) TMI 940
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....) failed to take note that the incentive provisions of section 54 should be interpreted beneficially as per its legislative intent. The Appellant, having fulfilled the essentials of the legislative intent, ought to be allowed the deduction in appeal. 2. Both the lower authorities erred in passing their respective orders in contravention of principles of natural justice. Their actions require to be set right in appeal." 3. Brief facts of the case are that the assessee is an individual and had filed his return of income declaring total income at Rs. 24,73,890/- after claiming deduction under chapter VI of the Act. The assessee's case was selected for limited scrutiny assessment under e- Assessment Scheme, 2019 on the issue of "capital gains deductions claimed". Notices u/s 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The Learned Assessing Officer ("Ld. AO" for short) after duly considering the assessee's submission passed the assessment order u/s 143(3) r.w.s. 143(3A)(3B) of the Act vide order dated 31.03.2021 determining the total income at Rs. 3,93,75,231/- after making an addition u/s 54 of the Act amounting to Rs. 3,69,01,341/- ....
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....judication is whether the assessee is entitled to claim deduction u/s 54 of the Act in case where the Department alleges that the assessee has failed to deposit the sale consideration in the capital gain account within the prescribed period as per the provisions of section 54(2) of the Act. 9. It is observed that the assessee has sold land or building or both for a total sale consideration of Rs. 5,03,00,000/- on various dates ranging from 08.08.2017 to 22.12.2017 and had claimed deduction u/s 48 of the Act amounting to Rs. 1,33,98,659/-. The assessee had claimed deduction u/s 54 of the Act on the balance amount of Rs. 3,68,01,341/-. It is further observed that the assessee had filed his return of income on 28.12.2018 belatedly which according to the Ld. AO ought to have been filed on 31.10.2018 which was the extended due date for filing the returns u/s 139(1) of the Act. The Ld. AO denied the assessee's claim u/s 54 of the Act for the reason that the assessee had failed to deposit the capital gain amount in the capital gain account scheme nor had he made investment before the due date of filing of return of income u/s 139(1) of the Act. Pertinently, the assessee is said to have....
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....s section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain: ^6[Provided that where the amount of the capital gain does not exceed two crore rupees, the assessee may, at his option, purchase or construct two residential houses in India, and where such option has been exercised,- (a) the provisions of this sub-section shall have effect as if for the words "one residential house in India", the words "two residential houses in ....
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.... of ten crore rupees shall not be taken into account for the purposes of this sub-section.] Explanation.- ^14[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]" 10. On a bare perusal of the provision, it is observed that the assessee on transfer of a long term capital asset where capital gain arises from such transfer, the assessee within the specified period had invested in the purchase/construction of a new asset then the said capital gain is not chargeable to tax subject to fulfilment of the conditions specified in section 54(1) of the Act. Sub section 2 provides for depositing the unutilized amount for purchase or construction of new asset in a notified bank account which shall be deposited before furnishing such return which is not later than the due date for furnishing return of income u/s 139(1) of the Act. For the purpose of determining the capital gain tax the assessee's contention is that section 54 of the Act is a beneficial provision and should be interpreted liberally where the assessee is entitled to the benefit of section 54 of the Act when the basic conditions of the said provisions are satisfied. The assessee further contends that ultimately he had in....
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....ital gains is utilized before filing of the return of income in purchase/construction of a residential house, then the benefit of exemption under Section 54F of the Act is available. Before us it is an undisputed position that except Rs. 35 lakhs, the balance of the amounts subject to capital gains tax has not been utilized before date of furnishing of return of income i.e. 4th November, 1996 under Section 139 of the Act. Therefore, on plain interpretation of Section 54F of the Act, it appears that the impugned order of the Tribunal cannot be faulted. (j) However, the aforesaid view would be subject to the result of our examination of the submissions and case laws relied upon by Mr. Chatterji in support of the appeal to urge a view contrary to the plain meaning of Section 54F of the Act. (k) Reliance placed by the Appellant upon the decision of this Court in Mrs. Hilla J. B. Wadia's case (supra) to contend that the issue stands concluded in favour of the appellant-assessee is not acceptable. This for the reason that the only issue for consideration before the Court in the above case was the interpretation of Section 54 of the Act. In the above case the assesse....
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.... by sub-section (4) of Section 54F of the Act. Therefore, neither the decision of this Court in Mrs. Hilla J. B. Wadia's case (supra) nor the Central Board of Direct Taxes Circulars dated 15th October, 1986 and 16th December, 1993 would govern the issue so as to conclude the issue in favour of the Appellant. (m) The reliance upon the decision of the M.P. High Court in Smt. Shashi Varma's case (supra), also does not advance the case of the Appellant. We find that the facts in the above case are similar to the one in Mrs. Hilla J.B. Wadia's case (supra) and for the same reasons, will not govern the present dispute. In fact, the issue stood covered by the Circular dated 15th October, 1986 as the property purchased therein was of the Delhi Development Authority. Thus, the above decision has no application to the present facts. (n) Mr. Chatterji, learned Senior Counsel appearing for the appellant assessee then contended on the basis of the two Circulars dated 15th October, 1986 and 16th December, 1993 of the Central Board of Direct Taxes that once an allotment letter has been issued to the assessee, then it follows that the title of the constructed house ha....
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....ter of law and intent can never override the plain and unambiguous letter of the law. It is true that normally while construing an all India Statute like the Income Tax Act, we would not easily depart from a view taken by another High Court on an issue arising for our consideration. This on consideration of certainty and consistency in law. However, the view of the other High Courts are not binding upon us unlike a decision of the Apex Court or of Larger or a Co-ordinate Bench of this Court. Thus if on an examination of the decisions of the other High Court we are unable to accept the same, we are not bound to follow/accept the interpretation of the other High Courts leading to a particular conclusion. In this case we find that the decision of the Karnataka High Court in K. Ramachandra Rao's case (supra) was rendered subsilentio i.e. no argument was made with regard to the requirement of deposit in notified bank account in terms of Section 54F(4) of the Act before the due date as provided in Section 139(1) of the Act. As observed in Salmond's Jurisprudence 12th Edition : "The rule that a precedent sub silentio is not authoritative goes back at least to 1661(m) when....
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.... the intent of parties and/or beneficial construction is irrelevant. In fact, the Apex court in Sales Tax Commissioner v. Modi Sugar Mills [1961] 12 STC 182 reiterated the well settled principle of interpretation in the following words: "In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statute be interpreted on any presumption or assumptions....It must interpret a taxing statute in the light of what is clearly expressed . . ." Recently, the Supreme Court in Mathuram Agrawal v. State of Madhya Pradesh [1999] 8 SCC 667 has observed as under :- "The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be....
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....urchase of the flat. In this case we are concerned with the purchase/construction of residential housing, after the sale of capital asset. This requires the amount which is to be subjected to capital gain has to be utilized before the date of filing of return of Income under Section 139 of the Act by the assessee. Section 54F(4) of the Act itself clearly states that the amount not utilized in purchase/construction of flat/house should be deposited in the specified Bank notified by the Government. Thus the plain language employed in Section 54F(4) of the Act makes a clear distinction between cases of appropriation (purchase prior to sale of capital asset) and utilization (purchase/construction after the sale of capital asset). Therefore the word "appropriated" would have no application in cases of purchase/construction of a house after the sale of capital asset with which we are concerned. (v) Lastly and in the alternative, it is submitted by Mr. Chatterji, that as the entire amount has been paid to the developer/builder before the last date to file the return of Income under Section 139 of the Act, the exemption is available to the appellant under section 54F(4) of the Act....
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....ection 54F(4) of the Act. (x) In the above view question no. 2 is also answered in the affirmative i.e. in favour of the revenue and against the appellant-assessee." 11. From the above observation, it can be inferred that the deposit of the unutilized amount in specified bank account within the prescribed time limit is a mandatory condition which cannot be overlooked though the same being a beneficial provision. Further, it had also dealt with the decision of Hon'ble Karnataka High Court in K. Ramachandra Rao (supra) which had merely gone by the intention of the assessee to purchase or construct the house and not to retain the capital gain, rather than looking into the provision of the Act where it had unambiguously specified that the unutilized consideration has to be deposited as per the capital gain scheme before the due date of filing of return of income u/s 139(1) of the Act. This tantamounts to a precedent sub-silentio and more so the decision of one High Court is not binding on another High Court as a precedent. Here in the present case, the facts are distinguishable to the extend that the assessee is said to have invested the entire sale consideration before fil....