Joint Commissioner of Income-tax (OSD),Circle -7, Pune V. Santosh Suresh Gupta, Pune

ITA 06/PUN/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9223 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-03-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 03-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IS DIRECTED AGAINS T PASSED
• Assessee Lawyers: LD CITA ON IN RELATION TO A Y
• Keywords: Capital asset; Benefit of exemption; Capital Gains
• Section: 54F; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH , B PUNE VIRTUAL COURT BEFORE SH RI R.S. SYAL, VICE PRESIDENT AND SH RI S.S. VISWANETHRA RAVI , J UDICIAL MEMBER . / ITA NO. 06 / PUN /201 8 / ASSESSMENT YEAR : 201 3 - 1 4 JCIT (OSD), CI RCLE 7, PUNE VS. SANTOSH SURESH GUPTA FLAT NO.B - 4, 105, AGRASEN SOCIETY, KOREGAON PARK, PUNE 411001 PAN: ACNPG6836H APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 2 9 . 0 9 .201 7 IN RELATION TO THE A.Y. 201 3 - 1 4 . 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DE LETION OF ADDITION OF RS.3,01,10,936 MADE BY THE AO BY DISALLOWING THE EXEMPTION U/S 54F OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) . ASSESSEE BY SHRI KRISHNA GUJARATHI REVENUE BY SHRI SUDHENDU DAS DATE OF HEARING 0 5 - 0 8 - 2021 DATE OF PRON OUNCEMENT 05 - 0 8 - 2021 ITA NO. 06 /PUN/201 8 SANTOSH SURESH GUPTA 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS BEEN ENGAGED AS A BUILDER. SHE DEVELOPED A PROJECT , NAMELY , SOLITA IRE, SITUATED AT SR. NO.17, DHANORI, PUNE. THE LAN D FOR THE SAME WAS PURCHASED ON 10.06.1985. T HE ASSESSEE SOLD 1/4 TH OF THE LAND ON 25.03.2011 FOR A SUM OF RS.2.7 CRORES AND DECIDED TO DEVELOP THE REMAINING 3/4 TH LAND HERSELF BY CONVERTING THE SAME IN TO STOCK IN TRADE. T HE ASSESSEE DECLARED , INTER ALIA , LONG TERM CAPITAL GAIN O N SALE OF FLATS OF THE SAID PROJECT . SHE CLAIMED EXEMPTION U/S 54F AMOUNTING TO RS.3,01,10,936 ON THE GROUND THAT SHE INVESTED A TOTAL SUM OF RS.3,24,39,500 BY DEPOSIT ING RS.1 CRORE IN C APITAL GAIN SCHEME ACCOUNT AND INVEST ING RS.2,24,39,500 IN PURCHASE OF RESIDENTIAL LAND AT A - 36, PURU SOCIETY, LOHEGAON, PUNE FOR CONSTRUCTION OF HOUSE. T HE AO OBSERVED THAT THE ASSESSEE HAD STARTED CONSTRUCTION OF A BUNGALOW AT PLOT NO.A - 36, PU RU SOCIETY, LOHEGAON, PUNE FOR CLAIMING EXEMPTION U/S 54F. HOWEVER, THE CONSTRUCTION OF SAID BUNGALOW WAS NOT COMPLETE ON THE DATE OF ASSESSMENT. IN ORDER TO ASCERTAIN THE STAGE OF COMPLETION/CONSTRUCTION OF HOUSE OF THE ASSESSEE, AN INSPECTOR OF INCOME T AX WAS DEPUTED TO FIND OUT THE FACTS BY WAY OF A SITE VISIT. ITA NO. 06 /PUN/201 8 SANTOSH SURESH GUPTA 3 CERTAIN PHOTOGRAPHS HAVE BEEN REPRODUCED IN THE ASSESSMENT ORDER INDICATING THAT A STRUCTURE WAS THERE WHICH WAS INCOMPLETE. THE AO OPINED THAT EVEN AFTER A LAPSE OF THREE YEARS FROM THE DATE O F TRANSFER OF ORIGINAL ASSET I.E. 23.10.2012 , THE ASSESSEE COULD NOT COMPLETE THE CONSTRUCTION OF HOUSE AND HENCE EXEMPTION U/S 54F WAS NOT AVAILABLE. HE, THEREFORE, DENIED THE BENEFIT OF EXEMPTION AMOUNTING TO RS.3,01,10,936. THE CIT(A) OVERTURNED THE A SSESSMENT ORDER ON THIS ISSUE, AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 4 . WE HAVE HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD . IT IS OBSERVED THAT THE ONLY ISSUE ON THE BASIS O F WHICH THE EXEMPTION U/S 54F HAS BEEN DENIED IS THAT THE ASSESSEE DID NOT COMPLETE THE CONSTRUCTION OF HOUSE WITHIN A PERIOD OF THREE YEARS ALBEIT THE CONST RUCTION WORK WAS GOING ON. WE, THEREFORE, NEED TO ASCERTAIN AS TO WHETHER IT IS COMPLETION OF CONS TRUCTION OR JUST INVESTMENT OF NET CONSIDERATION IN CONSTRUCTION WHICH IS SINE QUA NON FOR GRANTING EXEMPTION U/S 54F OF THE ACT . THE RELEVANT PART OF SECTION 54F IN THIS REGARD READS AS UNDER: ITA NO. 06 /PUN/201 8 SANTOSH SURESH GUPTA 4 54F. (1) SUBJECT TO THE PROVISIONS OF SUB - SECTION (4), WHER E, 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 AS SESSEE 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 T HE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45 : PROVIDED THAT NOTHING CONTAINED IN THIS SUB - SECTION SHALL APPLY WHERE ( A ) THE ASSESSEE, ( I ) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR ( II ) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR ( III ) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL A SSET; AND ( B ) 5. ON GOING THROUGH THE ABOVE LANGUAGE OF THE PROVISION, IT IS CLEAR THAT THE REQUIREMENT OF SECTION 54F IS , INTER - ALIA, TO CONSTRUCT ITA NO. 06 /PUN/201 8 SANTOSH SURESH GUPTA 5 THE RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS BY INVESTING THE NET CONSIDERATION . THE PROVISO TO THIS SECTION ALSO STATES THAT THE EXEMPTION SHALL NOT BE ALLOWED IF THE ASSESSEE CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET . SO THE EMPHASIS IN THE PROVISION IS ON CONSTRUCTING. NOWHERE DOES THE PROVISION LAY DOWN A STIPULATION O F COMPLETI ON OF CONSTRUCTION AS A CONDITION PRECEDENT FOR CLAIM ING THE EXEMPTION . ONCE THE CONSTRUCTION HAS BEEN STARTED AND THE REQUISITE AMOUNT HAS BEEN INVESTED IN THE SAME, THE R EQUIREMENT OF SECTION 54F GETS FULFILLED NOTWITHSTANDING THE FACT THAT THE CONSTRUCTION DOES NOT GET COMPLETED WITHIN THE GIVEN PERIOD OF THREE YEARS. ON THE FACTS OF EXTANT CASE, IT IS AMPLY CLEAR THAT THE ASSESSEE INVESTED RS.2.24 CRORES AND ODD I N THE CONSTRUCTION OF HOUSE WITHIN A PERIOD OF THREE YEARS, WHICH CONSTRUCTION WAS INCOMPLETE AT THE END OF TH E STIPULATED PERIOD , BUT GOT ACTUALLY COMPLETED AT A LATER STAGE AS HAS BEEN RECORDED BY THE LD. CIT(A) ON THE LAST PAGE OF HIS ORDER. IT IS FURTHER NO T DISPUTED THAT THE ASSESSEE INVESTED A SUM OF RS.1 CRORE IN THE CAPITAL GAINS SCHEME ACCOUNT. ITA NO. 06 /PUN/201 8 SANTOSH SURESH GUPTA 6 IN VIEW OF THE FOREGOING DISCUSSION, WE CONCUR WITH THE LD. CIT(A) IN GRANTING EXEMPTION U/S 54F OF THE ACT AND COUNTENANCE HIS VIEW. 6 . IN THE RESULT, THE APPE AL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2021. SD/ - SD/ - ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT PUNE ; DATED : 5 TH AUGUST , 2021 GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT (A) , PUNE - 5 , PUNE 4. 5. 6. THE PR. CIT , PUNE - 4 , PUNE DR, ITAT, B BENCH, PUNE / GUARD FILE . / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO. 06 /PUN/201 8 SANTOSH SURESH GUPTA 7 DATE 1. DRAFT DICTATED ON 0 5 - 0 8 - 2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 0 5 - 0 8 - 2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *