ITO, Hyderabad V. Munieer Khan, Hyderabad

ITA 1074/HYD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6446 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 04-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD KHURSHEED ALI
• Assessee Lawyers: K V N CHARYA
• Keywords: Unexplained cash credit; Capital asset; Benefit of exemption; Capital Gains
• Section: 54F; 69; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.1061/HYD/2008 ASSTT. YEAR : 2001-02 SHRI MUNEER KHAN, S/O LATE SHRI JAHANGIR KHAN, HYDERABAD (AHXPK 5607 K) (APPELLANT) ITA NO.1073/HYD/2008 ITO, WARD NO.7(2), HYDERABAD ITA NO.1074/HYD/2008 ITO, WARD NO.7(2), HYDERABAD VS. ITO, WARD NO.7(2), HYDERABAD (RESPONDENT) ASSESSMENT YEAR. 2001-02 SHRI MUNEER KHAN, S/O LATE SHRI JAHANGIR KHAN, HYDERABAD (AHXPK 5607 K) ASSESSMENT YEAR. 2003-04 SHRI MUNEER KHAN, S/O LATE SHRI JAHANGIR KHAN, HYDERABAD (AHXPK 5607 K) APPELLANT BY : SHRI MD. KHURSHEED ALI RESPONDENT BY : SHRI K.V.N. CHARYA, DR O R D E R PER : CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEALS IN ITA NOS.1061/HYD/2008 & ITA NO.1073 /HYD/2008 ARE CROSS APPEALS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) DATED 14.3.2008 AND PERTAINS TO THE ASSESSMENT YEARS 2001 -02 AND ITA NO.1074/HYD/2008 IS APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)- HYDERABAD DATED 14.3.2008 REL ATING TO ASSESSMENT YEAR 2003-04. SINCE CERTAIN COMMON ISSUES ARE INVO LVED IN THESE APPEALS, ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 2 2 THESE ARE CLUBBED, HEARD AND DISPOSED OFF VIDE THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL TAKE THE APPEALS RELATING TO TH E ASSESSMENT YEARS 2001-02 IN ITA NOS1061/H/2008 & 1073/HYD/2008. THE ASSESSEE RAISED GROUNDS IN ITS APPEAL WITH REGARD TO SUSTAINING ADD ITIONS OF RS.2,57,792/- ON ACCOUNT OF UNEXPLAINED CREDIT AND ALSO REGARDING SUSTAINING ADDITIONS OF RS.34,000/- TOWARDS LOW DRAWINGS. THE REVENUE IS IN APPEAL BEFORE US WITH REGARD TO GRANTING THE BENEFIT OF EXEMPTION U/ S 54F TO THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE PURCHASED A PROPERTY FOR CONSIDERATION OF RS.2.25 LAKHS AND INC URRED EXPENDITURE OF RS.37,792/- TOWARDS REGISTRATION TOTALING OF RS.2,5 7,792/- IN THE ASSESSMENT YEARS 2001-02. THE ASSESSING OFFICER FO UND THAT THERE WAS NO DEBIT ENTRIES IN THE BANK ACCOUNT AND HENCE CALLED FOR AN EXPLANATION REGARDING SOURCES FOR THIS INVESTMENT. THE ASSESSE E EXPLAINED THAT HE SOLD A SHOP FOR A CONSIDERATION OF RS.4 LAKHS AND THE SA ME WAS USED FOR THIS PURPOSE. THE ASSESSING OFFICER NOTICED THAT THE SH OP WAS SOLD IN JANUARY, 2009 I.E. AFTER THE PURCHASE OF THE PROPERTY AND AS SUCH SALE PROCEEDS OF SUCH SHOP COULD NOT HAVE BEEN USED FOR PURCHASE OF THE PROPERTY. ACCORDINGLY, THE SAID INVESTMENT OF RS.2,57,792/- WAS BROUGHT TO TAX U/S 69 OF THE ACT. THE SAME WAS CONFIRMED BY THE CIT(A ). 4. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS BEEN INCOME TAX ASS ESSEE FOR THE LAST 10 YEARS. THERE WAS AVAILABILITY OF OPENING CASH BALA NCE AS ON 1.4.1999 TO THE TUNE OF RS.2,14,012/- AND THE ASSESSEE PURCHASE D THE PROPERTY ON 25.9.2000. HE DREW OUR ATTENTION TO THE COPIES OF CASH FLOW STATEMENT AS ON 31.3.1999 WHICH IS ANNEXED TO THE RETURN OF INCO ME FOR THE ASSESSMENT YEARS 1999-2000. ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 3 3 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THERE IS NO EVIDENCE FOR KEEPING THE CASH ON HAND AND THE RE IS NO BASIS FOR AVAILABILITY OF SUCH CASH, SINCE HE HAS BEEN DECLAR ING VERY SMALL INCOME IN THE RANGE OF RS.60,000/- PER ANNUM WHICH WAS RS.5,0 00/- PER MONTH AND HE IS HAVING HIS PERSONAL EXPENSES ALSO. THERE IS NO EVIDENCE THAT HE HAS ABLE TO SAVE SUCH AN AMOUNT. THERE IS NO BANK ACCO UNT REFLECTING THESE TRANSACTIONS. HE SUBMITTED THAT THE ORDER OF THE C IT(A) TO BE CONFIRMED ON THIS ISSUE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS ADMITTED FACT THAT THE A SSESSEE HAS BEEN FILING RETURN OF INCOME FOR THE LAST 10 YEARS. THE ASSESS EE HAS ALSO FILED RETURN OF INCOME ON 31.1.2000 DECLARING INCOME OF RS.70,00 0/- AND THE ASSESSEE PAID TAX OF RS.3,000/- FOR THE ASSESSMENT YEAR 1999 -2000. THIS RETURN WAS ACCOMPANIED WITH THE STATEMENT OF COMPUTATION O F INCOME. THE ASSESSEE ALSO FILED CASH FLOW STATEMENT ALONG WITH THE RETURN OF INCOME WHICH SHOWS AS FOLLOWS: ACCOUNT TO DRAWING 20,000.00 BY BALANCE B/F 1,63,042.00 TO BALANCE C/D 2,14,012.00 BY NET INCOME 70,000.00 BY SHARE INCOME 970 2,34,012.00 2,34,012.00 7. THE ABOVE TABLE REFLECTS THE AVAILABILITY OF C ASH BALANCE AT RS.2,14,012/-AS ON 31-3-1999. THE DEPARTMENT ACCEP TED THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 1999-2000. THERE I S NO DISPUTE REGARDING THIS. ONCE THE DEPARTMENT ACCEPTED THE R ETURN OF INCOME FOR THE ASSESSMENT YEARS 1999-2000, IT IS TO BE CONSTRUED T HAT THEY ACCEPTED THE COMPUTATION OF INCOME AND ALSO CASH FLOW STATEMENT AND THE BALANCE SHEET ENCLOSED WITH THE RETURN OF INCOME. THEY HAVE NOT QUESTIONED THE CASH FLOW STATEMENT REGARDING THE AVAILABILITY OF FUNDS THEREON. LATER ON, THE ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 4 4 DEPARTMENT CANNOT SAY THIS FUND IS NOT AVAILABLE TO THE ASSESSEE. DUE CREDIT TO THIS SHOULD BE GIVEN. IT IS NOT OPEN TO THE DEPARTMENT TO PICK AND CHOSE THE CONTENTS OF THE RETURN AS SUITS TO THEM. ACCORDINGLY, IN OUR OPINION, THE CREDIT IS TO BE GIVEN TO THE AVAILABIL ITY OF CASH TO THE TUNE OF RS.2,14,012/-. HENCE, THIS GROUND TAKEN BY THE ASS ESSEE IS ALLOWED TO THAT EXTENT OF RS.2,14,012/-. 8. THE NEXT GROUND IN THE ASSESSEES APPEAL IS W ITH REGARD TO LOW DRAWING. THE ASSESSEE SHOWN DRAWING OF RS.20,000/- . ACCORDING TO THE ASSESSING OFFICER, IT IS VERY LOW AND ADDED RS.34,0 00/- TO THE INCOME OF THE ASSESSEE. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ACCORDING TO THE LEARNED DEPA RTMENTAL REPRESENTATIVE, THE ASSESSEE PAID A MUNICIPAL PROPERTY TAX AT RS.12 ,752/- AND THE ASSESSEES FAMILY CONSISTS OF 5 MEMBERS AND THE DR AWINGS OF RS.20,000/- IS NOT ENOUGH TO MEET THE MONTHLY EXPENDITURE OF TH E FAMILY. HENCE, HE ARGUED THAT THE ADDITION OF RS.34,000 IS TO BE CONF IRMED. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANYTHIN G OTHER THAN PAYMENT OF MUNICIPAL TAX OF RS.12,752/-. UNLESS THE ASSESS ING OFFICER BROUGHT ON RECORD ANY EVIDENCE REGARDING THE EXACT AMOUNT OF E XPENDITURE INCURRED BY THE ASSESSEE IN THE FORM OF BILLS, VOUCHERS OR B ANK WITHDRAWALS, WE ARE NOT IN A POSITION TO CONFIRM THIS ISSUE IN ITS ENTI RETY. ACCORDINGLY, WE CONFIRM THE ADDITION TO THE TUNE OF RS.12,752/- PAI D TOWARDS MUNICIPAL TAX FOR WHICH THERE IS AN EVIDENCE OF EXPENDITURE. THUS, ITA NO.1061/HYD/2008 IS PARTLY ALLOWED. 10. NOW COMING TO THE REVENUE APPEAL IN ITA NO.10 73/HYD/2008, THE MAIN GRIEVANCE OF THE DEPARTMENT IS WITH REGARD TO GRANTING OF EXEMPTION U/S 54F. THE ASSESSEE MADE A CLAIM U/S 5 4F WHICH WAS ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 5 5 DENIED BY THE ASSESSING OFFICER. THE ASSESSEE DISP OSED OF A SHOP IN JANUARY 2001 FOR A NET CONSIDERATION OF RS.4 LAKHS. OUT OF THIS, HE INVESTED AN AMOUNT OF RS.2,57,792/- WITHIN THE PRES CRIBED PERIOD OF PURCHASE OF PLOT. ACCORDING TO THE LEARNED DEPARTM ENTAL REPRESENTATIVE THE ASSESSEE NOT UTILIZED THE CAPITAL GAINS IN PURCHASE OF PLOT AND CONSTRUCTION OF HOUSE THEREON. THE PLOT WAS PURCHASED MUCH BEFO RE THE CAPITAL GAIN ACCRUED /RECEIVED BY THE ASSESSEE AND THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THAT HE HAS CONSTRUCTED THE HOUSE WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF SALE OF THE PROPERTY I.E. JA NUARY, 2001. MORESO, THE ASSESSEE HAS NOT INVESTED THE UNUTILIZED LONG TERM CAPITAL GAIN IN A SPECIFIC BANK ACCOUNT. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE CONTROVERSY RAISED BEFORE US IS WITH REGARD TO THE CONSTRUCTION OF S.54F OF THE ACT. IN ORDER TO UNDE RSTAND THE SAME, WE FEEL IT PROPER TO REPRODUCE S.54F AS UNDER: 54F. PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE O F AN ASSESSEE BEING AN INDIVIDUAL OR AN HUF, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HERE AFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSE E HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHIC H THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AF TER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREINAFTER IN TH IS 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 SA Y : A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CA PITAL GAIN SHALL NOT BE CHARGED U/S 45 ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 6 6 B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET C ONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPIT AL GAIN AS BEARS TO THE NEW WHOLE OF THE CAPITAL GAIN THE SAME PROPORTI ON AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED U/S 45. PROVIDED THAT NOTHING CONTAINED IN THIS SUB SECTION SHALL APPLY WHERE A) THE ASSESSEE I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN TH E 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 NE W ASSET, WITHIN A PERIOD OF 3 YEARS AFTER THE DATE OF TRANSF ER OF THE ORIGINAL ASSET AND B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER TH AN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAR INCOME FROM HOUSE PROPER TY. EXPLANATION: FOR THE PURPOSES OF THIS SECTION NET CONSIDERATION, IN RELATION TO THE TRANSFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXP ENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER 2 3 ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 7 7 4. THE AMOUNT OF THE NET CONSIDERATION WHICH IS NO T APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGIN AL ASSET TOOK PLACE, OR WHICH IS NOT UTILIZED BY HIM FOR THE PURCHASE OR CO NSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF I NCOME U/S 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN (SUC H DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME U/SUB SECTION (1 OF S.139 ) IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE C ENTRAL GOVT. MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTEE, FRAME IN THI S 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 UTILIZED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE COST OF THE NEW ASS ET. PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B SECTION IS NOT UTILIZED WHOLLY, OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB SECTION (1) THEN, I) THE AMOUNT BY WHICH A) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED H AD THE AMOUNT ACTUALLY UTILIZED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB SECTIO N (1) BEEN THE COST OF THE NEW ASSET SHALL BE CHARGED U/S 45 AS INCOME OF THE PREVIOUS Y EAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE ORI GINAL ASSET EXPIRES; AND ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 8 8 II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILIZED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 12. FROM A BARE READING OF S.54F, WE FIND THAT SU B SECTION (1) SHOULD BE READ WITH ALONG SUB SECTION (4). IT CANNOT BE READ IN ISOLATION BECAUSE THE BENEFITS OF S.54F ARE TO BE ALLOWED ONLY SUBJECT TO THE PROVISIONS OF SUB SECTION (4) OF THE SAID SECTION. THIS SECTION ALLO WS THE BENEFIT OF EXEMPTION TO THE INDIVIDUAL OR AN HUF IN WHICH CASE THE CAPIT AL GAIN ARISES FROM TRANSFER OF ANY LONG TERM CAPITAL ASSET NOT BEING A RESIDENTIAL HOUSE AND ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED OR HAS W ITHIN A PERIOD OF 3 YEARS AFTER THAT DATE, CONSTRUCT A RESIDENTIAL HOUS E, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH PROVISIONS LAID DO WN IN THIS SECTION. SUB S.(4) FURTHER STATES THAT THE AMOUNT OF NET CONSIDE RATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE O F THE NEW ASSET MADE WITHIN 1 YEAR BEFORE THE DATE OF WHICH TRANSFER OF THE ORIGINAL ASSET TOOK PLACE OR WHICH IS NOT UTILIZED BY HIM FOR PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF THE FILING OF THE RETU RN OF INCOME U/S 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISH SUCH RETUR N IN AN ACCOUNT IN ANY BANK OR INSTITUTION AS MAY BE SPECIFIED BY THE CENT RAL GOVT. IF BOTH THESE SUB SECTIONS ARE READ IN A CONJUNCTION ONLY ONE INF ERENCE IS DRAWN THAT TO AVAIL THE BENEFIT OF S.54F, THE ASSESSEE IS REQUIRE D EITHER TO PURCHASE A RESIDENTIAL HOUSE OUT OF THE SALE PROCEEDS OR LONG TERM CAPITAL ASSET WITHIN A PERIOD OF ONE YEAR BEFORE OR 2 YEARS AFTER THE DA TE ON WHICH TRANSFER TOOK PLACE OR WITHIN A PERIOD OF 3 YEARS AFTER THAT DATE , CONSTRUCT A RESIDENTIAL HOUSE. IN THAT CASE, GAIN SHALL BE COMPUTED AS PER CLAUSE (A) AND (B) OF SUB.S.(1) 13. IN CASE, THE ASSESSEE IS NOT ABLE TO APPROPRIA TE THE SALE PROCEEDS OF LONG TERM CAPITAL ASSET AS STATED ABOVE BEFORE THE DATE OF FURNISHING OF ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 9 9 RETURN OF INCOME U/S 139 HE IS REQUIRED TO DEPOSIT THE SAME BEFORE FURNISHING OF SUCH RETURN IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN AND UTILIZED IN ACCORDANCE WITH ANY SCHEME, WHICH THE CENTRAL GOVT. MAY BY NOTIFICATION IN THE OFFICIAL G AZETTE FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SU CH DEPOSIT. SIMILAR IS THE POSITION FOR CLAIMING THE EXEMPTION U/S 54. 14. THE OBJECT OF INTRODUCTION OF THESE SECTIONS A RE THAT ASSESSEE SHOULD MAKE MORE INVESTMENTS IN RESIDENTIAL HOUSE, ON SALE OF ITS OLD RESIDENTIAL HOUSE OR LONG TERM CAPITAL ASSET. IT IS NOT NECESS ARY THAT THE SAME FUNDS MUST BE USED IN PURCHASING OF THE NEW RESIDENTIAL H OUSE, BUT THE FUND SHOULD BE AVAILABLE WITH THE ASSESSEE FOR ITS INVES TMENT IN RESIDENTIAL HOUSE. SINCE THE LAW PERMITS UTILIZATION OF CAPITA L GAIN WITHIN THE SPECIFIED TIME, THE ASSESSEE MAY USE SUCH FUNDS FOR OTHER PUR POSE AND MAY FIND RESOURCE FROM OTHER SOURCE FOR INVESTMENT IN TIME. THE LAW DOES NOT EXPECT THAT THE SALE AMOUNT SHOULD BE KEPT IN THE L OCKER AND THE SAME SHOULD BE UTILIZED IN PURCHASE OF RESIDENTIAL HOUSE . NEITHER THE LAW NOR DOES ANY CIRCULAR REQUIRE THE IDENTITY OF THE AMOUN T RECEIVED ON SALE AND UTILIZATION FOR PURPOSE OF S.54F AND OTHER RELEVANT PROVISIONS. IT IS QUITE LIKELY THAT THE ASSESSEE MAY USE THE MONEY FOR HIS BUSINESS AND DRAW AMOUNT FOR INVESTMENT FROM HIS PAST SAVINGS. CONVE RSELY, HE MAY PLACE SALE PROCEEDS IN LONG TERM INVESTMENT OTHER THAN WH AT IS PERMITTED U/S 54F BUT, ALL THE SAME FIND MONEY FROM THE BUSINESS OR OTHER SOURCE FOR APPROVED INVESTMENT WITHIN THE TIME. SINCE LAW ITS ELF PERMITS INVESTMENT IN A NEW PROPERTY EVEN BEFORE SALE OF PROPERTY COVE RED BY SS 54 AND 54F, THE LAW DOES NOT CONTEMPLATE THE IDENTITY OF THE FU NDS ON SALE FOR ITS INVESTMENT. SINCE MONEY HAS NO COLOUR, ALL THAT IS REQUIRED IS COMPLIANCE WITH THE CONDITION OF INVESTMENT WITHIN THE SPECIFI ED TIME. ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 10 10 15. THIS VIEW IS FORTIFIED BY JUDGEMENT OF THE KER ALA HIGH COURT IN THE CASE OF ITO VS. KC GOPALAN (162 CTR 566) IN WHICH THE IR LORDSHIPS HAVE HELD THAT IN ORDER TO GET BENEFIT OF S.54, THERE IS NO C ONDITION THAT ASSESSEE SHOULD UTILIZE THE SALE CONSIDERATION ITSELF FOR TH E PURPOSE OF ACQUISITION OF NEW PROPERTY. IN THAT CASE, THE CLAIM OF THE ASSES SEE WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THE SAME F UND WAS NOT UTILIZED FOR CONSTRUCTION OF THE BUILDING AND IT WAS DEPOSITED I N AN APPROVED BANK. THE ASSESSEE TOOK A PLEA BEFORE THE APPELLATE AUTHO RITIES THAT HE HAD COMPLETED THE CONSTRUCTION OF A HOUSE IN CALICUT ON 31.12.1983 AT A COST OF RS.2,98,300 THE COST OF BUILDING WHICH HE HAD SO LD WAS VALUED AT RS.40,000. THEREFORE, THE COST OF CONSTRUCTION OF A NEW HOUSE PROPERTY IS MORE THAN THE CAPITAL GAIN, EVEN IF ANY LIABILITY O F CAPITAL GAIN WOULD ARISE FROM THE SALE OF HIS HOUSE. THEIR LODSHIPS OF THE KERALA HIGH COURT HAVE EXAMINED THE ISSUE AND HAVE HELD THAT THE WORDING O F SECTION ITSELF WOULD MAKE IT CLEAR THAT LAW DOES NOT INSIST FOR SALE CON SIDERATION OBTAINED BY THE ASSESSEE ITSELF SHOULD BE UTILIZED FOR THE PURCHASE OF HOUSE PROPERTY. THE MAIN PART OF S.54 PROVIDES THAT ASSESSEE HAS TO PUR CHASE A HOUSE PROPERTY FOR THE PURPOSE OF HIS OWN RESIDENCE WITHIN A PERIO D OF ONE YEAR BEFORE OR AFTER THE DATE ON WHICH TRANSFER OF HIS PROPERTY TO OK PLACE OR HE COULD HAVE CONSTRUCTED HOUSE PROPERTY WITHIN A PERIOD OF TWO Y EARS AFTER THE DATE OF TRANSFER. 16. IN THE PRESENT CASE, IT IS ADMITTED FACT THAT THE ASSESSEE HAS BROUGHT AN ASSET IN THE MONTH OF SEPTEMBER, 2000, T HOUGH THE ASSESSEE SOLD THE PROPERTY IN THE MONTH OF JANUARY, 2001. T HUS THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN THIS. THE AS SESSEE INVESTED THE CAPITAL GAIN ARAISED FROM THE TRANSFER OF LONG TERM CAPITAL ASSET NOT BEING A RESIDENTIAL ALLOWANCE INVESTED IN RESIDENTIAL HOUSE . THE ASSESSEE IS ENTITLED FOR DEDUCTION TO THAT EXTENT AND THE FINDI NGS OF THE CIT(A) IN ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 11 11 ACCORDANCE WITH THE PROVISIONS OF SEC.54F AND THE S AME IS CONFIRMED. THUS, APPEAL IN ITA NO.1073/HYD/ IS DISMISSED. 17. NOW COMING TO THE REVENUE APPEAL IN ITA NO.10 74/HYD/ IS WITH REGARD TO DELETION OF ADDITION OF RS.8,85,200/ - . BRIEF FACTS OF THE ISSUE ARE THAT IN THE ASSESSMENT YEARS UNDER CONSID ERATION, THE CAPITAL ACCOUNT SHOWED IN ADDITION OF RS.8,85,200/- AS RECE IPTS. WHEN THE ASSESSING OFFICER EXAMINED THE BANK ACCOUNT FOR THI S ASSESSMENT YEARS YEAR 2003-04, THE ASSESSEE DID NOT RECEIVE ANY REMI TTANCE DURING THE PREVIOUS YEAR 2002-03 RELEVANT ASSESSMENT YEARS 200 3-04. THE ASSESSEE RECEIVED REMITTANCE OF RS.10,85,200/- IN THE YEAR 2 001-02. THE SAME WAS TREATED AS UNEXPLAINED CREDIT. ON APPEAL ASSESSEE PLEADED BEFORE THE CIT(A) THAT THE ASSESSEE RECEIVED REMITTANCE DURING THE YEAR 2001-02 AND THE SAME LIABILITY CONTINUED DURING THE SUBSEQUENT YEARS ALSO. JUST BECAUSE IT WAS SHOWN IN THE BALANCE SHEET FOR THE A SSESSMENT YEARS 2003- 04, THE ASSESSING OFFICER WRONGLY CONCLUDED THE REM ITTANCE SHOULD HAVE COME ONLY DURING THAT YEAR TO EXPLAIN SUCH LIABILIT Y. SINCE THE REMITTANCE HAS COME IN THE EARLIER YEAR, THE CIT(A) DELETED TH E ADDITION. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 18. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMI TTED THAT THERE IS NO EVIDENCE TO SHOW THAT THE REMITTANCE OF RS.8, 85,200 HAD RECEIVED IN THE EARLIER FINANCIAL YEAR I.E., 2001-02. THE AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELI ED ON THE ORDER OF THE CIT(A). ON THE OTHER HAND, THE LEARNED DEPARTMENTA L REPRESENTATIVE RELIED ON THE ASSESSMENT ORDER. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THIS AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE AS FOLLOWS: ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 12 12 DATE CHEQUE NO. AMOUNT 17.8.2001 9531 RS.6,00,000 18.2.2002 9533 RS.2,85,200 =========== TOTAL RS.6,85,200 =========== 20. THESE FACTS WERE NOT CONTROVERTED BY THE DEPA RTMENTAL REPRESENTATIVE AND HENCE IN OUR OPINION, THE ADDITI ON CANNOT BE MADE IN THE ASSESSMENT YEARS 2003-04. THE DELETION OF ADDI TION BY CIT(A) IS JUSTIFIED AND SAME IS CONFIRMED. ACCORDINGLY THE R EVENUE APPEAL IN ITA NO.1074/HYD/ 2008 IS DISMISSED. 21. IN THE RESULT, THE ASSESSEE APPEAL IN ITA NO. 1061/HYD/2008 IS PARTLY ALLOWED AND THE REVENUE APPEALS IN ITA NOS. 1073 & 1074/HYD/2008 ARE DISMISSED. ORDER PRONOUNCED IN THE COURT 27. 8.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 27 TH AUGUST, , 2010 ITA NOS.1061, 1073 & 1074/H/2008 SHRI MUNEER KHAN, HYDERABAD 13 13 COPY FORWARDED TO: 1. SHRI MUNEER KHAN, S/O LATE JAHANGIR KHAN, 13-5-6 17, TAPPA CHABUTRA SABZI MANDI, HYDERABAD 2. ITO WARD NO.7(2), B-BLOCK, 2 ND FLOOR, IT TOWER, HYDERABAD, 3. CIT(A) IV, HYDERABAD 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP