Mrs. Jyoti Nitin Unkule, Pune V. Income-tax Officer,

ITA 1787/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1713 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 26-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: K SRINIVASAN
• Keywords: Capital asset; Additional evidence; Cost of acquisition
• Section: 143(3); 54F; 54

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1 787 /PN/201 4 / ASSESS MENT YEAR : 20 08 - 09 MRS. JYOTI NITIN UNKULE, 1013/16, VANDAN, SWASTIK SOCIETY, SHIVAJI NAGAR, PUNE - 411016 . / APPELLANT PAN: A ABPU9171B VS. THE INCOME TAX OFFICER, THE INCOME TAX OFFICER, WARD 3( 2 ), PUNE . / RESPONDENT / APPELLANT BY : SHRI K. SRINIVASAN / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 15 . 0 6 .201 6 / DATE OF PRONOUNCEMENT: 17 . 0 6 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FI LED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - I I , PUNE , DATED 1 2 . 05 .20 1 4 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. IN HOLDING THAT THE ASSESSEES CLAIM OF DEDUCTION U/S. 54F OF INCOME TAX ACT, 1961 IS NOT ALLOWABLE. 2. IN HOLDING THAT CAPITAL GAIN OUGHT TO HAVE BEEN TAXED IN A.Y. 2011 - 12 WITHOUT ANY MATERIAL IN AN APPEAL FOR A Y 2008 - 09 AND FINDING MAY BE QUASHED AS BAD IN LAW. 3. IN HOLDING THAT THE ASSESSEES CLAIM OF DEDUCTION U/S. 54F OF INCOME TAX ACT, 1961 DENIED BY THE ASSESSING OFFICER HAS BEEN PARTLY UPHELD THE FINDINGS MAY BE QUASHED AND AUTHORITIES BELOW DIRECTED TO ACCEPT THE ASSESSEES CLAI M IN TOTO OR ANY OTHER SUITABLE RELIEF GRANTED AS DEEM FIT. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. THE ASSESSEE IS ALSO AGGRIEVED BY THE OBSERVATIONS OF CIT(A) THAT THE INCOME FROM CAPITAL GAINS SHOULD BE TAXED IN ASSESSMENT YEAR 2011 - 12 AND NOT IN THE INSTANT ASSESSMENT YEAR I.E. 2008 - 09. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD DECLARED INCOME FROM CAPITAL GAINS ON SALE OF LAND AT RS.24 LAKHS , A FTER DEDUCTING THE IND EX ED COST OF CAPITAL GAINS ON SALE OF LAND AT RS.24 LAKHS , A FTER DEDUCTING THE IND EX ED COST OF ACQUISITION AT RS. 5,78,800/ - , THE ASSESSEE HAD WORKED OUT THE CAPITAL GAINS AT RS. 18,21,200/ - . THE ASSESSEE FURTHER CLAIMED THE EXEMPTION UNDER SECTION 54F OF THE ACT ON ACCOUNT OF INVESTMENT BEING MADE, AGAINST WHICH THE ASSESSEE PURCHASED P LOT OF LAND IN BALAJI CO - OP. HOUSING SOCIETY , BAVADHAN FOR TOTAL CONSIDERATION OF RS.30 LAKHS VIDE AGREEMENT DATED 06.05.2008. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, WHEREIN S HE WAS REQUIRED TO CONSTRUCT A HOUSE WITHIN PERIOD OF THREE YEARS FROM THE DATE OF SALE. IN THE CASE, THE ASSESSEE HAD SOLD THE LAND ON 18.03.2008 AND HAD PURCHASED THE PLOT OF LAND ON 06.05.2008, THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE EXEMPTION UNDER SECTION 54F OF THE ACT AS THE INVESTMENT WAS MADE IN THE PLOT OF LAND AND NOT IN A RESIDENTIAL HOUSE. ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 3 SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE IN THIS REGARD AND SHE WAS ASKED TO PRODUCE EVIDENCE OF CONSTRUCTION FOR PROPOSED RESIDENTIAL HOUSE ON THE SAID PLOT OF LAND. THE ASSESSEE IN REPLY, PRODUCED THE CERTIFICATE DATED 16.11.2010 SIGNED BY AN ARCHITECT AND INTERIOR DESIGNER TO THE EFFECT THAT THE ASSESSEE WAS PLANNING TO CONSTRUCT A BUNGALOW ON THE SAID PLOT OF LAND. FURTHER, IT WAS CLAIMED THAT THE NECESSARY PLANS FOR CONSTRUCTION WERE ALREADY SUBMITTED TO THE PUNE MUNICIPAL CORPORATION FOR PERMISSION AND COPY OF THE PLANS SUBMITTED TO PMC AND COPY OF SCRUTINY FEES PAID TO PMC WAS ALSO ATTACHED TO THE SAID CERTIFICATE. THE ASSESSEE THUS, CLAIMED THAT WHERE THE CONSTRUCTION ACTIVITY HAD ALREADY COMMENCED ON THE PLOT OF LAND, IT WAS ENTITLED TO CLAIM THE AFORESAID DEDUCTION UNDER SECTION 54F OF THE ACT. THE ASSESSING OFFICER IN ORDER TO VERIFY T HE ABOVE CLAIM OF ASSESSEE, HAD VISITED THE SAID PLOT OF LAND IN BAVDHAN, PUNE ON 18.12.2010, ALONG WITH INSPECTOR ATTACHED TO HIS WARD. THE ASSESSING OFFICER HAD NOTED THAT NO CONSTRUCTION HAS BEGUN ON THE SAID PROPERTY AND THE SAME WAS LYING VACANT. TH E REPORT OF THE INSPECTOR TO THAT EFFECT WAS ALSO PLACED ON RECORD AND IN TOTALITY OF THE SAME, THE CLAIM OF THE ASSESSEE WAS REJECTED AND THE INCOME FROM LONG TERM CAPITAL GAINS AT RS. 18,21,200/ - WAS ASSESSED IN THE HANDS OF ASSESSEE. 5. BEFORE THE CIT(A ), THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH ARE INCORPORATED IN THE APPELLATE ORDER AND IT WAS POINTED OUT THAT THE ACTIVITY FOR CONSTRUCTION OF RESIDENTIAL HOUSE HAD ALREADY COMMENCED AND IN THIS REGARD, SUPPORTING PROOF WAS FILED WHICH WAS NOT AP PRECIATED BY THE ASSESSING OFFICER. THE ASSESSEE FURTHER CLAIMED THAT THERE WAS THREE YEARS PERIOD FROM THE DATE OF TRANSFER OF ASSETS TO CONSTRUCT THE SAID RESIDENTIAL HOUSE I.E. UP TO 18.03.2011 AND HENCE THERE WAS NO MERIT IN THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER. IN THIS REGARD, THE ASSESSEE FURNISHED VARIOUS EVIDENCES WHICH POINTED ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 4 TO COMMENCEMENT OF WORK FROM 06.01.2011, WHEREAS THE ASSESSMENT ORDER WAS PASSED ON 21.12.2010. THE ASSESSEE MADE AN APPLICATION FOR ADMISSION OF ADDITIONAL EVID ENCE BEING DIFFERENT COMMUNICATIONS, WHICH ARE TABULATED UNDER PARA 3.1.1 AT PAGES 8 AND 9 OF THE APPELLATE ORDER. THE AFORESAID APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE WAS FORWARDED TO THE ASSESSING OFFICER AND THE REMAND REPORT WAS RECEIVED FRO M THE ASSESSING OFFICER AND THE ASSESSING OFFICER POINTED OUT THAT THE PERIOD OF CONSTRUCTION OF HOUSE PROPERTY WAS GOING TO EXPIRE ON 18.03.2011 AND THAT IS WHY THE ASSESSEE IMMEDIATELY STARTED THE WORK OF CONSTRUCTION AND OBTAINED THE PLINTH COMPLETION C ERTIFICATE ON 14.02.2011 VIDE LETTER DATED 21 .0 2.2011 . THE FINAL COMPLETION CERTIFICATE WAS GIVEN BY THE ARCHITECT VIDE LETTER DATED 15.02.2013 I.E. AFTER NEARLY TWO YEARS FROM THE DEADLINE I.E. FROM 18.11.2011, FOR CLAIMING THE DEDUCTION UNDER SECTION 54 F OF THE ACT. IN VIEW THEREOF, WHERE THE ASSESSEE HAS FAILED TO CONSTRUCT THE HOUSE BEFORE 18.03.2011 , THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT. AFTER CONSIDERING THE REJOINDER OF THE ASSESSEE, THE CIT(A) NOTED THE EVENTS IN THE CONSTRUCTION ACTIVITY HAVING TAKEN PLACE AFTER COMPLETION OF ASSESSMENT AND IN VIEW THEREOF, THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND ITS ADMISSION. THE CIT(A) ALSO NOTED THE FACT THAT THE TIME TO CONSTRUCT RESIDENTIAL HOUSE UNDER NORMAL CIRCUMSTANCES WAS AVAILABLE TO THE ASSESSEE UP TO 18.03.2011. HOWEVER, THE ACTIVITY OF CONSTRUCTION STARTED ONLY AFTER 06.01.2011. THE CIT(A) ADMITTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND CONSIDERED THE SAME FOR DECIDING THE ISSUE. HOWEVER, THE CIT(A) WAS OF THE VIEW THAT THE MATERIAL BROUGHT ON RECORD BY THE ASSESSEE DOES NOT JUSTIFY THE CLAIM OF ASSESSEE AS SHE HAS F A ILED TO CONSTRUCT THE NEW RESIDENTIAL HOUSE AS PER PROVISIONS OF SECTI ON 54F OF THE ACT WITHIN STIPULATED TIME FRAME I.E. UP TO 18.03.2011, THOUGH THE WORK RELATING TO ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 5 CONSTRUCTION HAD ALREADY STARTED. THE CIT(A) WAS OF THE VIEW THAT WHERE THE ASSESSEE HAD ONLY PURCHASED THE LAND AND HAD STARTED THE CONSTRUCTION WHICH WAS D ONE ONLY UP TO PLINTH LEVEL AREA UP TO 18.03.2011 , THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. RELIANCE PLACED UPON BY THE ASSESSEE ON VARIOUS JUDICIAL PRONOUNCEMENTS WERE HELD TO BE NOT ADMISSIBLE AS THOSE CASES WERE DISTINGUISHABLE ON FACTS, WHEREIN MAJOR PART OF THE CONSTRUCTION HAD TAKEN PLACE AND ONLY MINOR COMPLETION ACTIVITY WAS REMAINED. THE CIT(A) FURTHER NOTED THAT WHERE THE ASSESSEE CLAIMS DEDUCTION UNDER SECTION 54F OF THE ACT, UNDER WHICH IT IS PROVID ED THAT THE ASSESSEE HAS TO CONSTRUCT NEW RESIDENTIAL PROPERTY WITHIN PERIOD OF THREE YEARS FROM THE DATE OF SALE I.E. 18.03.2008 AND THE CONSTRUCTION HAD TO BE COMPLETED BY 18.03.2011, WHICH FALLS IN THE ASSESSMENT YEAR 2011 - 12 AND IN CASE THE ASSESSEE FA ILS TO FULFILL THE SAID CONDITION OF COMPLETING THE CONSTRUCTION BY 18.03.2011, THEN THE INCOME FROM CAPITAL GAINS IS TO BE CHARGED IN ASSESSMENT YEAR 2011 - 12 AND NOT IN ASSESSMENT YEAR 2008 - 09 AS WAS TAXED BY THE ASSESSING OFFICER. 6. THE ASSESSEE IS I N APPEAL AGAINST THE AFORESAID FINDING OF CIT(A). 7. THE CLAIM OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE ME WAS THAT THE REQUIREMENT OF SECTION WAS NOT TO COMPLETE THE RESIDENTIAL PROPERTY WITHIN TIME FROM THE DATE OF SALE AND THE REQUI REMENT WAS TO CONSTRUCT A RESIDENTIAL PROPERTY. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER STATED THAT WHERE THE INVESTMENT MADE IN THE PLOT OF LAND WAS HIGHER THAN EVEN THE SALE VALUE OF ORIGINAL ASSET AND AFTER THE ASSESSEE SHOWS ITS INTENTION OF CONSTRUCTING THE RESIDENTIAL PROPERTY, SINCE THE PROVISIONS OF SECTION 54F OF THE ACT WERE BENEVOLENT PROVISIONS, THE SAME SHOULD BE APPLIED LIBERALLY ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 6 AND THE DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE. THE INTENTION TO CONSTRUCT THE BUILDI NG REFLECTS FROM THE PURCHASE OF LAND WITHIN SHORT TIME AND THEREAFTER, START OF CONSTRUCTION ON THE SAID PLOT OF LAND AND ITS COMPLETION IN 2013. ATTENTION WAS DRAWN TO THE COMPLETION CERTIFICATE ISSUED BY PMC IN THIS REGARD, WHICH WAS PLACED ON RECORD D URING THE COURSE OF HEARING. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN TURN, RELIED ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. SMT. B.S. SHANTHAKUMARI IN ITA NO.165/2014, JUDGMENT DATED 13.07.2015 AND B Y THE HONBLE HIGH COURT OF MADRAS IN CIT VS. SARDARMAL KOTHARI (2008) 302 ITR 286 (MAD). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACING RELIANCE ON THE ORDERS OF AUTHORITIES BELOW POINTED OUT THAT WHERE THE ASSESSEE HAD ONLY CONSTRUCT ED THE BUILDING TO THE PLINTH AREA TILL THE END OF THREE YEARS, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL HOUSE AND CANNOT BE SAID THAT THE ASSESSEE HAS CONSTRUCTED A RESIDENTIAL HOUSE AND HENCE, THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. 9. ON PERUSAL OF RECO RD, IT IS APPARENT THAT THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD WORKED OUT THE INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF RESIDENTIAL PROPERTY. HOWEVER, IN ORDER TO CLAIM THE BENEFIT OF SECTION 54F OF THE ACT, THE ASSESSEE CLAIMS THAT IT HAD PURCHASED PLOT OF LAND IN BAVDHAN, PUNE FOR TOTAL CONSIDERATION OF RS.30 LAKHS. THE LONG TERM CAPITAL GAINS AFTER INDEXATION OF COST OF ACQUISITION OF ORIGINAL ASSET WORKS OUT IN THE HANDS OF ASSESSEE AT RS.18,21,200/ - . THE ASSESSEE HAD MADE AN INVESTME NT IN THE NEW PLOT OF LAND AT RS.30 LAKHS. THE REQUIREMENT OF SECTION 54F OF THE ACT IS THAT IN ORDER TO CLAIM EXEMPTION FROM THE TAXABILITY OF CAPITAL GAINS ARISING FROM ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 7 THE SALE OF LAND BEING LONG TERM CAPITAL GAIN ASSET AND NOT BEING RESIDENTIAL HOUSE , THEN EITHER THE ASSESSEE PURCHASES WITHIN ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH TRANSFER TOOK PLACE, A RESIDENTIAL PROPERTY OR HAS WITHIN PERIOD OF THREE YEARS AFTER THAT DATE, CONSTRUCTED A RESIDENTIAL HOUSE, THEN THE CAPITAL GAINS WOULD B E DEALT IN ACCORDING TO THE PROVISIONS OF SAID SECTION 54F OF THE ACT. THE OBLIGATION ON THE ASSESSEE, IN VIEW O F PROVISIONS OF SECTION 54F OF THE ACT WAS TO CONSTRUCT A RESIDENTIAL HOUSE WITHIN PERIOD OF THREE YEARS AND IN THIS REGARD, IN ORDER TO AVAIL THE SAID DEDUCTION, THE ASSESSEE HAS TO INVEST THE REQUISITE AMOUNT IN THE PURCHASE OF PLOT OF LAND AND ITS CONSTRUCTION THEREAFTER. THE ASSESSEE AFTER SELLING ITS ORIGINAL ASSET ON 18.03.2008 FOR RS.24 LAKHS HAD PURCHASED ANOTHER PLOT IN BAVDHAN, PUNE ON 06.05.2008 FOR RS.30 LAKHS. AS PER INVESTIGATION BY THE ASSESSING OFFICER AND THE REPORT OF INSPECTOR, NO CONSTRUCTION HAD TAKEN PLACE ON THE SAID PLOT OF LAND TILL THE DATE OF COMPLETION OF ASSESSMENT. THE ASSESSEE ON THE OTHER HAND, CLAIMS THAT IT HAD APPLIED FOR SANCTIONING OF PLANS TO CONSTRUCT THE BUILDING ON THE AFORESAID PLOT OF LAND AND IT HAD ALSO INCURRED SOME EXPENDITURE FOR DRILLING CHARGES AND ALSO PAYING PROCESSING FEES AND DEPOSITING MONEY FOR INSPECTION. THE CONSTRUCTION WAS UNDERTAKEN B Y MEHEN ADALI CONSTRUCTION PVT. LTD. AND THE ASSESSEE PAID RS.2 LAKHS FOR THE FIRST TIME ON 14.02.2011. IN OTHER WORDS, THE PRELIMINARY ACTIVITY FOR STARTING THE CONSTRUCTION WAS UNDERTAKEN BY THE ASSESSEE BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS. HOW EVER, THE BUILDING PERSE WAS CONSTRUCTED THEREAFTER. THE ASSESSEE IN ORDER TO SUPPORT ITS CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT HAD FURNISHED ADDITIONAL EVIDENCE BEFORE THE CIT(A) IN THIS REGARD, WHICH IS TABULATED AT PAGES 8 AND 9 OF THE APPELL ATE ORDER. THE ASSESSEE HAS CONSTRUCTED A BUILDING ON THE SAID PLOT OF LAND WHICH WAS COMPLETED AS PER THE COMPLETION CERTIFICATE OF BUILDER DATED 05.02.2013. THE CONSTRUCTION OF SAID BUILDING WAS NOT COMPLETED BY 18.03.2011, HOWEVER, THE ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 8 ACTIVITY OF CON STRUCTION HAD STARTED PRIOR TO THAT DATE. THE ASSESSEE HAD EXHAUSTED TOTAL AMOUNT OF CAPITAL GAINS IN THE PURCHASE OF PLOT ITSELF AND ADDITIONAL FUNDS WERE UTILIZED FOR CONSTRUCTING SUPER STRUCTURE. 10. THE PROVISIONS OF SECTION 54F OF THE ACT ARE BENE VOLENT PROVISIONS, WHEREIN THE STATUTE ALLOWS DEDUCTION TO THE ASSESSEE WHERE THE ORIGINAL CAPITAL ASSET OWNED BY THE ASSESSEE IS SOLD AND THE AMOUNT OF CAPITAL GAINS / SALE CONSIDERATION IS INVESTED IN PURCHASE OF A NEW RESIDENTIAL PROPERTY I.E. NEW ASSET . THE REQUIREMENT VIS - - VIS THE CONSTRUCTION OF PROPERTY IS THAT THE SAME SHOULD BE CONSTRUCTED WITHIN PERIOD OF THREE YEARS. HOWEVER, THERE IS NO LIMIT AS TO FINISH THE CONSTRUCTION WITHIN THE SAID PERIOD OF THREE YEARS. THE ASSESSEE HAVING EXHAUSTED I TS SALE PROCEEDS FOR THE PURPOSE OF INVESTMENT IN NEW ASSET CAN BE SAID TO HAVE UTILIZED THE SAID AMOUNT FOR THE CONSTRUCTION OF RESIDENTIAL PROPERTY. THE ACT ITSELF PROVIDED THAT IN CASE THE AMOUNT OF SALE CONSIDERATION / CAPITAL GAINS IS NOT UTILIZED BE FORE THE DUE DATE OF FILING THE RETURN OF INCOME, CAPITAL GAINS IS NOT UTILIZED BE FORE THE DUE DATE OF FILING THE RETURN OF INCOME, THEN SUCH AMOUNT IS TO BE DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME AND FROM THERE, THE ASSESSEE HAS TO CARRY OUT ITS BURDEN OF INVESTMENT BY WAY OF PURCHASING THE PROPERTY WITHIN PERIOD OF TWO YEARS FROM T HE DATE OF SALE OR CONSTRUCTING THE NEW HOUSE PROPERTY WITHIN PERIOD OF THREE YEARS. HOWEVER, IN THE CASE OF ASSESSEE, THE TOTAL SALE CONSIDERATION WAS UTILIZED AGAINST THE COST OF PLOT PURCHASED BY THE ASSESSEE. BUT , IT WAS INCUMBENT UPON THE ASSESSEE T O CONSTRUCT THE RESIDENTIAL HOUSE IN ORDER TO AVAIL THE DEDUCTION UNDER SECTION 54F OF THE ACT . W HERE THE ASSESSEE HAD STARTED THE CONSTRUCTION BEFORE EXPIRY OF PERIOD OF THREE YEARS FROM THE DATE OF SALE OF PROPERTY I.E. 18.03.2008 , I FIND NO MERIT IN TH E ORDERS OF AUTHORITIES BELOW IN DENYING THE DEDUCTION UNDER SECTION 54F OF THE ACT ON THE GROUND THAT THE CONSTRUCTION OF NEW HOUSE PROPERTY WAS NOT COMPLETED BEFORE 18.03.2011. I FIND SUPPORT FROM THE RATIO ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 9 LAID DOWN BY THE HONBLE HIGH COURT OF KARNATA KA IN CIT & ANR. VS. SMT. B.S. SHANTHAKUMARI (SUPRA) , WHEREIN IT HAS BEEN HELD AS UNDER: - 8. SECTION 54F OF THE ACT IS A BENEFICIAL PROVISION WHICH PROMOTES FOR CONSTRUCTION OF RESIDENTIAL HOUSE. SUCH PROVISION HAS TO BE CONSTRUED LIBERALLY FOR ACHIEVING THE PURPOSE FOR WHICH IT IS INCORPORATED IN THE STATUTE. THE INTENTION OF THE LEGISLATURE, AS COULD BE DISCERNED FROM THE READING OF THE PROVISION, WOULD CLEARLY INDICATE THAT IT WAS TO ENCOURAGE INVESTMENTS IN THE ACQUISITION OF A RESIDENTIAL PLOT AND C OMPLETION OF CONSTRUCTION OF A RESIDENTIAL HOUSE IN THE PLOT SO ACQUIRED. A BARE PERUSAL OF SAID PROVISION DOES NOT EVEN REMOTELY SUGGEST THAT IT INTENDS TO CONVEY THAT SUCH CONSTRUCTION SHOULD BE COMPLETED IN ALL RESPECTS IN THREE (3) YEARS AND / OR MAKE IT HABITABLE. THE ESSENCE OF SAID PROVISION IS TO ENSURE THAT ASSESSEE WHO RECEIVED CAPITAL GAINS WOULD INVEST SAME BY CONSTRUCTING A RESIDENTIAL HOUSE AND ONCE IT IS ESTABLISHED THAT CONSIDERATION SO RECEIVED ON TRANSFER OF HIS LONG TERM CAPITAL ASSET H AS INVESTED IN CONSTRUCTING A RESIDENTIAL HOUSE, IT WOULD SATISFY THE INGREDIENTS OF SECTION 54F. IF THE ASSESSEE IS ABLE TO ESTABLISH THAT HE HAD INVESTED THE ENTIRE NET CONSIDERATION WITHIN THE STIPULATED PERIOD, IT WOULD MEET THE REQUIREMENT OF SECTION 54F AND AS SUCH, ASSESSEE WOULD BE ENTITLED TO GET THE BENEFIT OF SECTION 54F OF THE ACT. THOUGH SUCH CONSTRUCTION OF BUILDING MAY NOT BE COMPLETE IN ALL RESPECT THAT BY ITSELF WOULD NOT DISENTITLE THE ASSESSEE TO THE BENEFIT FLOWING FROM SECTION 54F. IN FACT, APPELLATE COMMISSIONER HAS NOT ONLY TAKEN NOTE OF THE JUDGMENT OF THE CO - ORDINATE BENCH OF THIS COURT IN SAMBANDAMS CASE REFERRED TO SUPRA, BUT HAD ALSO TAKEN NOTE OF THE JUDGMENT OF HIGH COURT OF MADRAS IN THE CASE OF CIT VS. SARDARMAL KOTHARI REPORTED IN (2008) 302 ITR 286, WHICH WAS ON SIMILAR FACTS AS OBTAINED IN SAMBANDAM UDAYKUMARS CASE AND AS SUCH IN THE INSTANT CASE, APPELLATE COMMISSIONER ALLOWED ASSESSEES APPEAL NOTING THAT THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF HIGH CO URT OF MADRAS BEFORE APEX COURT IN CC NO.3953 - 3954/2009 HAD BEEN DISMISSED ON 06.04.2009. HAD BEEN DISMISSED ON 06.04.2009. 9. THAT APART, CO - ORDINATE BENCH OF THIS COURT IN SAMBANDAM UDAYKUMARS CASE REFERRED TO SUPRA HAS EXAMINED SIMILAR ISSUE AND HAS HELD THAT THE WORDS USED IN SECTI ON 54F ARE PURCHASED OR CONSTRUCTED AND HELD THAT THE CONDITION PRECEDENT FOR CLAIMING BENEFIT UNDER SUCH PROVISION IS THE CAPITAL GAIN REALIZED FROM SALE OF A LONG TERM CAPITAL ASSET SHOULD HAVE BEEN PARTED BY THE ASSESSEE AND INVESTED EITHER IN PURCH ASING A RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE. IT HAS ALSO BEEN HELD THAT IF THE ASSESSEE HAS INVESTED MONEY IN CONSTRUCTING THE RESIDENTIAL HOUSE, MERELY BECAUSE THE CONSTRUCTION WAS NOT COMPLETE IN ALL RESPECTS OR SUCH BUILDING IS YET TO BE COMPLETED FULLY OR THE BUILDING NOT BEING IN A FIT CONDITION FOR BEING OCCUPIED, WOULD BY ITSELF NOT BE A GROUND FOR THE ASSESSEE TO BE DENIED THE BENEFIT UNDER SECTION 54F OF THE ACT. IT HAS BEEN HELD BY THE CO - ORDINATE BENCH AS UNDER: THE INTEN TION OF THE LEGISLATURE WAS TO ENCOURAGE INVESTMENTS IN THE ACQUISITION OF A RESIDENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT THE REQUIREMENT OF LAW. THE WORDS USED IN THE SECTION ARE PURCHASED OR CONSTRUCTED. FOR SUCH PURPOSE, T HE CAPITAL GAIN REALIZED SHOULD HAVE BEEN INVESTED IN A RESIDENTIAL HOUSE. THE CONDITION PRECEDENT FOR CLAIMING BENEFIT UNDER THE SAID PROVISION IS THE CAPITAL GAIN REALIZED FROM SALE OF CAPITAL ASSET SHOULD HAVE BEEN PARTED BY THE ASSESSEE AND INVESTED E ITHER IN PURCHASING A RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE. IF AFTER MAKING THE ENTIRE PAYMENT, MERELY BECAUSE A REGISTERED SALE DEED HAD NOT BEEN EXECUTED AND REGISTERED IN FAVOUR OF THE ASSESSEE BEFORE THE PERIOD STIPULATED, HE CANNO T BE DENIED THE BENEFIT OF SECTION 54F OF THE ACT. SIMILARLY, IF HE HAS INVESTED THE MONEY IN CONSTRUCTION OF A RESIDENTIAL ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 10 HOUSE, MERELY BECAUSE THE CONSTRUCTION WAS NOT COMPLETE IN ALL RESPECTS AND IT WAS NOT IN A FIT CONDITION TO BE OCCUPIED WITHIN THE PERIOD STIPULATED, THAT WOULD NOT DISENTITLE THE ASSESSEE FROM CLAIMING THE BENEFIT UNDER SECTION 54F OF THE ACT. 10. WE ARE IN COMPLETE AGREEMENT WITH THE RATIO LAID DOWN BY THE CO - ORDINATE BENCH OF THIS COURT. IT HAS ALSO BEEN NOTICED BY THIS COURT THAT ON THE FACTS OF THE PRESENT CASE, ASSESSEE HAD PRODUCED MATERIAL EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY TO DEMONSTRATE THAT THE CONSTRUCTION WAS ON THE VERGE OF COMPLETION BY PRODUCING PHOTOGRAPHS AND THIS ASPECT, THOUGH NOT NOTICED IN DETAIL, SAME CAME TO BE NOTICED BY THE TRIBUNAL TO REJECT THE APPEAL OF REVENUE. IT WAS ALSO NOTICED BY THE TRIBUNAL THAT CONSTRUCTION OF THE BUILDING HAVING BEEN COMPLETED AND SAME HAVING BEEN OCCUPIED BY THE ASSESSEE, IS ALSO A FACTOR TO DISMISS THE APPEAL OF T HE REVENUE. 11. T HE HONBLE HIGH COURT HAS CLEARLY LAID DOWN THAT EVEN IN CASES WHERE CONSTRUCTION OF BUILDING IS NOT COMPLETE IN ALL RESPECTS, THEN THAT BY ITSELF WOULD NOT DIS - ENTITLES THE ASSESSEE TO THE BENEFIT FLOWING FROM SECTION 54F OF THE ACT. 12. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE HIGH COURT OF MADRAS IN CIT VS. SARDARMAL KOTHARI ( SUPRA ) . IN THE FACTS BEFORE THE HONBLE HIGH COURT OF MADRAS, THE ASSESSEE HAD INVESTED THE ENTIRE NET CONSIDERATION OF SALE OF CAPITAL ASSET IN T HE LAND ITSELF AND SUBSEQUENTLY, THE ASSESSEE HAD OF SALE OF CAPITAL ASSET IN T HE LAND ITSELF AND SUBSEQUENTLY, THE ASSESSEE HAD INVESTED LARGE SUMS OF MONEY IN CONSTRUCTION OF HOUSE AND THE HONBLE HIGH COURT HELD THAT THE EXEMPTION UNDER SECTION 54F OF THE ACT COULD NOT BE DENIED ON THE GROUND THAT THE CONSTRUCTION WAS NOT COMPLETE D WITHIN SPECIFIED PERIOD. 13. THE ASSESSEE BEFORE ME HAS FURNISHED THE COPY OF COMPLETION CERTIFICATE DATED 08.02.2013, WHICH CLEARLY LAYS DOWN THAT THE RESIDENTIAL HOUSE HAS BEEN COMPLETED BY THE ASSESSEE , THOUGH AFTER THE SPECIFIED DATE. HOWEVER, WHERE THE ASSESSEE HAD INVESTED THE AMOUNT OF SALE CONSIDERATION IN PURCHASING THE PLOT OF LAND AND THEREAFTER INVESTING IN CONSTRUCTION OF PROPERTY, THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54F OF THE ACT. APPLYING THE ABOVE SAID PRO POSITIONS LAID DOWN BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT & ANR. VS. SMT. B.S. SHANTHAKUMARI (SUPRA) AND HONBLE HIGH COURT OF ITA NO. 1 787 /PN/20 1 4 MRS. JYOTI NITIN UNKULE 11 MADRAS IN CIT VS. SARDARMAL KOTHARI (SUPRA), I HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 17 TH DAY OF JUNE , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 17 TH JUNE , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - I I , PUNE ; 4. / THE CIT - I I, PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE