C.Aryama Sundaram, CHENNAI V. ACIT, CHENNAI

ITA 1208/CHNY/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3929 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 29-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Court: TRIBUNAL
• Department Lawyers: DURAI
• Assessee Lawyers: R BALASUBRAMANIAN; MAYA J NICHANA
• Keywords: Capital asset; Period of limitation; Time period of passing order
• Section: 143(3); 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , # $ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1208/MDS/2015 / ASSESSMENT YEAR : 2010-11 SHRI C. ARYAMA SUNDARAM, C/O. R. BALASUBRAMANIAN, NEW NO. 18, ARMENIAN STREET, MADRAS - 600 001. [PAN: AJYPS 1233N] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE - 11(1), MADRAS - 600 006. ( / APPELLANT) ( /RESPONDENT) & ' / APPELLANT BY : SHRI R BALASUBRAMANIAN & MS. MAYA J NICHANA, CA *+& ' / RESPONDENT BY : SHRI DURAI PANDIAN, JCIT ' /DATE OF HEARING : 29.09.2016 ' /DATE OF PRONOUNCEMENT : 27.12.2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) - 13, ITA NO. 305 CIT(A) -13/2 014-15 DATED 30.03.2016 PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT. :-2-: I.T.A. NO.1208/MDS/2015 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE CIT(A) ERRED IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER, RELATING TO THE COMPUTATION OF LONG TERM CAPITAL G AINS ARISING ON THE SALE OF PROPERTY OF THE APPELLANT, AND SITUATE AT NO. 137, SUNDAR NAGAR, NEW DELHI. 2.2 THE CIT(A) ERRED IN MERELY FOLLOWING THE ORDER PASSED BY THE ASSESSING OFFICER WITHOUT ADDUCING ANY REASONS OF HIS OWN, A BOUT THE COMPUTATION OF THE LONG TERM CAPITAL GAINS ARISING TO THE APPELLA NT. 2.3 THE CIT(A) SHOULD HAVE HELD THAT THE ORDER WAS ONLY A REPETITION OF THE ASSESSING OFFICER'S ORDER AND THAT THERE WAS NO RE ASONING OF HIS OWN TO CONFIRM SUCH COMPUTATION. 2.4 THE CIT(A) SHOULD HAVE HELD THAT THE STRESS, IN SECTION 54(1) OF THE INCOME TAX ACT, 1961, AND THE CIRCULAR NO. 667 DATED 18.1 0.1993 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, WAS ONLY ON THE WOR D 'COMPLETED' AND THIS CAN HAVE RELEVANCE ONLY TO THE CONSTRUCTION OF THE BUI LDING. 2.5 THE CIT(A) SHOULD HAVE, THEREFORE, HELD THAT SU CH STRESS, BEING ON THE WORD 'COMPLETED', WOULD ONLY REFER TO THE CONSTRUCTION OF A BUILDING AND CANNOT REFER TO THE PURCHASE OF A PLOT OF LAND. 2.6 THE CIT(A) SHOULD HAVE, THEREFORE, HELD THAT, E VEN IF THE LAND HAD BEEN PURCHASED AT A MUCH EARLIER DATE, AS LONG AS THE C ONSTRUCTION THE BUILDING THEREON IS COMPLETED WITHIN A PERIOD OF THREE YEAR S FROM THE DATE OF SALE OF THE OLD BUILDING, THE APPELLATE WILL BE ENTITLED T O A DEDUCTION UNDER THE PROVISIONS OF SECTION 54 OF THE ACT. :-3-: I.T.A. NO.1208/MDS/2015 2.7 THE CIT(A) ERRED IN CONFUSING HIMSELF WITH ANY TRANSFER THAT TOOK PLACE ON MAY 14, 2007, WHILE WHAT DID TAKE PLACE ON MAY 14, 2007, IN THE APPELLANT'S CASE, WAS THE PURCHASE OF THE LAND ON WHICH THE BU ILDING WAS CONSTRUCTED. 2.8 THE CIT(A) SHOULD HAVE FURTHER APPRECIATED FACT THAT THE INTENTION OF THE LEGISLATIVE WAS TO ALLOW THE EXEMPTION FROM CAPITA L GAINS IF THE CONSTRUCTION OF THE NEW PROPERTY WAS COMPLETED WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF SALE OF THE OLD PROPERTY, NO MATTER WHEN THE LA ND WAS PURCHASED. 2.9 THE CIT(A) SHOULD HAVE, THEREFORE, APPRECIATED THE FACT THAT THE LEGISLATIVE INTENDED TO GRANT THE EXEMPTION UNDER SECTION 54 O F THE ACT IF THE CONSTRUCTION WAS COMPLETED WITHIN THREE YEARS FROM THE DATE OF SALE OF THE OLD PROPERTY 2.10 THE CIT(A) SHOULD HAVE HELD THAT THERE WAS NOT HING IN SECTION 54 OF THE ACT, TO BIFURCATE THE COST OF CONSTRUCTION OF THE NEW B UILDING, BETWEEN THE PERIOD PRIOR TO THE DATE OF SALE OF THE OLD BUILDING AND THE PERIOD SUBSEQUENT THERETO. 2.11 THE CIT(A) ERRED IN OMITTING TO NOTICE FROM TH E DECISION OF THE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS . ASHOK KUMAR RALHAN, REPORTED IN 360 ITR PAGE 575, THAT THE IMPORTANT A SPECT TO BE CONSIDERED FOR GRANTING EXEMPTION OF CAPITAL GAINS WAS THE CONSTR UCTION OF THE BUILDING AND, SINCE, IN THE APPELLANT'S CASE, THE CONSTRUCTION W AS COMPLETED WITHIN A PERIOD OF THREE YEARS FROM DATE OF SALE OF THE OLD BUILDI NG, THE APPELLANT WAS ENTITLED TO THE EXEMPTION IN RESPECT OF THE ENTIRE COST OF CONSTRUCTION OF THE NEW PROPERTY. :-4-: I.T.A. NO.1208/MDS/2015 2.12 THE CIT(A) SIMILARLY, ERRED IN OMITTING TO NOT ICE, IN THE CASE OF THE COMMISSIONER OF INCOME TAX VS. J.R. SUBRAMANYA BHA T, REPORTED IN 165 ITR PAGE 561, THAT IRRESPECTIVE OF WHEN THE LAND WAS P URCHASED, AS LONG AS THE CONSTRUCTION OF THE NEW BUILDING WAS COMPLETED WIT HIN THE STIPULATED TIME, THE EXEMPTION U/S. 54 OF THE ACT SHOULD BE GRANTED . 2.13 THE CIT(A) ERRED IN HOLDING THAT THE FACTS INV OLVED IN THIS CASE WERE NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE, W HILE AS A MATTER OF FACT, THE FACTS IN THE TWO CASES WERE SIMILAR. 2.14 THE CIT(A) SHOULD HAVE HELD THAT THE APPELLANT WAS ENTITLED TO A DEDUCTION, FROM THE COMPUTATION OF LONG TERM CAPITAL GAINS, O F THE ENTIRE COST OF CONSTRUCTION OF THE NEW BUILDING, ESPECIALLY SINCE THAT WILL BE THE ONLY MANNER IN WHICH THE PROVISIONS OF SECTION 54 OF THE ACT C OULD BE GIVEN EFFECT TO. 3. THE BRIEF FACTS THAT THE ASSESSEE IS AN INDIVIDU AL AND FILED RETURN OF INCOME FOR THE SAID ASSESSMENT YEAR ON 20.06.2010 DECLARIN G TOTAL INCOME OF RS. 12,20,97,560/- AND THE RETURN OF INCOME WAS PROCESS ED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICE U/S. 143(2) OF THE ACT WAS ISSUED AND IN COMPLIANCE LD. AR APPEARED FROM T IME TO TIME AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER ON PERUSAL OF THE FINANCIAL STATEMENTS AND SUBMISSIONS OF THE ASSESSEE FOUND THAT THE ASSESSEE HAS SOLD RESIDENTIAL HOUSE PROPERTY AT NEW DELHI ON 15.01.2010 FOR RS. 12,50,0 0,000/- AND WORKED OUT THE LONG TERM CAPITAL GAINS TO RS. 10,47,95,925/- AND T HE ASSESSEE CLAIMED EXEMPTION U/S. 54 OF THE ACT IN RESPECT OF PURCHASE OF LAND AND CONSTRUCTION OF THE RESIDENTIAL PROPERTY AT JORBAGH, NEW DELHI, WHEREAS, THE RESIDE NTIAL PROPERTY HOUSE WAS :-5-: I.T.A. NO.1208/MDS/2015 PURCHASED ON 14.04.2007 FOR A TOTAL CONSIDERATION O F RS. 13,00,00,000/- INCLUDING REGISTRATION AND STAMP DUTY. THE PROPERTY WAS OBTA INED WITH LOAN FROM HDFC BANK AND ASSESSEE PAID FINANCIAL CHARGES FOR THE PERIOD OF 2005-06 TO 2010-11, AGGREGATING TO RS. 2,96,46,446/-, IT WAS EXPLAINED THAT THE ASSESSEE HAS DEMOLISHED THE HOUSE AND CONSTRUCTED NEW RESIDENTIAL PROPERTY WITH TOTAL COST OF RS. 2,77,39,045/- AND FILED DETAILS. THE LD. AO FIND T HAT THE ASSESSEE HAS NOT COMPLIED THE CONDITIONS AND PROVISIONS OF SECTION 54 OF THE ACT AS THE LAND WAS PURCHASED ON 14.05.2007 AND NEW HOUSE PROPERTY WAS CONSTRUCTED A FTER DEMOLISHING THE SUPERSTRUCTURE OF OLD BUILDING. THE LD. AO HAS PER USED OF THE PROVISIONS OF SECTION 54 OF THE ACT. ' 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 AS SET, BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE , THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPE RTY' (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND TH E ASSESSEE 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 YE ARS AFTER THAT DATE INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY - (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN T HE COST OF THE RESIDENTIAL HOUSE SO PURCHASED OR CONSTRUCTED, THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCO ME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRA NSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTI ON, AS THE CASE MAY BE, THE COST SHALL BE NILL, OR (II) IF THE AMOUNT OF THE CAPITAL GAINS IS EQUAL TO OR L ESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT B E 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 CONSTRUC TION, AS THE :-6-: I.T.A. NO.1208/MDS/2015 CASE MAY BE, THE COST SHALL BE REDUCED BY THE AMOUN T OF THE CAPITAL GAIN.' AND CBDT CIRCULAR NO. 667 DATED 18.10.1993. THE AS SESSING OFFICER IN APPLYING THE PROVISIONS AND CBDT CIRCULAR, THE ASSESSEE SHOULD H AVE PURCHASED THE RESIDENTIAL PROPERTY ONE YEAR PRIOR TO DATE OF SALE OF THE PROP ERTY OR TWO YEARS AFTER THE SALE OF OLD PROPERTY OR WITHIN 3 YEARS CONSTRUCTED A RESIDE NTIAL PROPERTY. THE LD. AR HAS SUBMITTED THAT THE CONSTRUCTION WAS MADE AS PER THE PROVISIONS OF LAW AND EXEMPTION U/S. 54 OF THE ACT SHOULD BE ALLOWED. TH E ASSESSING OFFICER ELABORATELY DISCUSSED ON FACTS AND LAW IN THE ASSESSMENT ORDER AND FOUND THAT THE ASSESSEE AFTER PURCHASE OF PROPERTY HAS DEMOLISHED AND CONST RUCTED NEW RESIDENTIAL HOUSE AND THE TOTAL COST OF CONSTRUCTION WORKED OUT TO RS . 2,77,39,045/-. WHERE, THE LD. AR ARGUMENTS THAT LAND PURCHASED ON 14.05.2007 SHOU LD BE PART OF EXEMPTION ALLOWED U/S. 54 OF THE ACT. THE LD. AO IS OF THE O PINION THAT THE ENTIRE CAPITAL GAIN WAS NOT INVESTED IN THE PROPERTY BEFORE DUE DATE U/ S. 139(1) OF THE ACT NOR ASSESSEE HAS INVESTED IN CAPITAL GAIN ACCOUNT SCHEME AND REL IED ON THE MUMBAI HIGH COURT AND TRIBUNAL DECISION, HAS EXCLUDED THE PURCHASE OF LAND IN 2007 AT JORBARG AS IT DOES NOT FALL WITHIN THE CONSTRUCTION PROVISIONS OF SECTION 54 OF THE ACT AND MADE ADDITION TO THE RETURNED INCOME AND PASSED ASSESSME NT ORDER UNDER 143(3) DATED 27.03.2013. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR ARGUED THE GR OUNDS AND HELD SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE LD. CIT(A) CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND JUDICIAL DECISIONS AND INTROD UCTION OF THE PROVISIONS OF ACT AND :-7-: I.T.A. NO.1208/MDS/2015 CBDT CIRCULAR AND DISCUSSED EXHAUSTIVELY AT PAGE 11 TO 21 OF HIS ORDER AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER RESTRI CTING THE EXEMPTION TO RS. 1,14,81,067/-. AGGRIEVED BY THE ORDER, THE ASSESSE E HAS FILED APPEAL WITH THE TRIBUNAL. 5. THE LD. AR ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS OF ASSESSMENT AND APPELLATE PROCEEDINGS ALONG WITH THE DETAILED S UBMISSIONS. THE MAIN CONTENTION OF THE LD. AR THAT THE ASSESSEE IS ELIGIBLE FOR EXE MPTION U/S. 54(1) OF THE ACT ON LAND AND RELIED ON THE CBDT CIRCULAR NO. 667 DATED 18.09 .1993 WHERE DEFINITION OF 'COMPLETED' IS EMPHASIZED AND EXEMPTION HAS TO BE A LLOWED EVEN IF LAND PURCHASED IN EARLIER DATE AND CONSTRUCTION HAS BEEN COMPLETED WITHIN 3 YEARS FROM THE DATE OF SALE OF THE PROPERTY AND THAT THE LEGISLATIVE INTEN TION IS TO ALLOW EXEMPTION FROM CAPITAL GAINS, IF THE CONSTRUCTION OF THE NEW PROPE RTY WAS COMPLETED WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF SALE OF OLD PROPERTY, N O MATTER WHEN LAND WAS PURCHASED AND RELIED ON JUDICIAL DECISION AND PRAYED FOR EXEM PTION U/S. 54 OF THE ACT IN RESPECT OF ENTIRE COST OF BUILDING INCLUDING THE LAND. THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION SUBSTANTIATING THE FACTS AND LEGAL PROVI SIONS FOR ALLOWING THE APPEAL. CONTRA, THE LD. DR VEHEMENTLY OPPOSED THE GROUNDS R AISED BY THE ASSESSEE AND ARGUED THAT THE LD. CIT(A) AND THE ASSESSING OFFICE R HAS DEALT EXHAUSTIVELY AND FOUND THAT THERE IS NO PROVISION IN THE SECTION IN RESPECT OF LAND PURCHASED IN SUCH CIRCUMSTANCES AND RELIED ON THE FINDINGS OF THE ASS ESSING OFFICER AND THE CIT(A) AND PRAYED FOR DISMISSING THE APPEAL. :-8-: I.T.A. NO.1208/MDS/2015 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. AR CONTENTION IS THAT THE ASSES SEE HAS PURCHASED LAND IN THE YEAR MAY 2007 AND CONSTRUCTED NEW RESIDENTIAL HOUSE PROPERTY ON SAID LAND IN JAN, 2010 AND CLAIMED ENTIRE COST OF PROPERTY INCLUDING LAND AS THE EXEMPTION U/S. 54 OF THE ACT. THE ASSESSEE HAS PURCHASED THE LAND IN TH E YEAR 2007 AND THE PROVISIONS U/S. 54 ALLOW EXEMPTION IN RESPECT OF PURCHASE OF P ROPERTY ONE YEAR BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET. WE HAVE GONE THROUG H THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. THE FACT REMAINS THAT THERE IS NO DI SPUTE ON THE SALE OF THE PROPERTY AND CONSTRUCTION TO THE RESIDENTIAL PROPERTY UNDER THE PROVISIONS OF SECTION 54 OF THE ACT. THE ASSESSEE HAS TO COMPLIED CONDITION OF CON STRUCTION OF PROPERTY WITHIN 3 YEARS FROM THE DATE OF SALE OF PROPERTY. THE LD. A R RELIED ON THE DECISION OF BANGALORE TRIBUNAL IN THE CASE OF SRI R.M.M. ATHREY A VS. INCOME TAX OFFICER, IN ITA NO. 467/BANG/2013, WHERE THE TRIBUNAL CONSIDERED TH E FACTS IN RESPECT OF FLAT AND ALLOTMENT LETTER IN RESPECT OF BOOKING OF FLAT WITH DELHI DEVELOPMENT AUTHORITY AND WHEREAS, IN THE PRESENT CASE THE ASSESSEE HAS PURCH ASED THE LAND IN THE YEAR 2007 AND CLAIM OF EXEMPTION IS PRACTICALLY NOT VIABLE AN D DOES NOT SATISFY THE CONDITION ENVISAGED IN PROVISIONS OF SECTION 54(1) OF THE ACT . FURTHER, WE FOUND THE ASSESSING OFFICER HAS RESTRICTED THE CLAIM OF INVESTMENT IN C ONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY MADE BEFORE THE DUE DATE OF FILING THE RET URN OF INCOME UNDER 139(1) OF THE ACT. WHEREAS, THE ASSESSEE HAS SPENT TOTAL COST OF CONSTRUCTION BEING RS. 2,77,39,045/-. THE ASSESSING OFFICER CONTENTION TH AT THE ASSESSEE SHOULD HAVE DEPOSITED THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SC HEME BEFORE DUE DATE U/S. 139(1) AND RESTRICTED EXEMPTION U/S. 54 OF THE ACT TO THE AMOUNT OF RS. 1,14,84,067/-. :-9-: I.T.A. NO.1208/MDS/2015 7. WE ARE OF THE OPINION, THAT THERE IS NO DISPUTE ON CONSTRUCTION OF THE PROPERTY AND THOUGH THE ASSESSEE HAS NOT DEPOSITED IN CAPITA L GAIN ACCOUNT SCHEME, THE PROVISIONS OF SECTION 54 OF THE ACT ARE BENEFICIARY PROVISIONS AND HAVE TO BE CONSTRUED LIBERALLY ON COMPLYING THE CONDITIONS. W E RELYING ON DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 415/MDS/ 2015 & CO. NO. 43/MDS/2015 ACIT VS SMT. UMAYAL ANNAMALAI AT PAGE 8, PARA 8 READ AS UNDER: ' 8. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE M ATERIAL ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. DEPARTMENTAL REP RESENTATIVE CONTENTION BEING THE ASSESSEE THOUGH CONSTRUCTED THE PROPERTY BY INVESTING, THE NET SALE CONSIDERATION BUT NOT BEFORE THE DUE DATE OF RETURN U/S.139(1) OF THE ACT NOR SAID AMOUNT WAS DEPOSITED IN CAPITAL GAIN ACCOUNT SCHEME. THE ARGUMENT OF LD. DEPARTMENTAL REPRESENTATIVE WAS IN RESPECT OF THE PERIOD OF CONSTRUCTION AND THERE IS NO DISPUTE ON INVEST MENT OF THE NET CONSIDERATION IN RESIDENTIAL PROPERTY AND PROVISIO N OF SEC. 54F(1) OF THE ACT ARE AS UNDER:- 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG- TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTI ON REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PE RIOD OF ONE YEAR BEFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFE R TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT D ATE [ CONSTRUCTED, A RESIDENTIAL HOUSE ] (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 N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CA PITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (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 CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS TH E 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 A PPLY WHERE (A) THE ASSESSEE, :-10-: I.T.A. NO.1208/MDS/2015 (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THA N THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF TH E 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 ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER T HAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET , IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY.] THE ASSESSEE HAS COMPLIED THE PROVISIONS CONSIDERIN G THE DATES AS UNDER:- (I) DATE OF TRANSFER OF ORIGINAL ASSET : 14.02.2005. (II) THE DATE OF FILING OF RETURN : 17.03.2006. (III) DUE DATE OF RETURN FOR THE ASSESSMENT YEAR 2005-06 : 31.07.2005. (IV) DUE DATE OF FILING BELATED RETURN : 31.03.200 7. (V) POSSESSION OF THE PROPERTY : 15.12.2007. ON CONSIDERING THE PROVISIONS OF LAW AND FACTS OF THE CASE, THE ASSESSEE HAS INVESTED H68,00,000/- BEFORE DUE DATE OF FILING BE LATED RETURN I.E. 31.03.2007 AND TOOK THE POSSESSION AS PER THE FIN DINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON 15.12.2007 , BEING WITHIN THREE YEARS FROM THE DATE OF TRANSFER/SALE OF ORIGINAL ASSET BEING 14.02.2005. THE ASSESSEE HAS NOT INVESTED IN CAPITAL GAIN ACCO UNT SCHEME BEFORE 139(1) OF THE ACT BUT COMPLIED WITH THE CONDITIONS U/S.54F(1) OF THE ACT BY PURCHASING AND CONSTRUCTION OF RESIDENTIAL PROPERT Y WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET WHICH IS NO T DISPUTED IN THE ASSESSMENT PROCEEDINGS OR IN APPELLATE PROCEEDINGS. THE PROVI SIONS OF SEC. 54F ARE BENEFICIAL PROVISIONS AND ARE TO BE CONSIDERED LIB ERALLY IN THE ASPECT OF LIMITATION PERIOD. BUT THE INVESTMENT IN RESIDENT IAL PROPERTY IS MUST WHICH THE ASSESSEE HAS PROVED WITH EVIDENCE AND COMPLIE D BEFORE THE LOWER AUTHORITIES. THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) RELIED ON THE LEGAL PROVISION AND SUBMISSIONS OF THE ASSESSEE EX HAUSTIVELY WITH JUDICIAL DECISIONS. CONSIDERING THE FACTUAL ASPECTS, GENU INESS OF THE TRANSACTIONS AND BENEFICIAL ASPECTS OF THE PROVISIONS, WE ARE O F THE OPINION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY C ONSTRUED THE FINDINGS AND THE EXPLANATION OF THE ASSESSEE WITH OBSERVATI ON IN HIS ORDER AND ALLOWED THE DEDUCTION U/S.54F OF THE ACT. THEREFO RE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE GROUND OF THE REVENUE. ' :-11-: I.T.A. NO.1208/MDS/2015 WHERE THE ASSESSEE HAS NOT DEPOSITED CAPITAL GAINS IN THE CAPITAL GAINS ACCOUNT SCHEME AND WAS UTILISED FOR CONSTRUCTION OF THE PROPERTY W ITHIN THE THREE YEARS AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET AND SATISFIED THE PROVIS IONS OF SECTION 54F OF THE ACT. 8. IN THE PRESENT CASE, CONSIDERING THE APPARENT FA CTS, MATERIAL ON RECORD AND JUDICIAL DECISIONS AND THE WRITTEN SUBMISSION, WE A RE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR COST OF CONSTRUCTION IN RESPECT OF RES IDENTIAL PROPERTY, EVEN THOUGH THE ASSESSEE HAS NOT INVESTED IN CAPITAL GAIN ACCOUNTS SCHEME BUT COMPLIED THE MAIN CONDITION, OF THE PROVISIONS OF THE SECTION 54(I) O F THE ACT. ACCORDINGLY, WE REMIT THE DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE DEDUCTION U/S. 54 OF THE ACT FOR CONSTRUCTION COST INCURRED BY THE ASSES SEE AS ABOVE AND ASSESSING OFFICER SHOULD PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THEIR COST OF CONSTRUCTION BEFORE PASSING THE ORDER ON MERITS. A CCORDINGLY, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON TUESDAY, THE 27 TH DAY OF DECEMBER, 2016 AT CHENNAI. SD/ - ( ) (CHANDRA POOJARI) ! / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) $ ! /JUDICIAL MEMBER /CHENNAI, 1 /DATED: 27 TH DECEMBER, 2016 JPV ' *#34 54 /COPY TO: 1. & /APPELLANT 2. *+& /RESPONDENT 3. 6 ( )/CIT(A) 4. 6 /CIT 5. 4 *## /DR 6. 9 /GF