ITO, Trichy V. Irshath Ahamed, Trichy

ITA 1602/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8118 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 14-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2015
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Capital asset; Gift; Period of limitation; Cost of acquisition
• Section: 143(3); 54; 139

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1602 /MDS/201 5 / ASSESSMENT YEAR :20 1 2 - 1 3 THE INCOME TAX OFFICER , WARD 1( 2 ) , 44, WILLIAM ROAD, TRICHY. VS. SHRI IRSHATH AHAMED, 5, GROUND FLOOR, MARIS AVENUE, NETHAJI STREET, COLLECTOR OFFI CE ROAD, TRICHY - 1. [PAN:AAFPI7058F ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SUPRIYO PAL, JCIT / RESPONDENT BY : SHRI K. MEENAKSHISUNDARAM, ITP / DATE OF HEAR ING : 14 . 0 9 .201 6 / DATE OF P RONOUNCEMENT : 31 . 1 0 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 , TI RUCHIRAPALLI , DATED 2 1 . 0 4 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 . IN THIS APPEAL, THE REVENUE HAS RAISED TWO EFFECTIVE GROUNDS VIZ., (I) ADOPTION OF INDEXED COST OF ACQUISITION AND (II) CLAIM OF DEDUCTION UNDER SECTION 54 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT). I.T.A. NO . 1602 /M/ 15 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ADMITTING AN INCOME OF .1,52,490/ - AFTER CLAIMING DEDUCTION UNDER SECTION 54 OF THE ACT AGAINST LONG TERM CAPITAL GAINS ARISEN ON ACCOUNT OF SALE OF PROPERTY COMPRISING OF LAND AND BUILDING INHERITED FROM HIS FATHER WHO DIED DURING 1999 - 2000. WHILE COMPUTING CAPITAL GAINS ON TH E SALE OF PROPERTY, THE ASSESSEE HAS CLAIMED A DEDUCTION UNDER SECTION 54 OF THE ACT FOR INVESTMENT IN RESIDENTIAL HOUSE PROPERTY. AFTER EXAMINING THE BOOKS AND ACCOUNTS, SALE DEEDS, ETC., THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS ADOPTED TH E RATE OF GROUND FLOOR STATE PWD PLINTH AREA RATE FOR THE FIRST FLOOR SOLD BY HIM. FURTHER, FOR COMPUTING INDEXED COST OF ACQUISITION, THE ASSESSEE HAS ADOPTED THE INDEX NUMBER OF YEAR 1981 - 82, WHEREAS, THE PROPERTY PASSED ON TO HIM BY INHERITANCE ONLY ON 24.01.2000 ON THE DEATH OF HIS FATHER FOR WHICH THE ASSESSEE HAS TO ADOPT THE INDEX NO. OF THE YEAR 1999 - 2000. MOREOVER, THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT AGAINST PURCHASE OF NEW RESIDENTIAL HOUSE FOR WHICH THE PAYMENTS HAVE BE EN MADE ON VARIOUS DATES COMMENCING FROM 02.11.2012 AND ENDING ON 09.05.2013 [ACTUAL DATE OF ACQUISITION]. AGAINST THE ABOVE OBSERVATIONS, THE ASSESSEE WAS ASKED TO FILE HIS EXPLANATION FOR RECOMPUTING THE CAPITAL GAINS. IN RESPONSE THERETO, THE ASSESSEE H AS FILED A DETAILED WRITTEN SUBMISSION BY RELYING ON VARIOUS CASE LAW . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS COMPLETED THE I.T.A. NO . 1602 /M/ 15 3 ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY ASSESSING INCOME OF THE ASSESSEE AT .63,58,939/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING VARIOUS CASE LAW, THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN AP PEAL BEFORE THE TRIBUNAL. THE LD. DR HAS SUBMITTED THAT ACCORDING TO EXPLANATION (III) TO THE SECTION 48 OF THE ACT, THE INDEXED COST OF ACQUISITION MEANS AN AMOUNT WHICH BEARS IN THE COST OF ACQUISITION, THE SAME PROPORTION AS COST INFLATION INDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 1981, WHICH IS LATER. IN THIS CASE, THE PROPERTY WAS HELD BY THE ASS ESSEE FOR THE FIRST TIME ON 24.01.2000 ONLY AND THEREFORE THE ASSESSING OFFICER ALLOWED INDEXATION FROM 1999 - 2000. THUS, HE PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE SET ASIDE AND RESTORED THAT OF THE ASSESSING OFFICER. 5. PER CONTRA, BY STRONG LY RELYING ON THE DECISION IN THE CASE OF CIT V. MANJULA J. SHAH [2013] 355 ITR 474 (BOM) , THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) AND PRAYED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE SUSTAINED. I.T.A. NO . 1602 /M/ 15 4 6. WE H AVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO ADOPTION OF INDEXED COST OF ACQUISITION, THE ASSESSING OFFICER HAS OBSERVED THAT THE IMMOVABLE PROPERTY WHICH WAS SOLD BY THE ASSESSEE HA S BEEN ACQUIRED BY WAY OF INHERITANCE ON THE DEATH OF HIS FATHER ON 24.01.2000 AND THEREFORE, THE PERIOD HELD BY THE PREVIOUS OWNER SHOULD BE TAKEN UP FOR DETERMINING THE NATURE OF THE CAPITAL ASSET [I.E., WHETHER LONG TERM OR SHORT TERM], THE INDEX NUMBER OF THE YEAR IN WHICH HE HELD THE ASSET FOR FIRST TIME SHOULD ALONE BE TAKEN INTO ACCOUNT AS PER THE PROVISION OF THE ACT. WHEREAS, THE ASSESSEE HAS ADOPTED THE INDEX NUMBER 100 APPLICABLE FOR THE YEAR 1981 - 82 AND THEREFORE, THE ASSESSING OFFICER HAS HELD THAT ONLY THE INDEX NUMBER 389 RELEVANT TO THE YEAR 1999 - 2000, IN YEAR IN WHICH THE PREVIOUS OWNER AND ASSESSEE S FATHER DIED INTESTATE, SHOULD BE TAKEN INTO ACCOUNT FOR COMPUTING THE INDEXED COST OF ACQUISITION. ACCORDINGLY, THE ASSESSING OFFICER HAS TAKE N THE COST INFLATION INDEX OF THE YEAR BY TAKING THE INDEX NUMBER 389 AND WORKED THE INDEXED COST OF ACQUISITION AND ALLOWED THE SAME. ON APPEAL, BY TAKING CUE FROM VARIOUS JUDGEMENT INCLUDING THE DECISION OF THE HON BLE MUMBAI HIGH COURT IN THE CASE OF CI T V. MANJULA J. SHAH [2013] 355 ITR 474 (BOM) , WHEREIN , AFTER ANALYZING I.T.A. NO . 1602 /M/ 15 5 THE FACTS OF THE CASE AND POSITION, IN LAW, LAID DOWN AN IMPORTANT LEGAL PREPOSITION THAT WHILE COMPUTING CAPITAL GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY AN ASSESSEE U NDER A GIFT, INDEX COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO YEAR IN WHICH PREVIOUS OWNER FIRST HELD THE ASSET, AND NOT FROM THE YEAR IN WHICH THE ASSESSEE BECAME OWNER OF THAT ASSET, THE LD. CIT(A) HAS OBSERVED THAT SEVERAL COURTS HAVE HELD THAT WHERE THE COST TO THE PREVIOUS OWNER HAD BEEN ADOPTED AS COST TO THE ASSESSEE, WHEN THE COST TO THE PREVIOUS OWNER IS ADOPTED FOR DETERMINING WHETHER AN ASSET IS A LONG TERM ASSET OR SHORT TERM ASSET, THE SAME YARDSTICK SHOULD BE APPLIED FOR EXTENDIN G THE BENEFIT OF INDEXATION. THE INDEXATION HAS TO BE APPLIED HARMONIOUSLY FROM THE DATE OF ACQUISITION IN THE HANDS OF THE PREVIOUS OWNER AND NOT FROM THE DATE WHEN THE ASSESSEE ACQUIRED THE RIGHT OVER THE PROPERTY WHERE THE PROPERTY HAD BEEN ACQUIRED OTH ERWISE THAN BY WAY OF ACTUAL PURCHASE. ACCORDINGLY, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE THAT THE COST OF INDEXATION HAS TO BE TAKEN AS ON 01.04.1981 IN THE CASE OF THE ASSESSEE AND CALCULATE THE COST OF ACQUISIT ION. HOWEVER, THE CONTENTION OF THE LD. DR IS THAT THAT ACCORDING TO EXPLANATION (III) TO THE SECTION 48 OF THE ACT, THE INDEXED COST OF ACQUISITION MEANS AN AMOUNT I.T.A. NO . 1602 /M/ 15 6 WHICH BEARS IN THE COST OF ACQUISITION, THE SAME PROPORTION AS COST INFLATION INDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 1981, WHICH IS LATER. IN THIS CASE, THE PROPERTY WAS HELD BY THE ASS ESSEE FOR THE FIRST TIME ON 24.01.2000 AND THUS INDEXED COST OF ACQUISITION SHOULD BE ADOPTED FROM THE YEAR 1999 - 2000 ONLY. 6.1 NOW, T HE ISSUE BEFORE US IS WHETHER, FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, INDEXED COST OF ACQUISITION HAS TO BE CO MPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER WAS HELD OR THE YEAR IN WHICH THE ASSESSEE BECOME OWNER BY WAY OF INHERITANCE? THE VERY SAME ISSUE HAS BEEN CONSIDERED BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MANJULA J. SHAH (SUP RA), WHEREIN THE HON BLE HIGH COURT HAS OBSERVED AS UNDER: 19) IT IS TRUE THAT THE WORDS OF A STATUTE ARE TO BE UNDERSTOOD IN THEIR NATURAL AND ORDINARY SENSE UNLESS THE OBJECT OF THE STATUTE SUGGESTS TO THE CONTRARY. THUS, IN CONSTRUING THE WORDS ASSET WAS HELD BY THE ASSESSEE IN CLAUSE (III) OF EXPLANATION TO SECTION 48 OF THE ACT, ONE HAS TO SEE THE OBJECT WITH WHICH THE SAID WORDS ARE USED IN THE STATUTE. IF ONE READS EXPLANATION 1(I)(B) TO SECTION 2(42A) TOGETHER WITH SECTION 48 AND 49 OF THE ACT, I T BECOMES ABSOLUTELY CLEAR THAT THE OBJECT OF THE STATUTE IS NOT MERELY TO TAX THE CAPITAL GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY AN ASSESSEE BY INCURRING THE COST OF ACQUISITION, BUT ALSO TO TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET INTER ALIA ACQUIRED BY AN ASSESSEE UNDER A GIFT OR WILL AS PROVIDED UNDER SECTION 49 OF THE ACT WHERE THE ASSESSEE IS DEEMED TO HAVE INCURRED THE COST OF ACQUISITION. THEREFORE, IF THE OBJECT OF THE LEGISLATURE IS TO TAX THE GAINS ARISING ON TRANSF ER OF A CAPITAL ACQUIRED UNDER A GIFT OR WILL BY INCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER IN DETERMINING THE PERIOD FOR WHICH THE SAID I.T.A. NO . 1602 /M/ 15 7 ASSET WAS HELD BY THE ASSESSEE, THEN THAT OBJECT CANNOT BE DEFEATED BY EXCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER WHILE DETERMINING THE INDEXED COST OF ACQUISITION OF THAT ASSET TO THE ASSESSEE. IN OTHER WORDS, IN THE ABSENCE OF ANY INDICATION IN CLAUSE (III) OF THE EXPLANATION TO SECTION 48 OF THE ACT THA T THE WORDS ASSET WAS HELD BY THE ASSESSEE HAS TO BE CONSTRUED DIFFERENTLY, THE SAID WORDS SHOULD BE CONSTRUED IN ACCORDANCE WITH THE OBJECT OF THE STATUTE, THAT IS, IN THE MANNER SET OUT IN EXPLANATION 1(I)(B) TO SECTION 2(42A) OF THE ACT. 20. TO ACCE PT THE CONTENTION OF THE REVENUE THAT THE WORDS USED IN CLAUSE (III) OF THE EXPLANATION TO SECTION 48 OF THE ACT HAS TO BE READ BY IGNORING THE PROVISIONS CONTAINED IN SECTION 2 OF THE ACT RUNS COUNTER TO THE ENTIRE SCHEME OF THE ACT. SECTION 2 OF THE ACT EXPRESSLY PROVIDES THAT UNLESS THE CONTEXT OTHERWISE REQUIRES, THE PROVISIONS OF THE ACT HAVE TO BE CONSTRUED AS PROVIDED UNDER SECTION 2 OF THE ACT. IN SECTION 48 OF THE ACT, THE EXPRESSION ASSET HELD BY THE ASSESSEE IS NOT DEFINED AND, THEREFORE, IN TH E ABSENCE OF ANY INTENTION TO THE CONTRARY THE EXPRESSION ASSET HELD BY THE ASSESSEE IN CLAUSE (III) OF THE EXPLANATION TO SECTION 48 OF THE ACT HAS TO BE CONSTRUED IN CONSONANCE WITH THE MEANING GIVEN IN SECTION 2(42A) OF THE ACT. IF THE MEANING GIVEN I N SECTION 2(42A) IS NOT ADOPTED IN CONSTRUING THE WORDS USED IN SECTION 48 OF THE ACT, THEN THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED UNDER A GIFT OR WILL BE OUTSIDE THE PURVIEW OF THE CAPITAL GAINS TAX WHICH IS NOT INTENDED BY THE LEGISLAT URE. THEREFORE, THE ARGUMENT OF THE REVENUE WHICH RUNS COUNTER TO THE LEGISLATIVE INTENT CANNOT BE ACCEPTED. 21. APART FROM THE ABOVE, SECTION 55(1)(B)(2)(II) OF THE ACT PROVIDES THAT WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY ANY O F THE MODES SPECIFIED UNDER SECTION 49(1) OF THE ACT, NOT ONLY THE COST OF IMPROVEMENT INCURRED BY THE ASSESSEE BUT ALSO THE COST OF IMPROVEMENT INCURRED BY THE PREVIOUS OWNER SHALL BE DEDUCTED FROM THE TOTAL CONSIDERATION RECEIVED BY THE ASSESSEE WHILE CO MPUTING THE CAPITAL GAINS UNDER SECTION 48 OF THE ACT. THE QUESTION OF DEDUCTING THE COST OF IMPROVEMENT INCURRED BY THE PREVIOUS OWNER IN THE CASE OF AN ASSESSEE COVERED UNDER SECTION 49(1) OF THE ACT WOULD ARISE ONLY IF THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER IS INCLUDED IN DETERMINING THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE ASSESSEE. THEREFORE, IT IS REASONABLE TO HOLD THAT IN THE CASE OF AN ASSESSEE COVERED UNDER SECTION 49(1) OF THE ACT, THE CAPITAL GAINS LIABILITY HAS TO B E COMPUTED BY CONSIDERING THAT THE ASSESSEE HELD THE SAID ASSET FROM I.T.A. NO . 1602 /M/ 15 8 THE DATE IT WAS HELD BY THE PREVIOUS OWNER AND THE SAME ANALOGY HAS ALSO TO BE APPLIED IN DETERMINING THE INDEXED COST OF ACQUISITION. 22. THE OBJECT OF GIVING RELIEF TO AN ASSESSEE BY ALLOWING INDEXATION IS WITH A VIEW TO OFFSET THE EFFECT OF INFLATION. AS PER THE CBDT CIRCULAR NO.636 DATED 31/8/1992 [SEE 198 ITR 1 (ST)] A FAIR METHOD OF ALLOWING RELIEF BY WAY OF INDEXATION IS TO LINK IT TO THE PERIOD OF HOLDING THE ASSET. THE SAID CIRC ULAR FURTHER PROVIDES THAT THE COST OF ACQUISITION AND THE COST OF IMPROVEMENT HAVE TO BE INFLATED TO ARRIVE AT .THE INDEXED COST OF ACQUISITION AND THE INDEXED COST OF IMPROVEMENT AND THEN DEDUCT THE SAME FROM THE SALE CONSIDERATION TO ARRIVE AT THE LONG TERM CAPITAL GAINS. IF INDEXATION IS LINKED TO THE PERIOD OF HOLDING THE ASSET AND IN THE CASE OF AN ASSESSEE COVERED UNDER SECTION 49(1) OF THE ACT, THE PERIOD OF HOLDING THE ASSET HAS TO BE DETERMINED BY INCLUDING THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER, THEN OBVIOUSLY IN ARRIVING AT THE INDEXATION, THE FIRST YEAR IN WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER WOULD BE THE FIRST YEAR FOR WHICH THE SAID ASSET WAS HELD BY THE ASSESSEE. 6.2 WHILE CONCURRING WITH THE DEC ISION IN THE CASE OF MANJULA J. SHAH, THE HON BLE DELHI HIGH COURT IN THE CASE OF ARUN SHUNGLOO TRUST V. CIT [2012] 205 TAXMAN 456 (DELHI) HAS HELD AS UNDER: 15. NORMALLY LITERAL RULE OF CONSTRUCTION IS APPLIED AND THE WORDS OF THE STATUTE ARE TO BE UNDE RSTOOD IN THEIR ORDINARY AND POPULAR SENSE, BUT THIS IS SUBJECT TO THE RIDER THAT THIS SHOULD NOT LEAD TO ABSURDITY, CONTRADICTION OR STULTIFICATION OF THE STATUTORY OBJECTIVE. LITERAL CONSTRUCTION SHOULD BE AVOIDED, IF IT LEADS TO UNWARRANTED REPUGNANCE O R INCONSISTENCIES. IN SUCH CIRCUMSTANCES THE EXPRESSION/WORDS CAN BE INTERPRETED BY THE COURTS TO AVOID ABSURDITIES AND INCONSISTENCIES BETWEEN THE PROVISIONS. IN THE PRESENT CASE, AS NOTICED ABOVE, THE CONSTRUCTION PLACED BY THE REVENUE WILL LEAD TO INCON SISTENCY AND INCONGRUITIES, WHEN WE REFER TO SECTION 49 AND CLAUSE (IV) TO EXPLANATION (1) TO SECTION 48 . THIS WILL RESULT IN ABSURDITIES BECAUSE THE HOL DING OF PREDECESSOR HAS TO BE ACCOUNTED FOR THE PURPOSE OF COMPUTING THE COST OF ACQUISITION, COST OF IMPROVEMENT AND INDEXED COST OF IMPROVEMENT BUT AS PER THE REVENUE NOT FOR THE PURPOSE OF INDEXED COST OF ACQUISITION. AS NOTICED BELOW, EVEN FOR THE PURP OSE OF DECIDING WHETHER THE TRANSACTION IS A SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN, THE HOLDING BY THE PREDECESSOR IS TO BE TAKEN INTO CONSIDERATION. I.T.A. NO . 1602 /M/ 15 9 16. BENEFIT OF INDEXED COST OF INFLATION IS GIVEN TO ENSURE THAT THE TAXPAYER PAYS CAPITAL GAI N TAX ON THE 'REAL' OR ACTUAL GAIN AND NOT ON THE INCREASE IN THE CAPITAL VALUE OF THE PROPERTY DUE TO INFLATION. THIS IS THE OBJECT OR PURPOSE IN ALLOWING BENEFIT OF INDEXED COST OF IMPROVEMENT, EVEN IF THE IMPROVEMENT WAS BY THE PREVIOUS OWNER IN CASES COVERED BY SECTION 49 . ACCORDINGLY THERE IS NO JUSTIFICATION OR REASON TO NOT ALLOW THE BENEFIT OF INDEXATION TO THE COST OF ACQUISITION IN CASES COVERED BY SECTION 49 . THIS IS NOT THE LEGISLATIVE INTENT BEHIND CLAUSE (III) TO EXPLANATION TO SECTION 48 OF THE ACT. 17. THERE IS NO REASON AND JUSTIFICATION TO HOLD THAT CLAUSE (III) OF THE EXPLANATION IN TENTS TO REDUCE OR RESTRICT THE 'INDEXED COST OF ACQUISITION' TO THE PERIOD DURING WHICH THE ASSESSEE HAS HELD THE PROPERTY AND NOT THE PERIOD DURING WHICH THE PROPERTY WAS HELD BY THE PREVIOUS OWNER. THE INTERPRETATION RELIED BY THE ASSESSEE IS REASONABLE AND IN CONSONANCE WITH THE OBJECT AND PURPOS E BEHIND SECTIONS 48 AND 49 OF THE ACT. 18. THE EXPRESSION 'HELD BY THE ASSESSEE' USED IN EXPLANATION (III ) TO SECTION 48 HAS TO BE UNDERSTOOD IN THE CONTEXT AND HARMONIOUSLY WITH OTHER SECTIONS. THE COST OF ACQUISITION STIPULATED IN SECTION 49 MEANS T HE COS T FOR WHICH THE PREVIOUS OWNER HAD ACQUIRED THE PROPERTY. THE TERM 'HELD BY THE ASSESSEE' SHOULD BE INTERPRETED TO INCLUDE THE PERIOD DURING WHICH THE PROPERTY WAS HELD BY THE PREVIOUS OWNER. 6.3 THE LD. CIT(A), BY FOLLOWING THE ABOVE DECISIONS, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. BEFORE US, THE REVENUE COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE DECISIONS OF THE HON BLE HIGH COURT S OR FILED ANY HIGHER COURT DECISION HAVING MODIFIED OR REVERSED THE ABOVE DECISION OF THE HON BLE HIGH COURT S . T HE LD. CIT(APPEALS) HAS RIGHTLY FOLLOWED THE ABOVE JUDGEMENT S AND WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(APPEALS). THUS, T HE GROUND RAISED BY THE REVENUE IS DISMISSED. I.T.A. NO . 1602 /M/ 15 10 7. THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT. THE ASSESSING OFFICER HAS OBSERVED THAT IN REGARD TO INVESTMENT OF THE CAPITAL GAIN IN CAPITAL GAIN ACCOUNT SCHEME NOTIFIED BY THE CENTRAL GOVERNMENT WITHIN DUE DATE FOR FILING RETURN OF INCOME UNDER SECT ION 139(1) OF THE ACT, IT HAS BEEN STATED IN SECTION 54(2) OF THE ACT THAT THE AMOUNT OF CAPITAL GAIN WHICH IS NOT UTILIZED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DUE DATE FOR FURNISHING OF RETURN SHALL BE DEPOSITED BY HIM BEFORE THE DUE DATE FOR FILING RETURN OF INCOME OR DATE OF FILING OF RETURN WHICHEVER IS EARLIER. IN THIS CASE, SINCE THE ASSESSEE HAS NOT MADE ANY DEPOSIT UNDER CAPITAL GAIN DEPOSIT ACCOUNT BUT HAS KEPT ALL THE SALE PROCEEDS IN HIS SAVINGS BANK ACCOU NT AND MADE PAYMENTS FOR ACQUISITION OF NEW ASSET FROM HIS ORDINARY SAVINGS BANK ACCOUNT, THE ASSESSING OFFICER HAS OBSERVED THAT IT IS CLEAR VIOLATION OF THE PROVISIONS OF SECTION 54(2) OF THE ACT. S INCE THE DECISION IN THE CASE OF CIT V. MRS. JAGRITHY AG ARWAL 339 ITR 610 (P&H) HAS NOT ATTAINED FINALITY, THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF THE ASSESSEE. ON APPEAL , THE LD. CIT(A) HAS OBSERVED THAT AS FAR AS CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT IS CONCERNED, WHEREIN THE CAPITAL GAINS C OULD NOT BE USED IN THE PURCHASE OR I.T.A. NO . 1602 /M/ 15 11 CONSTRUCTION OF A NEW HOUSE BEFORE FILING THE RETURN UNDER SECTION 139 OF THE ACT, THE SALE PROCEEDS SHOULD BE DEPOSITED IN THE CAPITAL GAIN ACCOUNTS SCHEME. HOWEVER, SINCE SECTION 139 OF THE ACT INCLUDES BOTH THE FILING OF RETURN UNDER SECTION 139(1) AND 139(4), THE PERIOD OF INVESTMENT IN THE NEW ASSET SHOULD BE LIBERALLY CONSTRUED AND THE SAME SHOULD NOT BE CONSTRUED TO MEAN THAT ONLY THAT PERIOD PRIOR TO FILING THE RETURN UNDER SECTION 139(1) OF THE ACT. THE ACTUAL IN VESTMENT CAN ALSO BE MADE EVEN IN THE EXTENDED PERIOD UNDER SECTION 139(4) WITHOUT INVESTING IN THE CAPITAL GAIN ACCOUNTS SCHEME. HE ALSO OBSERVED THAT THE CASE OF THE ASSESSEE WAS SUPPORTED BY VARIOUS CASE LAW, WHEREIN THE EXTENDED TIME LIMIT IS AVAILABLE FOR MAKING DEPOSIT IN THE CAPITAL GAINS ACCOUNT SCHEME I.E., BEFORE THE DATE OF EXEMPTION CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED. BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SMT. R. MALLIKA V. ITO IN I.T.A. NO.2046/MDS/2013 VIDE ORDER DATE D 22.07.2014, WHEREIN IT WAS HELD THAT THE ASSESSEE CAN UTILIZE THE FUND AVAILABLE AS PER SECTION 139(4) AND NOT UNDER SECTION 139(1) OF THE ACT BASED ON THE DECISION IN THE CASE OF CIT V. MRS. JAGRITHY AGARWAL (SUPRA) AND IN THIS CASE, THE ASSESSEE HAS IN VESTED IN THE NEW PROPERTY WELL WITHIN THE TIME LIMIT UNDER SECTION 139(4) OF THE ACT BEING 31.03.2004 AND THE ASSESSEE I.T.A. NO . 1602 /M/ 15 12 HAS PURCHASED THE NEW PROPERTY ON 09.05.2013 IN COMPLIANCE TO THE REQUIREMENTS UNDER SECTION 54(2) OF THE ACT, THE LD. CIT(A) DIRECTED T HE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT. WE HAVE PERUSED THE DECISION IN THE CASE OF SMT. R. MALLIKA V. ITO (SUPRA), WHEREIN OF THE COORDINATE BENCH OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ONLY DISPUTE BEFORE US IS WHETHER THE ASSESSEE HAS NOT BEEN ABLE TO UTILIZE THE FUND SHE HAS TO DEPOSIT THE SAME UNDER CAPITAL GAINS ACCOUNT AS PER NOTIFICAT ION ISSUED BY THE DEPARTMENT DATED 22.06.1998 ACCORDING TO SECTION 139(1) OR 139(4) OF THE ACT. IN THIS CASE, THE ASSESSEE SOLD AGRICULTURAL LAND ON 13.02.2007 AND PURCHASED AGRICULTURAL LAND ON 19.03.2008. ACCORDING TO THE ASSESSING OFFICER THE DUE DATE O F FILING OF RETURN AS PER SECTION 139(1) IS ON 31.07.2007. ACCORDING TO THE ASSESSEE, THE DUE DATE OF FILING OF RETURN AS PER 139(4) IS ON 31.03.2009. UNDER SIMILAR CIRCUMSTANCES, THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. MS. JAGRITI AG ARWAL 339 ITR 610, CONSIDERED THE ISSUE, WHEREIN IT HAS BEEN HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT THE SALE OF THE ASSET HAD TAKEN PLACE, ON JANUARY 13, 2006, FALLING IN THE PREVIOUS YEAR 2006 - 07, THE RETURN COULD BE FILED BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR 2007 - 08, I.E., MARCH 31, 2007.THUS, SUB - SECTION (4) OF SECTION 139 PROVIDES THE EXTENDED PERIOD OF LIMITATION AS AN EXCEPTION TO SUB - SECTION (1) OF SECTION 139 OF THE ACT. SUB - SECTION (4) WAS IN RELATION TO THE TIME ALLOWED TO AN ASSESSEE UNDER SUB - SECTION (1) TO FILE THE RETURN. THEREFORE, SUCH PROVISION WAS NOT AN INDEPENDENT PROVISION, BUT RELATES TO THE TIME CONTEMPLATED UNDER SUB SECTION (1) OF SECTION 139. THEREFORE, SUB - SECTION (4) HAD TO BE READ ALONG WITH SUB - SECTION (1). THEREFORE, THE DUE DATE FOR FURNISHING THE RETURN OF INCOME ACCORDING TO SECTION 139(1) OF THE ACT WAS SUBJECT TO THE EXTENDED PERIOD PROVIDED UNDER SUB - SECTION (4) OF SECTION 139 OF THE ACT. I.T.A. NO . 1602 /M/ 15 13 5. THOUGH THE DECISION HAS BEEN RENDERED IN THE CONTEXT OF SEC TION 54, THIS AS WELL APPLIES TO SECTION 54(B) ALSO. AS PER THE ABOVE DECISION OF THE HON BLE PUNJAB & HARYANA HIGH COURT, THE ASSESSEE CAN UTILIZE THE FUND AVAILABLE AS PER SECTION 139(4) AND NOT UNDER SECTION 139(1). IN THIS CASE, THE ASSESSEE WAS HAVING TIME UPTO 31.03.2009 AS PER SECTION 139(4). BUT THE ASSESSEE HAS PURCHASED THE AGRICULTURAL LAND ON 19.03.2008. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 54(B) OF TH E ACT. NO JURISDICTIONAL HIGH COURT S DECISION HAS BEEN FILED BY THE REVENUE OR FILED ANY HIGHER COURT DECISION HAVING MODIFIED OR REVERSED THE ABOVE DECISION OF THE PUNJAB & HARYANA HIGH COURT. KEEPING IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND RESP ECTFULLY FOLLOWING THE DECISION OF THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. JAGRITHI AGARWAL (SUPRA), THE DISALLOWANCE MADE BY THE ASSESSING OFFICER STANDS DELETED. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE COORDINATE BENC H OF THE TRIBUNAL IN THE CASE OF SMT. R. MALLIKA V. ITO, WHEREIN THE DECISION IN THE CASE OF CIT V. JAGRITHI AGARWAL (SUPRA) HAS BEEN FOLLOWED, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) SINCE IN THE PRESENT IN HAND, THE ASSESSEE HAS I NVESTED IN THE NEW PROPERTY ON 09.03.2013 WELL WITHIN THE TIME LIMIT PROVIDED UNDER SECTION 139(4) OF THE ACT BEING 31.03.2014. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . O RDER PRONOUNCED ON THE 31 ST OCTOBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 31 . 1 0 .201 6 VM/ - I.T.A. NO . 1602 /M/ 15 14 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.