Saraswathy, CHENNAI V. ITO, CHENNAI

ITA 1170/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8034 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 29-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Capital asset; Gift; Period of limitation; Cost of acquisition; Non compliance; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 54F; 274; 139(1); 139(4); 54EC; 13; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.1170/MDS./2016 / ASSESSMENT YEAR : 2012-13 SMT SARASWATHY , 76,RAJA NAGAR, 2 ND CROSS ROAD, NEELANKARAI,CHENNAI -41. VS. THE ITO, BUSINESS WARD V(1), CHENNAI -34. [PAN ARIPS 0675 A ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI K.G.RAGHUNATH, ADVOCATE /RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT D.R / DATE OF HEARING : 22 - 12 - 2016 / DATE OF PRONOUNCEMENT : 20 - 01 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHENNA I DATED 04.02.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. ITA NO.1170/16 :- 2 -: 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WIT H REGARD TO NON-GRANTING OF EXEMPTION U/S.54F OF THE ACT ON THE REASON THAT THE RETURN FILED BY THE ASSESSEE U/S.139(4), AS SUCH TH E BENEFIT U/S.54F IS DENIED. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE HA D SOLD HIS VACANT LAND FOR A TOTAL CONSIDERATION OF ` 56,51,000/- AND THE SALE CONSIDERATION WAS INVESTED IN CONSTRUCTION OF BUILDING, WHICH WAS INH ERITED FROM HER FATHER. THE AO FOUND THAT THE ASSESSEE HAD NOT DEPOSITED UNUTIL IZED CAPITAL GAINS IN THE CAPITAL GAINS ACCOUNT SCHEME BEFORE DUE DATE OF FIL ING THE RETURN OF INCOME WHICH FALLS ON 31.07.2012. ACCORDING TO AO, IT IS A MANDATORY CONDITION ON THE TAX PAYERS TO DEPOSIT UNUTILIZED CAPITAL GAINS IN THE CAPITAL GAINS ACCOUNT AND IF SHE FAIL TO FULFILL THIS CONDITION, SHE IS N OT ELIGIBLE FOR EXEMPTION U/S.54 / 54F OF THE ACT. HENCE, THE AO DISALLOWED A SUM OF 50,70,180/- FRO M SALE CONSIDERATION AS THE SAID SUM WAS NOT INVESTED IN A CAPITAL GAINS SCHEME, BEFORE THE DATE OF FILING OF RETURN OF INCO ME ON 31.07.2012. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE T HE LD.CIT(A). 3.1 ON APPEAL, LD.CIT(A) OBSERVED THAT THE ASSESSE E HAD SUBMITTED A CONFIRMATION FROM M/S.N.TECH INFRASTRUC TURE DATED 28.08.2014 ADDRESSED TO THE AO STATING THAT ` 56,57,144/- WAS RECEIVED FROM THE ASSESSEE BEFORE 31.07.2012. HOWEVER, THIS WAS FACTUALLY INCORRECT AS ` 5,20,000/- ONLY WAS WITHDRAWN FROM THE BANK BEFORE 31.07.2012 AND ONLY POST DATED CHEQUES WERE GIVEN TO THE BUILDER. THEREFORE, LD.CIT(A) ITA NO.1170/16 :- 3 -: CONFIRMED THE ACTION OF THE AO. AGAINST THIS, THE A SSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US LD.A.R DREW OUR ATTENTION TO THE FOLL OWING POINTS FOR OUR CONSIDERATION. A) THE ASSESSEE HAD SOLD THE VACANT LAND SITUATED AT KURINJI NAGAR, PERUNGUDI FOR A SALE CONSIDERATION OF ` 56,51,000/- AND HAD THEREON REINVESTED THE ENTIRE SALE CONSIDERATION IN THE CON STRUCTION OF A RESIDENTIAL HOUSE ON HER OWN LAND SITUATED AT NO.15 , VALLALAR MAIN ROAD, CHELLI NAGAR, CAMP ROAD, SELIYUR CHENNAI 600 073 , FOR AN AGREED CONSTRUCTION COST OF ` 57,00.000/-. THE ASSESSEE HAD ALSO ENTERED INTO A CONSTRUCTION AGREEMENT WITH M/S N. T ECH INFRASTRUCTURE ON SEPTEMBER 2011 AND THE CONSTRUCTION WAS AGREED T O BE COMPLETED ON OR BEFORE MARCH 31, 2014. THE ASSESSEE HAD DEPOS ITED THE SALE CONSIDERATION INTO HER BANK ACCOUNTS MAINTAINED AT AXIS BANK (A/C NO. 423010100070090) AND INDIAN BANK ACCOUNT (A/C NO. 771795055) AND ALL THE PAYMENTS TOWARDS THE CONSTRUCTION OF TH E RESIDENTIAL HOUSE WERE ISSUED ONLY FROM THE ABOVE MENTIONED BANK ACCO UNTS. B) THE ASSESSEE HAVING THUS COMPLIED WITH THE PROVI SIONS OF SECTION 54 F, I.E., REINVESTMENT OF THE SALE CONSIDERATION WITHIN A PERIOD OF THREE YEARS TOWARDS THE CONSTRUCTION OF A RESIDENTIAL PRO PERTY ; AND AS THE APPELLANT HAD ALSO INTENDED TO COMPLETE THE UTILISA TION OF THE ENTIRE SUM OF ` 56,51,000/- TOWARDS THE NEW RESIDENTIAL HOUSE BEFOR E 31.03.2014, THE APPELLANT FILED HER RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2012-13 ON 31. 07.2012 AS PER THE P ROVISIONS OF SECTION 139 OF THE INCOME TAX ACT, 1961, CLAIMING T HE ENTIRE SALE PROCEEDS AS EXEMPTED INCOME. C) THE LEARNED ASSESSING OFFICER, HAD COMPLETED THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT,1961 ON 07.10.2014 AFT ER MAKING AN ITA NO.1170/16 :- 4 -: ADDITION OF A SUM OF ` 50,70,180/- FROM OUT OF THE SALE CONSIDERATION, STATING THE REASON THAT THE SAID SUM WAS NOT INVEST ED IN A CAPITAL GAINS SCHEME, BEFORE THE DATE OF FILING OF RETURN O N 31.07.2012. D) THE LEARNED ASSESSING OFFICER, HAD ALSO ERRONEO USLY CONSIDERED THE COST INFLATION INDEX OF THE YEAR 2004-05 OF 480, IN STEAD OF 161 , WHICH IS THE CII OF THE YEAR 1988, THE FIRST YEAR IN WHIC H THE ASSET WAS ACQUIRED. THE APPELLANT HEREBY SUBMITS THAT, WHILE COMPUTING CAPITAL GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIR ED AS A GIFT, THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER ACQUIRED THE ASSET , AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET . AS THE ASSESSEE IS DEEMED TO HAVE HELD THE ASSET FROM 10.06.1998, A ND HENCE THE APPLICABLE COST INFLATION INDEX IS ALSO 161. IN ADD ITION TO THIS, THE LEARNED ASSESSING OFFICER, DID NOT ALSO CONSIDER TH E IMPROVEMENT COSTS INCURRED BY THE PREVIOUS OWNER, OF A SUM OF ` 51,489/- INCURRED IN THE YEAR 1988-89, WHICH IS ALSO FORMING PART OF THE COS TS OF ACQUISITION FOR THE PURPOSE OF ARRIVING AT THE CAPITAL GAINS ON THE SALE OF THE ASSET. E) THE ASSESSEE HAD FURNISHED ALL THE RELEVANT DOC UMENTS THAT WERE REQUIRED BY THE LEARNED ASSESSING OFFICER TO ESTABL ISH THE FACT THAT: A) THE ENTIRE SALE CONSIDERATION OF ` 56,51,000/- WAS RE-INVESTED IN THE NEW HOUSE AS PER THE PROVISIONS OF SECTION 54F OF T HE INCOME TAX ACT,1961 B) THE PAYMENTS TOWARDS THE CONSTRUCTION COST OF ` 56,57,144/- WAS COMPLETELY DISBURSED BY THE APPELLANT BEFORE 31.03. 2014, AND HENCE ARE TERMED AS UTILISED BY THE ASSESSEE WITHIN A PER IOD OF THREE YEARS TOWARDS THE CONSTRUCTION OF THE NEW HOUSE. C) AS THE APPELLANT HAD UTILISED ALL THE SALE PROCE EDS IN THE NEW HOUSE, BEFORE THE DUE DATE OF FILING A RETURN U/S 139(4) , WHICH IS 31.03.2014, ITA NO.1170/16 :- 5 -: A CASE OF NON COMPLIANCE CANNOT BE MADE OUT ON TH E ASSESSEE U/S 54F (4). D) THE APPLICABLE COST INFLATION INDEX IS 161 OF TH E YEAR 1988, AND THAT THE PREVIOUS OWNER HAD ALSO INCURRED A SUM OF ` 51,489/- TOWARDS IMPROVEMENT, WHICH IS ALSO TO BE CONSIDERED FOR CAL CULATING CAPITAL GAINS. HOWEVER, THESE WERE NOT CONSIDERED BY THE LEARNED A SSESSING OFFICER, WHO HAD PROCEEDED TO ASSESS THE TAXABLE LONG TERM C APITAL GAINS AT RS.50,70,180/- AND THEREBY RAISED AN ADDITIONAL TAX DEMAND OF ` 13,72,570/-. F) DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT HAD FURNISHED AL THE INFORMATION, DOCUMENTS AND EXPLANA TION TO ESTABLISH THAT THE APPELLANT HAD COMPLIED WITH ALL THE CONDIT IONS STIPULATED U/S 54F (1) OF THE INCOME TAX ACT, WHICH ALSO INCLUDED COMPLIANCE WITH THE CONDITIONS US/54 F (4) OF THE ACT. G) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , DID NOT CONSIDER AND APPRECIATE THE EXPLANATIONS OFFERED AND AS A RE SULT THE APPEAL OF THE APPELLANT WAS DISMISSED AND HAD UPHELD ALL THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICE FOR A SUM OF ` 50,70,180/- TOWARDS THE INCOME DECLARED BY THE APPELLANT, AND THUS RAISED A N ADDITIONAL TAX DEMAND AMOUNTING TO ` 13,72,570/-. H) THE LD.A.R PLEADED THAT THE ASSESSEE SEEKS JUSTI CE RESULTING IN DELETION OF THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFI CER, ON MERITS. 5. ON THE OTHER HAND, LD.D.R SUBMITTED THAT IN THIS CASE, THE ASSESSEE HAD NOT DEPOSITED UNUTILIZED CAPITAL GAINS IN THE CAPITAL GAINS ACCOUNT SCHEME BEFORE DUE DATE OF FILING THE RETURN OF INCOME WHICH FALLS ON ITA NO.1170/16 :- 6 -: 31.07.2012 AND IT IS A MANDATORY CONDITION ON THE T AX PAYERS TO DEPOSIT UNUTILIZED CAPITAL GAINS IN THE CAPITAL GAINS ACCOU NT. HENCE, THE AO CORRECTLY REJECTED THE CLAIM OF ASSESSEE AND LD.D.R RELIED ON THE ORDER OF LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE FILED THE RETURN OF IN COME FOR ASSESSMENT YEAR 2012-13 ON 31.07.2012. THE CLAIM O F ASSESSEE IS THAT SHE HAS MADE INVESTMENT OF SALE CONSIDERATION RECEIVED FROM SALE OF KURINJI NAGAR, PERUNGUDI FOR CONSTRUCTION OF RESIDE NTIAL HOUSE SITUATED AT AT NO.15, VALLALAR MAIN ROAD, CHELLI NAGAR, CAMP RO AD, SELIYUR CHENNAI 600 073TO THE TUNE OF ` 57 LAKHS. ASSESSEE ALSO ENTERED INTO A CONTRACT AGREEMENT WITH M/S N. TECH INFRASTRUCTURE ON SEPTEM BER, 2011 AND CONSTRUCTION WAS AGREED TO BE COMPLETED ON OR BEFOR E 31.03.2014. 6.1 THE CONTENTION OF THE LD.D.R IS THAT THE ASSES SEE HAS TO APPROPRIEATE THE SALE CONSIDERATION TOWARDS PURCHA SE OF NEW RESIDENTIAL HOUSE WITHIN TWO YEARS AFTER THE DATE ON WHICH THE ORIGINAL ASSET WAS TRANSFERRED OR CONSTRUCTED A NEW HOUSE WITHIN 3 YEA RS FROM THE DATE OF ORIGINAL ASSET TRANSFERRED. IN CASE, IT IS NOT USED FOR THE PURCHASE OF NEW HOUSE OR CONSTRUCTION OF NEW HOUSE, THE ASSESSEE SH ALL DEPOSIT THE NET CONSIDERATION WITH THE BANK OR AN INSTITUTION AS MA Y BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT NOTIFIED IN OFFICIAL GAZETTE IN ACCORDANCE WITH RUL ES FRAMED BY THE CENTRAL ITA NO.1170/16 :- 7 -: GOVERNMENT. IN THIS REGARD, THE RETURN SHALL BE MA DE BEFORE DUE DATE OF FILING OF RETURN U/S.139(1) OF THE ACT. IN OUR OPIN ION, THIS PLEA OF THE LD.D.R HAS NO MERIT. THE FACT THAT THE ASSESSEE HAS REINVE STED THE SALE CONSIDERATION IN THE CONSTRUCTION OF RESIDENTIAL HO USE ON HER OWN LAND SITUATED AT NO.15, VALLALAR MAIN ROAD, CHELLI NAGAR , CAMP ROAD, SELIYUR CHENNAI 600 073 FOR AN AGREED CONTRACT FOR AN AGREE D CONSTRUCTION WORK COST OF 57 LAKHS WAS NOT DISPUTED BY THE DEPARTMENT . FOR THIS PURPOSE, ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S N. TECH INFRASTRUCTURE ON SEPTEMBER, 2011 AND THE CONSTRUCTION OF A HOUSE WAS AGREED TO BE COMPLETED ON OR BEFORE MARCH, 31 ST 2014. THE ASSESSEE HAD DEPOSITED THE CONSIDERATION INTO HER BANK ACCOUNT IN AXIS BANK (A /C NO. 423010100070090) AND INDIAN BANK ACCOUNT (A/C NO. 771795055) AND ALL THE PAYMENTS TOWARDS THE CONSTRUCTION OF THE RESIDE NTIAL HOUSE WERE ISSUED ONLY FROM THESE ABOVE TWO BANK ACCOUNTS. THE CASE OF THE ASSESSEE IS THAT A RESIDENTIAL HOUSE WAS TO BE CONSTRUCTED ON THE AS SESSEES OWN LAND WITHIN SPECIFIED TIME U/S.54F OF THE ACT. THE HONBLE PUNJ AB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. MS. JAGRITI AGGARWAL IN [2011] 339 ITR 610 (P&H) HELD THAT IN RELATING TO TIME LIMIT FOR MAKIN G DEPOSIT UNDER THE SCHEME VIS--VIS FOR PURCHASE OF A NEW PROPERTY FOR FILING EXEMPTION U/S.54F HAS HELD, TH DUE DATE FOR FURNISHING THE RETURN OF INCOME U/S.139(1) OF THE ACT AS SUBJECT TO THE EXTENDED PERIOD PROVIDED U/S. 139(4) OF THE ACT, WHILE HOLDING SO, THE HIGH COURT CONSIDERED THE DECISION OF KARNATAKA HIGH COURT REFERRED TO IN THE CASE OF FATIMA BAI V. ITO [2009] 32 DTR 243 (KARN) AND CIT V. RAJESH KUMAR JALAN [2006] 286 ITR 274 (GAUHA TI) WHEREIN HELD THAT:- ITA NO.1170/16 :- 8 -: 10. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE OPINION THAT SUB-SECTION (4) OF SECTION 139 OF THE ACT IS, IN FACT, A PROVISO TO SUB-SECTION (1) OF SECTION 139 OF THE AC T. SECTION 139 OF THE ACT FIXES THE DIFFERENT DATES FOR FILING THE RE TURNS FOR DIFFERENT ASSESSEES. IN THE CASE OF THE ASSESSEE AS THE RESPO NDENT, IT IS THE 31ST DAY OF JULY OF THE ASSESSMENT YEAR IN TERMS OF CLAUSE (C) OF EXPLANATION 2 TO SUB-SECTION (1) OF SECTION 139 OF THE ACT, WHEREAS SUB-SECTION (4) OF SECTION 139 PROVIDES FOR EXTENSI ON IN PERIOD OF DUE DATE IN CERTAIN CIRCUMSTANCES. IT READS AS UNDE R : PAGE NO : 0614 '(4) ANY PERSON WHO HAS NOT FURNISHED A RETURN WITH IN THE TIME ALLOWED TO HIM UNDER SUB-SECTION (1), OR W ITHIN THE TIME ALLOWED UNDER A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142, MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR O R BEFORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER : PROVIDED THAT WHERE THE RETURN RELATES TO A PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSME NT YEAR, THE REFERENCE TO ONE YEAR AFORESAID SHALL BE CONSTRUED AS A REFERENCE TO TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR.' 11. A READING OF THE AFORESAID SUB-SECTION WOULD SH OW THAT IF A PERSON HAS NOT FURNISHED THE RETURN OF THE PREVIOUS YEAR WITHIN THE TIME ALLOWED UNDER SUB-SECTION (1), I.E., BEFORE TH E 31ST DAY OF JULY OF THE ASSESSMENT YEAR, THE ASSESSEE CAN FILE RETURN BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 12. THE SALE OF THE ASSET HAVING BEEN TAKEN PLACE O N JANUARY 13, 2006, FALLING IN THE PREVIOUS YEAR 2006-2007, THE R ETURN COULD BE FILED BEFORE THE END OF THE RELEVANT ASSESSMENT YEA R 2007-08, I.E., MARCH 31, 2007. THUS, SUB-SECTION (4) OF SECTION 13 9 PROVIDES THE EXTENDED PERIOD OF LIMITATION AS AN EXCEPTION TO SU B-SECTION (1) OF ITA NO.1170/16 :- 9 -: SECTION 139 OF THE ACT. SUB-SECTION (4) IS IN RELAT ION TO THE TIME ALLOWED TO AN ASSESSEE UNDER SUB-SECTION (1) TO FIL E RETURN. THEREFORE, SUCH PROVISION IS NOT AN INDEPENDENT PRO VISION, BUT RELATES TO TIME CONTEMPLATED UNDER SUB-SECTION (1) OF SECTION 139. THEREFORE, SUCH SUB-SECTION (4) HAS TO BE READ ALON G WITH SUB- SECTION (1). SIMILAR IS THE VIEW TAKEN BY THE DIVIS ION BENCH OF THE KARNATAKA AND GAUHATI HIGH COURTS IN FATIMA BAI [20 09] 32 DTR 243 AND RAJESH KUMAR JALAN [2006] 286 ITR 274 (GAUH ATI) RESPECTIVELY. 6.2 FURTHER, CO-ORDINATE BENCH IN THE CASE OF ITO VS. K.S.NARASIMHAN, HUF FOR ASSESSMENT YEAR 2004-05 ITA NO.166/MDS./2010 VIDE ORDER DATED 25.03.2011 WHEREIN HELD THAT:- 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE AS TO FACTS. ASSESSEE HAD CONST RUCTED A HOUSE DURING THE THREE YEARS PERIOD STIPULATED UNDER SECT ION 54F OF THE ACT. AT THE SAME TIME, ASSESSEE HAD FAILED TO DEPOS IT THE SUMS NOT UTILIZED IN SUCH CONSTRUCTION UPTO THE DATE OF FILI NG THE RETURN, IN THE STIPULATED ACCOUNT UNDER CAPITAL GAINS ACCOUNT SCHEME. NEVERTHELESS IT IS ALSO A FACT THAT ASSESSEE HAD DE POSITED THE CONSIDERATION RECEIVED, IN A SAVINGS BANK ACCOUNT H ELD WITH INDIAN OVERSEAS BANK ACCORDING TO ASSESSEE, ALL THE DISTI NCTIVE FEATURES OF AN ACCOUNT OPENED UNDER CAPITAL GAINS ACCOUNT SC HEME, STOOD SATISFIED BY IT THOUGH ITS ACCOUNT WAS AN ORDINARY SAVINGS BANK. NO DOUBT AN ACCOUNT OPENED UNDER THE CAPITAL GAINS ACCOUNT SCHEME, HAS CERTAIN RESTRICTIVE FEATURES, SETTING I T APART FROM AN ORDINARY SAVINGS BANK ACCOUNT. HERE THE ASSESSEE HA D KEPT THE MONEY IN A SAVINGS BANK ACCOUNT ON A BONAFIDE BELIE F THAT ITS 54EC INVESTMENT WOULD COVER THE CAPITAL GAINS LIABI LITY AND THERE WAS NO FURTHER NECESSITY TO OPEN A DISTINCT ACCOUNT UNDER THE ITA NO.1170/16 :- 10 - : CAPITAL GAINS ACCOUNT SCHEME. NEVERTHELESS IT HAD DRAWN MONEY FROM SUCH SAVINGS BANK ACCOUNT ONLY FOR CONSTRUCTIO N OF RESIDENTIAL HOUSE AND THIS HAS NOT BEEN REBUTTED BY THE REVENUE. HENCE THE RESTRICTIVE FEATURES OF AN ACCOUNT UNDER CAPITAL GAINS ACCOUNT SCHEME, WAS SATISFIED BY THE ASSESSEE, THO UGH THE AMOUNTS WERE HELD BY IT IN AN ORDINARY S.B. ACCOUNT . LD. CIT(APPEALS) AFTER ELABORATING ON THE INTENTION OF THE LEGISLATURE IN INTRODUCING SECTION 54F IN THE ACT, WAS OF THE OPIN ION THAT JUST BECAUSE ASSESSEE HAD FAILED TO DEPOSIT THE UNUTILIZ ED SUMS IN THE SPECIFIED ACCOUNT, HE COULD NOT BE DENIED DEDUCTION UNDER SECTION 54F OF THE ACT IF OTHER ASPECTS WERE SATISFIED. NO DOUBT, LEARNED D.R. STRONGLY RELIED ON THE DECISION OF THIS TRIBUN AL IN THE CASE OF MRS. C.M. VIJAYAKUMARI (SUPRA) WHERE IT WAS HELD AT PARA 4 AS UNDER: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. SECTION 54F IS A BEN EFICIAL PROVISION WHEREIN THE CAPITAL GAIN ON TRANSFER OF C APITAL ASSETS ARE NOT TO BE CHARGED IN CASE OF INVESTMENT IN THE RESIDENTIAL HOUSE. IT IS ON ADMITTED FACT THAT THE ASSESSEE HAS NOT COMPLIED WITH THE CONDITION REGARDING INVESTMENT WITHIN THE DUE DATE OR DEPOSIT THE AMOUNT IN A SPECIFIED ACCOUNT. UNDER TH E CIRCUMSTANCES THE UTILIZATION IS BEYOND THE DUE DAT E EVEN THE KIND WAS NOT AT ALL PURCHASED, IN THE ALTERNATIVE, THE DEPOSITS WERE ALSO NOT MADE WITHIN THE SPECIFIED DATE, THE A SSESSEE IS NOT ENTITLED TO THE BENEFIT AS ENVISAGED UNDER SECTION 54F. THEREFORE, WE AGREE WITH THE FINDINGS OF THE ID. CI T(A) AND ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE IS DI SMISSED. 8. IN OUR OPINION, THIS DECISION MAY NOT BE APPLICA BLE ON FACTS HERE. IN THE SAID CASE, EVEN THE LAND WAS NOT AT ALL PURC HASED BEFORE THE DUE DATE TO FILING OF THE RETURN AND THERE WAS NO U TILIZATION AT ALL. IT WAS IN THESE CIRCUMSTANCES, HE TRIBUNAL CAME TO AN OPINION THAT ASSESSEE WAS NOT ENTITLED TO BENEFIT UNDER SECTION 54F OF THE ACT. THERE WAS NO UTILIZATION OF THE SUMS BY THE ASSESSE E THERE NOR ANY INVESTMENT IN RESIDENTIAL HOUSE UPTO THE DUE DATE O F THE RETURN. HERE, ON THE OTHER HAND, ASSESSEE HAD UTILIZED A SU M OF 3,96,000/- ITA NO.1170/16 :- 11 - : BEFORE THE DATE OF FILING OF THE RETURN. ASSESSEE F ILED HIS RETURN ON 19.4.2004 FOR THE IMPUGNED ASSESSMENT YEAR AND THE DUE DATE FOR FILING RETURN WAS STILL FAR AWAY. THUS THE INTENTIO N OF THE ASSESSEE TO UTILIZE THE SUM FOR THE PURPOSE OF CONSTRUCTION OF THE RESIDENTIAL HOUSE COULD NEVER BE DOUBTED. MAY BE THE ASSESSEE F AILED TO KEEP THE SUMS NOT UTILIZED, IN AN ACCOUNT OPENED UNDER C APITAL GAINS ACCOUNT SCHEME BUT, AS ALREADY MENTIONED BY US, THE REQUIREMENT OF SUCH A DEPOSIT COULD NOT HAVE BEEN ENVISAGED BY IT SINCE ENHANCEMENT IN CAPITAL GAINS AROSE OUT OF A RE-ASSE SSMENT PROCEEDING. DESPITE THIS, ASSESSEE HAD DEPOSITED SU CH SUMS IN A SAVINGS BANK ACCOUNT AND THERE IS NO CASE FOR THE R EVENUE THAT ASSESSEE WITHDREW THE SUM FOR ANY OTHER PURPOSE THA N CONSTRUCTION OF A HOUSE. ASSESSEE THOUGH IT HAD DEPOSITED ONLY I N AN ORDINARY SAVINGS BANK ACCOUNT, HAVING MADE WITHDRAWALS THERE FROM ONLY FOR THE PURPOSE OF CONSTRUCTION OF A HOUSE, THERE WAS S UBSTANTIAL COMPLIANCE TO THE PROCEDURES. JUST BECAUSE THE ACCO UNT WAS NOT NOMENCLATURED AS AN ACCOUNT UNDER CAPITAL GAINS ACC OUNT SCHEME, ASSESSEE COULD NOT HAVE BEEN DENIED DEDUCTION UNDER SECTION 54F OF THE ACT WHEN HE HAD SATISFIED ALL OTHER CONDITIONS. IN THIS VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE CIT(APPEALS) WAS JUSTIFIED IN GIVING THE DEDUCTION TO THE ASSESSEE. NO INTERFEREN CE IS CALLED FOR. 6.2 FURTHER, CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF ANIL KUMAR OMKAR SINGH AURORA VS. ITO IN ITA NO.4648/MUM .2013 VIDE ORDER DATED 06.11.2013 WHEREIN HELD THAT:- 6. ONLY ISSUE INVOLVES IN THIS APPEAL INVOLVES I N THIS APPEAL IS AS TO WHETHER EXTENDED PERIOD AS PER SECTION 139(4) HAS TO BE CONSIDERED FOR THE PURPOSE OF UTILIZATION OF AMOUNT OF CAPITAL GAIN FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54F OF TH E ACT. THE ITA NO.1170/16 :- 12 - : ABOVE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V/S MS. J AGRITI AGGARWAL (2011) 339 1TR 610 (P&H), WHEREIN, THEIR LORDSHIPS HAVE HELD THAT PROVISION OF SECTION 139(4) IS NOT AN INDEPEND ENT PROVISION, BUT IS RELATED TO TIME CONTEMPLATED UNDER THE PROVI SION OF SECTION 139(1) OF THE ACT. ACCORDINGLY, SECTION 139(4) HAD TO BE READ ALONG WITH SUB-SECTION (1) OF SECTION 139 AND THE DUE DAT E FOR FURNISHING THE RETURN OF INCOME U/S 139(1) IS SUBJECT TO THE E XTENDED PERIOD PROVIDED U/S 139(4). HENCE, EXTENDED PERIOD U/S 139 (4) HAS TO BE CONSIDERED FOR THE PURPOSE OF UTILIZATION OF THE CA PITAL GAIN AMOUNT. THE 1TAT, MUMBAI FOLLOWING THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF KISHORE GALAI YA V/S ITO (137 LTD 229) HAS HELD THAT WHEN THE ASSESSEE HAD U TILIZED THE AMOUNT WHICH WAS MORE THAN THE CAPITAL GAIN EARNED TOWARDS CONSIDERATION OF NEW RESIDENTIAL HOUSE WITHIN EXTEN DED PERIOD U/S 139(4) OF THE ACT, THE CLAIM MADE BY ASSESSEE FOR E XEMPTION U/S 54F OF THE ACT COULD NOT BE DENIED. 7. THE SIMILAR ISSUE HAD ALSO COME UP BEFORE THE H ONBIE GUWAHATI HIGH COURT IN THE CASE OF CIT V/S RAJESH K UMAR JALAN (SUPRA) AND THE HONBLE HIGH COURT HAS HELD THAT IF THE ASSESSEE FULFILS THE CONDITION FOR EXEMPTION U/S 54 WITHIN T HE EXTENDED TIME OF FILING OF RETURN U/S 139(4) OF THE ACT, THE ASSE SSEE IS ENTITLED TO EXEMPTION U/S 54 OF THE ACT. IN VIEW OF ABOVE, WE H OLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 54F OF THE ACT FOR ITA NO.1170/16 :- 13 - : UTILIZATION OF SALE CONSIDERATION FOR INVESTMENT IN NEW RESIDENTIAL PROPERTY WITHIN DUE DATE AS STIPULATED U/S 139 OF T HE ACT. HENCE, GROUNDS OF APPEAL TAKEN BY ASSESSEE ARE ALLOWED BY REVERSING THE ORDERS OF AUTHORITIES BELOW. 7. SO FAR AS, THE TIME LIMIT FOR ASSESSEE TO INVES T THE AMOUNT OF CAPITAL GAINS IN PURCHASE/CONSTRUCTION OF NEW RESID ENTIAL ASSET OR INVESTMENT IN CAPITAL GAINS SCHEME U/S.54F OF THE ACT IS CONCE RNED, IT HAS BEEN AFFIRMED BY THE HIGH COURT THAT DUE DATE REFERS TO THE EX TENDED DUE DATE U/S.139(4) OF THE ACT. 7.1 IN VIEW OF THIS, WE REMIT THE ISSUE IN DISPUTE TO THE FILE OF AO FOR THE PURPOSE OF VERIFYING THE RECORDS, WHETHER THE R ESIDENTIAL BUILDING HAD COME INTO EXISTENCE WITHIN SPECIFIED PERIOD, I.E. T HREE YEARS FROM THE TRANSFER OF ORIGINAL ASSET. THE ASSESSEE IS DIRECTED TO PROD UCE RELEVANT DOCUMENTARY EVIDENCE BEFORE THE AO TO SHOW THAT THE RESIDENTIAL BUILDING HAD COME INTO EXISTENCE WITHIN THREE (3) YEARS AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET. THE AO AFTER VERIFYING THE FACTS, GRANT NECESSARY D EDUCTION IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20 TH JANUARY, 2017, AT CHENNAI. ITA NO.1170/16 :- 14 - : SD/ - SD / - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 20 TH JANUARY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF