TaxTMI 
TaxTMI 
2019 (2) TMI 2150
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....order. He has written 14/07/2017 as receipt of order of CIT(A), whereas, in fact, it was received on 14/08/2017. Necessary evidence has been submitted to this effect. 4. Considering the explanation of the assessee, I am of the view that the appeal is not time-barred. 5. The brief facts of the case are that the assessee has filed his return of income on 07/09/2013 electronically declaring total income at Rs. 1,98,970/-. The case of the assessee was selected for scrutiny assessment and notice u/s.143(2) was issued and served upon the assessee. 6. On scrutiny of the accounts, it revealed that assessee was co-owner along with 32 persons of an immovable property. It was sold on 28/03/2013 for a sum of Rs. 9.83 crores. The share of the assessee out of the sale consideration was Rs. 21,09,437/-. The assessee claimed exemption u/s. 54 of the Act on the ground that he has purchased a new residential house situated at Flat No.302, Second Floor, Shreeji Villa Flats, Vejalpur, Ahmedabad for Rs. 49,00,000/-. This house was purchased on 18/03/2014 in joint capacity with her wife. The Ld. Assessing Officer has denied the exemption claimed by the assessee on the ground that the house was ....
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....Hon'ble Karnataka High Court in the case of K. Ramachandra Rao as well in the case of Hon'ble Calcutta High Court in the case of CIT vs. Smt. Bharati C. Kothari (2000) 160 CTR 165. I am of the view that Division Bench of the ITAT has made a lucid enunciation of law while explaining the scope of section 54(2). I cannot do better than to extract the discussion made by the ITAT which read as under: 4. We have heard the rival contentions and have also gone through the records. Admittedly, the capital gain had arisen to the assessee on 17.9.2012 and the amount was paid by the assessee to the builder for purchase of a new house on 9.9.2014 i.e. within 2 years of the date of transaction of sale of the house property. The Assessing officer denied the claim because as per the agreement with the builder, the house was to be completed within 4 years, whereas, as per the provisions of section 54 of the Act, the house should have been constructed within 3 years from the date of receipt of the capital gains. Though the assessee has relied upon various cases wherein liberal construction has been taken by the Tribunal as well as various High Courts which is in consonance of the ob....
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....struction of other house, within the stipulated period, hence, substantial compliance has been made by the assessee. 7. On the other hand, Ld. DR while referring to the provisions of section 54 of the Act, has submitted that the assessee was required to deposit the capital gains in the relevant scheme and since the said requirement under the provisions was not complied with, hence, the assessee is not entitled to claim for the benefit under the exemption provisions of section 54 of the Act. 8. We have heard the rival contentions. Before deliberating further on this issue we would like to reproduce the relevant provisions of section 54 of the Act herein under :- "Profit on sale of property used for residence. 54. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee ha....
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....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. Explanation .-- [ Omitted by the Finance Act, 1992, w.e.f. 1.4.1993" 9. A perusal of the above reproduced provisions of section 54 of the Act reveals that it deals with the capital gains earned on sale of property used for residence and as per the provisions of sub section (1) of section 54 of the Act, if an assessee, after sale of his residential property, has within a period of one year before or two years after the date of such transfer or within a period of three years, constructs a residential house, the capital gains will not be charged to tax upt....
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....ights of the exemption provisions u/s 54 of the Act. This enabling section, in our view, cannot abridge or modify the substantive rights given vide sub section (1) of section 54 of the Act, otherwise, the real purpose of substantive provision i.e. sub section (1) will got defeated. The primary goal of exemption provisions of section 54 is to promote housing. The procedural and enabling provisions of sub-section (2) thus cannot be strictly construed to impose strict limitations on the assessee and in default thereof to deny him the benefit of exemption provisions. In our view, if the assessee at the time of assessment proceedings, proves that he has already invested the capital gains on the purchase / construction of the new residential house within the stipulated period, the benefit under the substantive provisions of section 54(1) cannot be denied to the assessee. Any different or otherwise strict construction of sub section (2), in our view, will defeat the very purpose and object of the exemption provisions of section 54 of the Act. Our above view, is fortified with the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Shri K Ramachandra Rao, ITA No. 47 of ....