RAM PRAKASH MIYAN BAZAZ, Jaipur V. DCIT, Jaipur

ITA 182/JPR/2013

• Counselvise Citation: 18223114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: R K JAIN
• Keywords: Capital asset; Cost of acquisition; Revised return
• Section: 80C; 54F; 54; 11; 139; 28; 10

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 182/JP/2013 (A.Y. 2009-10) RAM PRAKASH MIYAN BAZAZ, VS. DCIT, CIRCLE-6, S-225, MAHAVEER NAGAR, JAIPUR. TONK ROAD, JAIPUR. PAN NO. ABHPP 9332 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. JAIN DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 29/01/2014. DATE OF PRONOUNCEMENT : 05/05/2014. O R D E R PER HARI OM MARATHA, J.M THIS APPEAL OF THE ASSESSEE FOR A.Y. 2009-10 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A)-II, JAIPUR DATED 28/01/2013. 2 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AS AN INDIVIDUAL, DERIVES HIS INCOME FROM LONG TERM CAPIT AL GAIN AND FROM OTHER SOURCES. FOR A.Y. 2009-10, HE FILED HIS RETURN OF INCOME (RIICO) ON 30/09/2009 DECLARING TOTAL INCOME OF RS. 2,06,86,65 0/-. THE ASSESSEE 2 HAS DERIVED INCOME FROM OTHER SOURCES OF RS. 77,23, 448/- FROM LONG TERM CAPITAL AND OF RS. 1,34,63,204/- FORM OF INTEREST. DURING THE RELEVANT PERIOD, THE RAJASTHAN STATE INDUSTRIAL DEVELOPMENT AND INVESTMENT CORPORATION LTD. (IN SHORT, RIC) ACQUIRED LAND OW NED BY THE ASSESSEE JOINTLY WITH OTHER MEMBERS OF HIS FAMILY LOCATED AT VIMALPURA, JAIPUR FOR A TOTAL CONSIDERATION OF RS. 5,81,19,891/-. PARTIC ULARS OF THE ENTIRE LAND ACQUIRED ARE AS UNDER:- KHASARA NO. AREA DATE OF PURCHASE AMOUNT SHARE OF THE ASSESSEE 731 0.43 FEET 25.01.1991 42000 SHARE / RS. 21000 28 0.63 FEET 31.05.1994 151200 SHARE / RS. 75600 27.29 1.51 FEET 01.06.1994 362400 SHARE OF RS. 90600 2.1 INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN OF RS. 77,23,448/- HAS BEEN COMPUTED BY THE ASSESSEE AS UNDER:- SALE CONSIDERATION OF VIMALPURA LAND ON 03/10/2008 RS. 20881079 LESS: VIMALPURA LAND 1. INDEXED COST OF ACQUISITION F.Y. 1991-92 42000/199 X 582 = 122834 2. VIMALPURA LAND F.Y. 1991-92 170000/259X582 = 382008 RS. 504 842 LONG TERM CAPITAL GAIN RS. 20376237 DEDUCTION U/S 54F RS. 12652789 (INVESTMENT IN HOUSE PROPERTY U/S 54F OF RS. 12966275) TAXABLE LTCG RS. 7723448 3 3. THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 5 4F OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). THE ASSESSING OFFICER HAS CALLED FOR THE COMPLETE DETAILS REGARDI NG THIS CLAIM. THE ASSESSEE FILED REPLY DATED 18/07/2011 STATING THAT HE HAD UTILIZED RS. 1,29,66,275/- IN TERMS OF SECTION 54F OF THE ACT. HE HAD DEPOSITED RS. 40 LAC UNDER CAPITAL GAIN ACCOUNT SCHEME OPENED WITH T HE BANK OF BARODA ON 29/09/2009 AND RS. 79,66,275/- WAS UTILIZED IN P URCHASING RESIDENTIAL FLAT IN THE VILLAGE MAIDAWAS (GURGOAN). TO PROVE P URCHASE OF FLAT, THE ASSESSEE PRODUCED A PHOTOCOPY OF THE APPLICATION FO RM ISSUED BY THE EMAAR MGF LAND LTD., ON A STAMP PAPER OF RS. 50/- D ATED 10/12/2009. ANNEXURE-3 OF THE APPLICATION-CUM-AGREEMENT FORM BE ARS THE NAME OF THE ASSESSEE FOR UNIT AREA 1975 SQ.FT. DATED 23/09/ 2009 AND ITS PRICE HAS BEEN CALCULATED AS UNDER:- BASIC PRICE - RS. 7108025/- IDC & EDC - RS. 533250/- CAR PARK - RS. 250000/- AND CLUB MEMBERSHIP - RS. 75000/- ------------------- TOTAL RS. 7966275/- -------------------- 3.1 THE ASSESSEE HAS ALSO CLAIMED FURTHER EXPENDITU RE OF RS. 10 LAC AS GIVEN TO THE INTERIOR DESIGNER-SHRI MUKESH AREN, A CIVIL ENGINEER, TOWARDS 4 SUPERVISION AND INTERIOR DECORATION. AFTER RECEIPT OF THIS REPLY, THE ASSESSING OFFICER SOUGHT CLARIFICATION FROM THE ASS ESSEE AS TO HOW SECTION 54F OF THE ACT APPLIES TO THIS CASE AND WHY HE SHOU LD ALLOW THIS EXEMPTION. THE ASSESSING OFFICER WANTED PROOF OF T HE ENTIRE CLAIM MADE BY HIM. THE ASSESSEE REPLIED VIDE LETTER DATED 12/ 08/2011 AS UNDER:- 1. THE ASSESSEE HAS BOOKED RESIDENT FLAT AT GURGAO N WITH EMAAR MGF LAND LTD. BY GIVING CHEQUE NO. 531797 OF RS. 5,00,0 00/- ON 24/09/2009, THE CHEQUE WAS CLEARED ON BANK ON 29/09 /2009. THE DATE OF BOOKING 23/09/2009 IS MENTIONED IN SCHEDULE OF PAYMENT OF SAID AGREEMENT. BANK STATEMENT HAS ALSO BEEN SUBMI TTED. THE ASSESSEE HAS GIVEN FULL AMOUNT OF CHEQUES AMOUNTING TO RS. 79,66,275/- WHICH WAS SUBSEQUENTLY CLEARED TIME TO TIME. THE STAMP PAPER DATE IS NOT SO IMPORTANT AS IT IS EVIDENT FROM RECORD THAT ASSESSEE HAS GIVEN & BOOKED FLAT WITHIN DUE TI ME. THE REGISTRATION OF DOCUMENTS ETC. IS SUBSEQUENT PROCES S. 10 SOT 139 MUMBAI ANGELA J KAZI VS. ITO 75 TAXMAN 145 (BOMB.) PLACED LETTER OF BOOKING OF NEW FLAT RECORD, COPY CHEQUE TO BUILDER AND ULTIMATE SALE AGREEMENTS. HENCE ASSESSEES INTENTION WAS CLEAR FOR PURCHASIN G NEW FLAT WITH IN PERIOD OF FURNISHING OF RETURN. SO CLAIM OF ASSESS EE IS WELL JUSTIFIED AND WITHIN AMBIT OF INCOME-TAX LAW. 2. THE ASSESSEE IS HAVING ONLY ONE RESIDENTIAL HOUSE A T S-225, MAHAVEER NAGAR, JAIPUR, AS APPEARING IN BALANCE SHEET OF RS. 43,50,534/-. THE ABOVE MENTIONED FLAT IS ONLY ANOTHER RESIDENTIAL FL AT WITHIN CONDITION OF SECTION 54F AS PRIOR TO IT ASSESSEE IS HAVING ON LY MAHAVEER NAGAR RESIDENTIAL HOUSE. THE OTHER ALLEGED FLATS ARE NOT RESIDENTIAL FLAST AS APPEARING IN BALANCE SHEET AS ASSESSEE HAS NEVER OCCUPIED THEM F OR RESIDENTIAL 5 PURPOSES, AS THESE ARE FOR INVESTMENT PURPOSES, ACC ORDING ALSO SHOWN UNDER INVESTMENTS IS BALANCE SHEET. THE ASSE SSEE HAS INVESTED IN ATS PARADISO, GREATER NOIDA (U.P.) AMOU NTING TO RS. 51,23,000/- AND POSSESSION OF IT HAS BEEN TAKEN ON 10/07/2010, COPY ENCLOSED. THE ANOTHER INVESTMENT WAS IN ATS PRELUDE GOLF M EDOW CHANDIGARH AMOUNTING TO RS. 29,90,000/- ITS POSSESS ION IS PENDING. THE HERITAGE CITY FLAT WAS JOINTLY OWNED BY BROTHER OM PRAKASH POSSESSION TAKEN ON 08/03/1999 IT WAS ALSO FOR INVE STMENT PURPOSES LETTER ENCLOSED. 3. IT HAS ALREADY BEEN EXPLAINED THAT ASSESSEE HAS UTI LIZED AMOUNT OF CAPITAL GAIN FOR PURCHASE OF NEW RESIDENTIAL HOUSE I.E. AMOUNTING TO RS. 79,66,275/- GIVEN TO BUILDER AND FURTHER RS. 10 LAC AGAINST SUPERVISION AND INTERIOR WORK. THUS TOTAL AMOUNTIN G TO RS. 89,66,275/- AND BALANCE RS. 40 LAC HAS BEEN DEPOSIT ED IN CAPITAL GAIN ACCOUNT, EVIDENT OF SAME HAS BEEN FILED. THUS TOTA L INVESTMENT U/S 54F IS OF RS. 1,29,66,275/- AS CLAIMED IN COMPUTATI ON OF INCOME AND ON BALANCE AMOUNT ASSESSEE HAS PAID CAPITAL GAIN TA X. THE FOLLOWING JUDGMENTS ARE IN THIS CONTEXT. SMT. SHASHI VERMA VS. CIT 224 ITR 106 (M.P.) I) THE CIRCULATE N. 672 DATED 16/12/1993 AND 471 DATED 15/10/1986 (THAT AMOUNT WAS ALLOWED TO BE PAID IN INSTALLMENTS DOES NOT EFFECT THE LEGAL POSITION IN SUCH SCHEMES. THESE CASES SHALL BE TREATED AS CASES OF CONSTRUCTI ON FOR THE PURPOSES OF CAPITAL GAINS. II) IF SUBSTANTIAL INVESTMENT IS MADE IN THE CONSTRUCTI ON OF HOUSE THAN IT SHOULD BE DEEMED THAT SUFFICIENT STEPS HAVE BEEN TAKEN AND THIS SATISFIES THE REQUIREMENTS OF SECTION 54. MRS. SEETHA SUBRAMANIAN VS. ACIT 59 ITD 94 MAD. THE ALLOTMENT ITSELF IS A SUFFICIENT COMPLIANCE F OR GETTING BENEFIT U/S 54F EVEN THOUGH THE ASSESSEE HAS NOT PAID ALL THE I NSTALLMENTS DUE UNDER SAID SCHEME. THE INTENTION OF LEGISLATURE WA S TO INVEST IN THE 6 ACQUISITION OF A RESIDENTIAL HOUSE AND COMPLETION O F CONSTRUCTION OF OCCUPATION IS NOT REQUIRED. 4. THE ASSESSEE HAS GIVEN EXPLANATION FOR THE INTER IOR & SUPERVISION WORK IN LETTER DATED 05/08/2011, THE COPY OF THE CL AIM OF RECEIPT OF AMOUNT OF RS. 10 LAC GIVEN TO MR. MUKESH AREN ENGIN EER FOR MAKING HOUSE HABITABLE IS ENCLOSED. 4. AFTER CONSIDERING THE ABOVE REPLY AND MAKING VARIO US OBSERVATIONS, THE ASSESSING OFFICER HAS FINALLY CONCLUDED THAT TH E ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT BECAUSE AT THE TIME OF ACQUISITION OF LAND, THE ASSESSEE OWNED MORE THA N ONE RESIDENTIAL HOUSE. THEREFORE, AS PER ASSESSING OFFICER ASSESSE E DOES NOT FULFILL EVEN THE PRIMARY CONDITION FOR CLAIMING EXEMPTION UNDER SECTION 54F OF THE ACT. FURTHER, ADVANCE PAYMENT MADE FOR THE PURCHAS E OF RESIDENTIAL FLAT HAS NOT BEEN TREATED AS INVESTMENT/UTILIZATION OF T HE CAPITAL GAIN IN THE PURCHASE OF A RESIDENTIAL HOUSE. THAT IS WHY ON BO TH THESE COUNTS, THE ASSESSING OFFICER HAS REJECTED THIS CLAIM OF THE AS SESSEE. HE HAS NOT TREATED THE DEPOSIT OF RS. 40 LAKHS IN THE CAPITAL GAIN ACCOUNT SCHEME. HE HAS DISTINGUISHED THE DECISIONS/CASE LAW ON WHIC H THE ASSESSEE PLACED RELIANCE IN SUPPORT OF HIS CLAIM. THE CLAIM OF PAY MENT OF RS. 10 LAC TO THE CIVIL ENGINEER ON ACCOUNT OF SUPERVISION WAS AL SO DECLINED ON THE REASONING THAT ON THE RECEIPT ISSUED BY SHRI MUKESH AREN, HE HAS NOT 7 MENTIONED HIS DEGREE AND AMOUNT WAS PAID IN CASH. THE ASSESSING OFFICER HAS COMPUTED THE INCOME OF THE ASSESSEE AS UNDER:- A INCOME FROM LONG TERM CAPITAL GAIN 2,04,37,654 / - B INCOME FROM OTHER SOURCES 1,34,63,204 / - GROSS TOTAL INCOME 3,39,00,858 / - DEDUCTION UNDER CHAPTER VIA (I) U/S 80C 1,00,000 / - (II) U/S 80 G (ELIGIBLE FOR 50% OF CONTRIBUTION RS.. 8,00,000/-) 4,00,000/- 5,00,000/- TOTAL INCOME 3,44,00,858/- ROUNDED OF 3,34,00,860 / - 4.1 AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AGAINST THE ORDER OF ASSESSING OFFICER. AFTER MAKING LENGTHY D ISCUSSIONS, LD. CIT(A) HAS ALSO DISMISSED THE APPEAL OF THE ASSESSEE. THE ASSESSEE IS FURTHER AGGRIEVED. HE HAS FILED THIS SECOND APPEAL BY RAIS ING THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAD DENIED THE CLAIM OF ASSESSEE U/S 54F OF I.T. ACT AND HAD ERRED IN HOLDING THAT ASSESSEE OWNED TO RESIDE NTIAL HOUSES (ATS-NOIDA FLAT AND ATS-CHANDIGARH FLAT) ON THE DAT E OF TRANSFER OF ORIGINAL ASSET, UNDER PROVISO (A)(I) TO SECTION 54F (1) BY OVERLOOKING THE APPARENT FACT THAT THE ASSESSEE NEITHER HAD POS SESSION NOR OWNERSHIP OF THESE SO CALLED FLATS ON THE DATE OF T RANSFER OF ORIGINAL ASSET (I.E. 05/06/2008). 2. THAT LD. CIT(A) HAD IGNORED THE FACT THAT INCOME FR OM SO CALLED TWO RESIDENTIAL HOUSES (ATS-NOIDA FLAT AND ATS-CHANDI GARH FLAT), SAID TO BE OWNED BY ASSESSEE, HAD TO BE CHARGEABLE UNDER INCOME FROM HOUSE PROPERTY AS PER PROVISO (BUSINESS) TO SECTIO N 54F(1), SO AS TO 8 DENY THE EXEMPTION U/S 54F. THE ASSESSEE DID NOT H AVE ANY ACCESS, CONTROL, POSSESSION, OWNERSHIP ETC. ON THE DATE OF TRANSFER OF ORIGINAL ASSET (I.E. 05/06/2008) AND THEREFORE, NO INCOME WA S CHARGEABLE UNDER THE INCOME FROM HOUSE PROPERTY ON THAT DATE . 3. THE LD. CIT(A) HAD FAILED TO DIFFERENTIATE BETWEEN NATURE OF ASSET OWNED BY THE ASSESSEE I.E. RIGHT TO ACQUIRE THE FL AT AND THE FLAT ITSELF. ASSESSEE HAD RIGHT TO ACQUIRE THE FLATS AND NOT THE FLAT/RESIDENTIAL HOUSES ITSELF ON THE DATE OF TRA NSFER OF ORIGINAL ASSET (I.E. 05/06/2008) IN TERMS OF SECTION. 54F. LD. CIT(A) ALSO IGNORED THE FACT THAT ATS-NOIDA BEC AME THE RESIDENTIAL HOUSE ON 10/07/2010 AFTER GETTING CON TROL/POSSESSION ON THIS DATE, THE RIGHT TO ACQUIRE FLAT WAS CONVE RTED INTO THE OWNERSHIP OF FLAT/RESIDENTIAL HOUSES. ATS CHANDI GARHS POSSESSION HAS STILL NOT BEEN RECEIVED TILL THE DATE OF THIS A PPEAL AND THEREFORE IT REMAINS A RIGHT TO ACQUIRE FLAT ONLY. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LD. CIT (A) HAD ERRED IN HOLDING THAT NO EXEMPTION WOULD BE AVAILABLE TO THE ASSESSEE FOR THE NEW ASSET ACQUIRED FOR RESIDENCE U/S 54F WHERE THE ASSESSEE HAS MADE THE PAYMENT OF THE BOOKING ONLY AND NOT OBTAIN ED THE POSSESSION OF THE NEW HOUSE BEFORE DUE DATE OF FILI NG THE RETURN. WHILE HOLDING SO, THE LD. CIT(A) HAS IGNORED THE CB DT CIRCULAR NO. 471 DATED 15/10/1986 WHICH LAYS DOWN THAT PAYMENT T O BUILDER IS SUFFICIENT COMPLIANCE FOR CLAIMING EXEMPTION U/S 54 F. 5. THAT THE APPELLANT CRAVES LEAVE TO RESERVE TO ITSEL F THE RIGHT TO ADDITIONAL, ALTER, AMEND, SUBSTITUTE, WITHDRAW AND/ OR ANY GROUND(S) OF APPEAL AT OR BEFORE THE TIME OF HEARING. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE RECORD. BOTH THE PARTIES HAVE REITERATED TH EIR ARGUMENTS TAKEN BEFORE LD. CIT(A). AFTER CONSIDERING RIVAL SUBMISS IONS IN THE LIGHT OF THE 9 EVIDENCE AVAILABLE ON RECORD INCLUDING THE PAPER BO OK FILED BY THE ASSESSEE, WE HAVE FOUND THAT THE FOLLOWING FACTS AR E NOT DISPUTED BY THE PARTIES:- (1) THAT THE ASSESSEE GOT HIS SHARE IN THE COMPEN SATION OF RS. 208.81 LAC FROM JOINTLY OWNED LAND CONSEQUENT UPON ACQUISITION THEREOF BY THE RAJASTHAN STATE INDUSTRIAL DEVELOPMENT AND I NVESTMENT CORPORATION LTD. (RIICO) ON 05/06/2008 AND HAS EARN ED THE LONG TERM CAPITAL GAIN (LTCG) OF RS. 203.76 LAC IN THIS PROCE SS. (2) THAT THE ASSESSEE INVESTED HIS SHARE OF COMPENSATION OF RS. 208.81 LA C BEFORE 30/09/2009 (I.E. DUE DATE OF FILING OF ROI FOR A.Y. 2009-10). THE DETAILS OF ENTIRE INVESTMENT ARE AS UNDER:- 1. INVESTMENT UNDER SECTION 54F RUPEES A) PAYMENT FOR RESIDENTIAL FLAT OF EMAAR MGF (A BUILDER) AT GURGAON 89.66 LAC B) DEPOS I T IN CAPITAL GAIN ACCOUNT WITH BOB 40.00 LAC 2. OFFERED FOR TAX AS LTCG 77.23 LAC ASSESSEE HAD FOLLOWING HOUSES & BOOKINGS AS ON 05/0 6/2008:- S.NO. PROPERTIES AND THEIR ADDRESS YEAR OF ACQUISITION SHARE OF THE ASSESSEE WHETHER ASSESSED UNDER SECTION 22 1 RESIDENTIAL HOUSE S-225, MAHAVEER NAGAR, JAIPUR AROUND 15 YEARS BACK 100% YES, AS SELF OCCUPIED HOUSE 10 2 BUSINESS OFFICE FLAT NO. 101, BLOCK NO. 43, HERITAGE CITY, GURGAON SINCE JUNE 1998 50% PROPERTY USED FOR BUSINESS & EXEMPTED U/S 22 3 BOOKINGS OF FLAT ATS-NOIDA AND ATS-CHANDIGARH ADVANCE BOOKINGS ON THE DATE OF TRANSFER I.E. 05/06/2008 100% IN ABSENCE OF OWNERSHIP, POSSESSION ETC. THE QUESTION DOES NOT ARISE. 4. NEW RESIDENTIAL HOUSE BOOKING AT EMAAR-MGF, GURGAON 2009 100% EXEMPTION U/S 54F CLAIMED FOR ACQUIRING SECOND HOUSE BOOKINGS FOR THE FLATS NAMELY ATS-NOIDA AND ATS-CHA NDIGARH EXISTED ON 05/06/2008, WHEREIN THE ASSESSEE DID NOT HAVE OWNER SHIP, CONTROL, POSSESSION, TITLE ETC. BY VIRTUE OF THESE BOOKINGS AND THE ONLY VALUABLE RIGHT/ASSET, ASSESSEE HAD, WAS THE RIGHT TO ACQUIRE FLAT WHICH COULD BE EITHER CONVERTED INTO A FLAT OR THE RIGHT ITSELF COULD BE TRANSFERRED FOR A CONSIDE RATION. 6 . TO UNDERSTAND THE NATURE OF CLAIM MADE UNDER SECT ION 54F OF THE ACT, WE HAVE TO INCORPORATE THIS SECTION IN ITS ENT IRETY HEREIN AS UNDER:- 54F. CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL AS SETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE.- (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FRO M THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HO USE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THR EE YEARS AFTER THAT DATE 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 SA Y, 11 (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN T HE NET 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 N ET CONSIDERATION 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 THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER S ECTION 45: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY WHERE (A) THE ASSESSEE, (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. 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) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIOD OF TWO YEARS AFTER THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET, OR CONS TRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY, OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH 12 NEW ASSET AS PROVIDED IN CLAUSE (A), OR, AS THE CAS E MAY BE, CLAUSE (B), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARG EABLE UNDER THE HEAD CAPITAL GAINS RELATING TO LONG-TERM CAPITAL ASSET S OF THE PREVIOUS YEAR IN WHICH SUCH RESIDENTIAL HOUSE IS PURCHASED OR CONSTR UCTED. (3) WHERE THE NEW ASSET IS TRANSFERRED WITHIN A PER IOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE OR, AS THE CASE MAY BE, IT S CONSTRUCTION, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE OR IGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH N EW ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B), OF S UB-SECTION (1) SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPI TAL GAINS RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WH ICH SUCH NEW ASSET IS TRANSFERRED. (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 UTILISED BY HIM FOR THE PURCHASE OR CO NSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF I NCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RE TURN SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLIC ABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN AN ACCOUNT IN ANY SUCH BANK OR INSTI TUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SU CH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY , ALREADY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NE W ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE C OST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B-SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION O F THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, (I) THE AMOUNT BY WHICH (A) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRA NSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE CO ST OF THE NEW ASSET AS 13 PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAU SE (B) OF SUB-SECTION (1), EXCEEDS (B) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1 ) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TH E TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. FROM THE PLAIN AND NORMAL READING OF THE ABOVE SEC TIONS ONE CAN EASILY CONSTRUE THAT THIS PROVISION AIMS AT ENCOURA GING EITHER CONSTRUCTION OR PURCHASE OF A RESIDENTIAL HOUSE OUT OF A CAPITAL GAIN ARISING FROM THE SALE OF CERTAIN CAPITAL ASSETS. THE TITLE ABOVE TH E MAIN SECTION IS VERY CLEAR IN THIS DIRECTION. WE WOULD LIKE TO REPEAT T HIS TITLE TO EMPHASIZE OUR POINT OF VIEW:- 54F. CAPITAL GAIN ON THE TRANSFER OF CERTAIN CAP ITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOU SE THIS SECTION DESCRIBES VENDORS OF THE CAPITAL GAIN , AS AN INDIVIDUAL OR A HUF. ALL OTHER ENTITIES LIKE A FIRM, A COMPAN Y ETC. HAVE BEEN EXCLUDED FROM ITS AMBIT. THIS FACT ALSO CLEARS THE INTENTION OF THE LEGISLATIONS BECAUSE THE INDIVIDUALS AND/OR THE HUF WHICH IS COMPOSED OF INDIVIDUALS, ARE ONLY CAPABLE OF RESIDING IN A HOUS E. THIS SECTION BINDS 14 THE INDIVIDUAL/HUF TO GET A NEW-ASSET (= A RESIDENT IAL HOUSE) EITHER BY WAY OF PURCHASE OR CONSTRUCTION WITHIN THE STIPULAT ED PERIOD AFTER THE SALE OF THE ORIGINAL ASSET. WE ARE NOT CONCERNED ABOUT THIS LIMITATION IN THIS CASE. THIS SECTION ALSO HELPS THE INDIVIDUAL TO CLAIM BENEFIT BY DEPOSITING THE CAPITAL GAIN IN A PARTICULAR MANNE R. WE ARE NOT CONCERNED ABOUT THIS ASPECT NOW. APART FROM DEFINI NG THE TERMS LIKE THE NET-CONSIDERATION ETC. THIS SECTION IMPOSES OTH ER CONDITIONS VIA A PROVISION APPENDED THERETO. AND WE ARE CONCERNED O NLY WITH THE PROVISION 54F(B)(A)(I) AS EXTRACTED ABOVE AND WE AR E REQUIRED TO ANSWER THE DISPUTE BETWEEN THE PARTIES BY USING THIS PROVI SION ALONE. THIS PROVISION PROSCRIBES THAT THE INDIVIDUAL/HUF MUST N OT OWN MORE THAN ONE RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF THE OR IGINAL ASSET. THEY HAVE EXCLUDED NEW-ASSET I.E. NEW RESIDENTIAL HOUSE FROM BEING COUNTED AT THE TIME OF SUCH TRANSFER BECAUSE THE SECTION PROVIDES A LEEWAY OF ONE YEAR FOR PURCHASING/CONSTRUCTING THE RESIDENTIAL HOUSE B EFORE THIS TRANSFER. THE DATE OF TRANSFER OF THE ORIGINAL ASSET IN THIS CASE IS 05/06/2008. LET USE EXAMINE IF THE ASSESSEE HAD MORE THAN ONE RESID ENTIAL HOUSE ON THAT DATE OR NOT. THE CHART EXTRACTED AT PAGES 9 & 10 O F THIS ORDER MAKES IT AMPLY CLEAR THAT ON 05/06/2008, THIS ASSESSEE DID N OT OWN MORE THAN ONE RESIDENTIAL HOUSE. HOWEVER, HE HAD BOOKED TWO FLAT S (RESIDENTIAL HOUSES) 15 ONE EACH AT ATS-NOIDA AND ATS-CHANDIGARH. REGARD ING THESE BOOKINGS AND THE INVESTMENTS MADE THE CONTENTION OF THE ASSE SSEE IS THAT THE BOOKING OF FLATS DOES NOT TANTAMOUNT TO OWNERSHIP OF THE FLATS UNLESS THESE ARE COMPLETED AND THEIR OWNERSHIP IS TRANSFER RED IN HIS NAMES. BUT AT THE SAME IT IS CONTENDED THAT AFTER 05/06/2008, IN THE YEAR OF 2009 I.E. WITHIN THE PERIOD OF LEEWAY PROVIDED IN THIS S ECTION, THE ASSESSEE HAS BOOKED ONE FLAT IN THE EMAAR-MGF, GURGAON AND HAS T REATED THE BOOKING AMOUNT PAID AS AN INVESTMENT MADE IN THE PURCHASE OF A NEW-ASSET I.E. A RESIDENTIAL HOUSE IN CONSONANCE WITH THE PROVISIO NS OF SECTION 54F WHICH DOES NOT SUFFER WITH THE PROHIBITIONS OF SECTION 54 F(4) OR THE PROVISO 54F(1)(B)(A)(I). THIS SUBMISSION SEEMS TO BE CONTR ADICTORY AT THE FIRST SIGHT. BUT, WHEN THIS ISSUE IS EXAMINED IT IS NOT NOTICED THAT THERE IS NEITHER CONTRADICTION IN ASSESSEES CLAIM NOR THERE IS INHERENT CONTRADICTION IN THE ACT. THE ACT IS VERY CLEAR. IT SPEAKS ABOUT INVESTMENT IN THE NEW-ASSET (REFER THE TITLE OF T HIS SECTION). THE TERM PURCHASED OR CONSTRUCTED USED IN SECTION 54F(1) MAY NOT NECESSARILY MEAN THAT THE NEW-ASSET MUST HAVE BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE AND THE INVESTMENT MADE BY WAY OF BOOKING A FLAT AND IF SUCH INVESTMENT IS PROVED IT MUST BE TREATED AS AN AMPLE COMPLIANCE OF THIS PROVISO WHEN IT IS EXAMINED IN THE LIGHT OF THE AIM AND OBJECT WITH WHICH 16 THE LEGISLATORS HAVE ENACTED THIS BENEFICIAL PROVIS ION. ON THE OTHER HAND THE TRANSFER OF OWNERSHIP IN OTHER FLATS IS MATER IAL BECAUSE THE SECTION USES THE TERM OWNS IN THE PROVISO. THUS INVESTME NT & OWNERSHIP ARE TWO DISTINCT TERMS WHICH HAVE THEIR MEANINGS AND CO NNOTATIONS IN DIFFERENT WAYS. THE INVESTMENT OF CAPITAL GAINS IS A BENEFICIAL PROVISION AND OWNERSHIP AT THE TIME OF TRANSFER OF THE ORIG INAL ASSET IS TO BE INTERPRETED STRICTLY AS PER LAW. IN OUR CONSIDERED OPINION BOTH THESE STAGES CANNOT BE DEALT WITH IN THE SAME MANNER. OU R THIS VIEW IS FURTHER FORTIFIED BY THE SAME PROVISION AS THE PROVISO 54F( 1)(B)(B) TO THIS SECTION POSTULATES THAT SUCH RESIDENTIAL HOUSE, OTHER THAN THE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE PROVISO 54F(1)(B)(A)(I) IS FURTHER CLARIFIED BY THIS PROVISO. IF THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE THE INCOME FROM THAT HOUSE IS CHA RGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THIS CASE NO SUCH INCOME IS CHARGEABLE FROM THE FLATS BOOKED AT NOIDA AND CHADI GARH. THUS, IN THE TOTALITY OF THE FACTS AND THE LAW THE FLATS BOOKED AT ATS-NOIDA AND ATS- CHANDIGARH OWNED BY THE ASSESSEE AS ON 05/06/2008 . 7. NOW, WE HAVE TO SEE AS TO WHETHER APPELLANT HAS FU LFILLED ALL THE REQUISITE CONDITIONS OF THIS SECTION OR NOT? AS PE R LD. CIT(A), THE ASSESSEE 17 OWNED TWO RESIDENTIAL HOUSES, SITUATED AT ATS-NOIDA FLAT AND ATS- CHANDIGARH FLAT, ON THE DATE OF TRANSFER OF THE ORI GINAL ASSET, WHICH IS A PROSCRIBED CONDITION AND, THEREFORE, THIS BENEFIT I S NOT AVAILABLE TO THE ASSESSEE. AS AGAINST THIS, THE CASE OF THE ASSESS EE, THROUGHOUT HAS BEEN THAT HE NEITHER POSSESSED NOR OWNED THESE HOUSES WH ICH ARE FLATS, ON THE DATE OF TRANSFER OF ORIGINAL ASSET WHICH FALL ON 05 /06/2008. IN FACT, UNDER PROVISO A(I) TO SECTION 54F (1) OF THE ACT, THE ASS ESSEE IS NOT ENTITLED TO THIS BENEFIT, IN CASE, HE OWNS MORE THAN ONE RESIDE NTIAL HOUSE OTHER THAN THE NEW ASSET ON THE DATE OF TRANSFER OF THE ORIGIN AL ASSET. 8. NOW WE HAVE TO SEE AS TO WHETHER ON THE DATE OF TR ANSFER OF THE ORIGINAL ASSET, WHICH IS OF 05/06/2008, THE ASSESSE E OWNED MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET OR NOT? AS PER THE ABOVE CHART, THE FACTS WHICH REMAINED UNDISPUTED. ON 05/ 06/2008, THE ASSESSEE HAD ONE RESIDENTIAL HOUSE AT S-225, MAHAVE ER NAGAR, JAIPUR WHICH WAS SELF OCCUPIED, ONE BUSINESS OFFICE AT HER ITAGE CITY, GURGAON WHICH IS BUSINESS PROPERTY, IN WHICH THE ASSESSEE H AD 50% SHARE. THE ASSESSEE HAD BOOKED TWO FLATS ONE EACH AT NOIDA & C HANDIGARH AND HAD MADE ADVANCE BOOKINGS ON THE DATE OF TRANSFER I.E. ON 05/06/2008. BUT NEITHER POSSESSION HAD BEEN TAKEN NOR OWNERSHIP HAD TRANSFERRED OF THOSE 18 FLATS IN THE NAME OF THE ASSESSEE TILL THAT DATE. THE ASSESSEE HAS BOOKED ONE NEW RESIDENTIAL HOUSE AT EMAAR-MGF, GURGAON IN THE YEAR 2009 I.E. AFTER THE DATE OF 05/06/2008. THE ASSESSEE HAS TRE ATED THIS NEW RESIDENTIAL HOUSE AT MGF, JAIPUR AS A NEW ASSET AND THE HOUSE AT MAHAVEER NAGAR, JAIPUR, AS HIS SOLE RESIDENTIAL HOU SE. REGARDING TWO FLATS BOOKED, ONE EACH AT NOIDA AND CHANDIGARH, THE CASE OF THE ASSESSEE IS THAT ASSESSEE HAS NOT BECOME OWNER OF THOSE HOUSES UNTIL 05/06/2008 AS NEITHER POSSESSION OF THE SAME HAD BEEN GIVEN TO HI M. ACCORDING TO HIM, ON 05/06/2008 HE OWNED ONLY ONE RESIDENTIAL HOUSE A ND THEREFORE, HE IS ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT IN RESPECT OF NEW ASSET BOOKED AT EMAAR-MGF, GURGAON. IT IS STATED T HAT IN THOSE TWO FLATS, ASSESSEE HAS ONLY RIGHT TO ACQUIRE FLAT. 9 . ON THE OTHER HAND, THE CASE OF LD. SR. D.R. WHO H AS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW, IS THAT THESE TWO FLATS ONE EACH AT NOIDA AND CHANDIGARH WOULD BE INCLUDED IN THE TERM OWNS ON 05/06/2008 AS BOTH THESE FLATS HAD BEEN BOOKED BY THAT DATE. STI LL FURTHER, THE CASE OF THE ASSESSEE IS THAT EVEN THE BOOKING OF A FLAT IN A BUILDINGS UNDER CONSTRUCTION TANTAMOUNT TO UTILIZATION OF CAPITAL G AIN IN THE PURCHASE OF A RESIDENTIAL HOUSE AND THE AMOUNT PAID IN ADVANCE TI LL THE FLAT (HOUSE) IS READY AND IS TRANSFERRED TO THE ASSESSEE OR AS PER LAW ITS OWNERSHIP IS 19 TRANSFERRED TO THE ASSESSEE. THE ITAT, COCHIN BENC H RENDERED IN THE CASE OF GEROGE DOMINIC VS. ACIT REPORTED IN (2013) 35 TAXMA NN.COM 547 . WITH REFERENCE TO PARA 12 OF THIS JUDGMENT IT WAS A RGUED THAT ONLY ON COMPLETION OF CONSTRUCTION OF THE BUILDING, IT ACQU IRES THE STATUS OF RESIDENTIAL HOUSE. THE BENCH HAS FURTHER OBSERVE D THAT PROVISO APPENDED TO SECTION 54 SAYS THAT THE INCOME FROM RE SIDENTIAL HOUSE IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY. MEANING THEREBY THAT HOUSE SHOULD BE FIT FOR RESIDING AT TH E RELEVANT TIME, SO THAT, IT SHOULD BE TREATED AS A HOUSE PROPERTY AND ITS IN COME CAN BE CHARGED UNDER THE LAW. THEREFORE, THE RATIO OF THIS JUDGME NT IS THAT ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET OWNED BY THE ASSE SSEE IF SHOULD BE A HOUSE READY FOR LIVING THEREIN. FURTHER DELHI BE NCH IN THE CASE OF SMT. BINA KEDIA VS. ITO, WARD 23(2), NEW DELHI (DISCUSSED AT PAGES 4 & 5 IN WRITTEN SUBMISSIONS) HAS TAKEN A SIMILAR VIEW. THE RELEVANT PORTION OF THIS JUDGMENT READS AS UNDER:- THE LD. CIT(A) HAS MENTIONED THAT AS ON THE DATE OF TRANSFER (I.E. 04/10/1999), THE ASSESSEE WAS OWNER OF ANOTHER HOUS E (DDA FLAT BOOKING) AND HENCE BENEFIT OF SEC. 54F WAS NOT AVAI LABLE. WE FIND THAT THE FLAT IN DWARKA WAS ALLOTTED ON 28/06/2001 (POSSESSION TAKEN ON 21/07/2001). THUS THE ASSESSEE WAS NOT OWNER OF ANY HOUSE ON THE DATE OF TRANSFER (I.E. 04/10/1999) OF CAPITAL A SSETS. LD. CIT(A) HAS ALSO HELD THAT BENEFIT OF SEC. 54F CANNOT BE GRANTE D AS THE ASSESSEE HAD PURCHASED RESIDENTIAL HOUSE OTHER THAN THE NEW ASSET WITHIN THE PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF CA PITAL ASSET AS DDA FLAT WAS ACQUIRED BY HER WITHIN ONE YEAR. IN THIS CASE THE ASSESSEE 20 SOLD 125 SHARES OF CASTROL ON 21/08/1999 FOR A SUM OF RS. 53,108.75 AND 66200 SHARES OF RAJDHANI SECURITIES ON 04/10/19 99 FOR A SUM OF RS. 11,55,190 THROUGH SHREE BALAJI SHARE TRADING CO MPANY. THEREFORE, THE DDA FLAT WAS NOT ACQUIRED WITHIN ONE YEAR FROM THE DATE OF TRANSFER OF CAPITAL ASSET. HENCE PROVISO T O SECTION 54F IS NOT APPLICABLE IN THE CASE OF ASSESSEE. 10 . UNDISPUTEDLY, THE ASSESSEE BECAME OWNER OF THE NO IDA FLAT ONLY ON 10/07/2010 AND HAS NOT ACQUIRED OWNERSHIP OF THE CH ANDIGARH FLAT TILL DATE. THUS, PICTURE BECOMES CLEAR IN RESPECT OF PR OVISO (A)(I) TO SECTION 54F OF THE ACT THAT THE RESIDENTIAL HOUSE MENTIONED THEREIN HAS A DIFFERENT CONNOTATION BECAUSE HOUSE MEANS BUILDIN G IN ITS NORMAL RESIDENTIAL CONDITIONS WHICH IS FOUND FIT FOR LIVIN G BY HUMAN-BEINGS AND NOT A HOUSE UNDER CONSTRUCTION AND THIS HOUSE SHOU LD BE COMPLETELY OWNED BY THE ASSESSEE AT THE RELEVANT TIME. THE LE GISLATORS IN THEIR WISDOM HAVE USED TWO DIFFERENT TERMS TO REFER TO TH E ORIGINAL RESIDENTIAL HOUSE SOLD AS OLD ASSET AND BY REFERRING TO THE N EW RESIDENTIAL HOUSE TO BE PURCHASED OR CONSTRUCTED AS THE CASE MAY BE, AS NEW ASSET. THE COLLECTIVE READING OF THIS SECTION MAKES IT CLEAR T HAT TWO CONDITIONS SHOULD BE SATISFIED AND BOTH ARE CO-EXIST AT THE RE LEVANT TIME OF TRANSFER OF ORIGINAL ASSET 1) THE ASSESSEE MUST OWNED THE RE SIDENTIAL HOUSE ON THE DATE OF TRANSFER AND 2) INCOME FROM SUCH RESIDENTIA L HOUSE SHOULD BE CHARGEABLE UNDER THE HEAD INCOME FROM OTHER HOUSE PROPERTY. IF THE 21 ABOVE TWO CONDITIONS CO-EXIST, THE ASSESSEE BECOMES DISENTITLED TO THE EXEMPTION SECTION 54F OF THE ACT, PARTICULARLY WHEN , THE ASSESSEE OWNS SUCH A HOUSE OTHER THAN THE ORIGINAL ASSET AND ITS INCOME IS CHARGEABLE AS A INCOME FROM HOUSE PROPERTY AS PER THE PROVISIONS OF SECTION 22 OF THE ACT. THE ASSESSEE NEEDS TO BE OWNER RATHER LEGAL O WNER OF THAT HOUSE. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. PODAR CEMENT (P) LTD. ETC. REPORTED IN 226 ITR 625 (SC) HAS CLEARLY EXPLAINED THIS POSITION BY HOLDING THAT OWNER IS A PERSON WHO IS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. IN THE ABSENCE OF COMPL ETION AND POSSESSION BY WAY OF REGISTRATION AND TRANSFER OF ITS TITLE ETC., OF THESE TWO FLATS BOOKED BY THE ASSESSEE ON THE DATE OF TRANSFER ORIGINAL CA PITAL ASSET I.E. 05/06/2008, THE QUESTION OF ASSESSING INCOME FROM HOUSE PROPERTY UNDER SECTION 22 OF THE ACT WILL NOT ARISE. THE LD . CIT(A) HAS MISDIRECTED HIMSELF HAS TREATING EVEN RIGHT TO ACQUIRE A FLAT AS OWNED BY THE ASSESSEE. IN OUR CONSIDERED OPINION, THE CONCLUSIO N OF LD. CIT(A) IS NOT CORRECT. THUS WITH REGARD TO NOIDA & CHANDIGARH FL ATS IT CAN BE SAFELY CONCLUDED THAT THESE WERE NOT OWNED BY THE ASSESSEE ON 05/06/2008 IN TERMS OF SECTION 54F OF THE ACT. THE LD. CIT(A) HA S OBSERVED (AT PAGE 14 OF HER ORDER) THAT THE ARGUMENT THAT THE FLATS AT NOIDA AND CHANDIGARH ARE JUST BOOKED AND NOT POSSESSED DOES NOT HOLD WAT ER, BECAUSE IF THE 22 SAME LOGIC IS APPLIED, NO EXEMPTION WOULD BE AVAILA BLE TO THE APPELLANT BECAUSE THE FLAT AT THE GURGAON WITH RESPECT TO WHI CH EXEMPTION IS BEING SOUGHT FROM CAPITAL GAIN IS ALSO JUST BOOKED AND PO SSESSION HAS NOT BEEN GIVEN TO THE APPELLANT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ABOVE OBSERVATION SEEMS TO BE PLAUSIBLE AT THE FIRST READING. WHY THE BOOKING AT NOIDA/CHANDIGARH IS TO BE TREA TED DIFFERENTLY FROM THE BOOKING OF GURGAON FLAT. BUT, WHEN THIS ASPECT IS EXAMINED IN DEPTH WITH RATIOCINATION THE ABOVE OBSERVATION BECOMES WR ONG AND CONTRARY TO THE INTENTION OF THE ACT. THE MEANING OF TERM OWN S USED IN SECTION 54F (CONDITIONS) OWNS MORE THAN ONE RESIDENTIAL HOUS E ON THE DATE OF TRANSFER OF THE CAPITAL ASSET HAS A DIFFERENT ME ANING. THAT HOUSE NEEDS TO BE. THIS OWNER MEANS A LEGAL OWNER WHO IS ENTITL ED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. THIS HOUSE SHO ULD BE REAL AND NOT SYMBOLIC. IN THE ABSENCE OF POSSESSION, REGISTRATI ON, TITLE ETC., QUESTION OF ASSESSING INCOME FROM HOUSE PROPERTY UNDER SEC TION 22 OF THE ACT DOES NOT ARISE. THUS, LD. CIT(A) HAS FAILED TO DIF FERENTIATE BETWEEN THE NATURE OF ASSET OWNED BY THE ASSESSEE WHEN A FLAT I S BOOKED HE HAS A RIGHT TO ACQUIRE AND THIS RIGHT TO ACQUIRE, IS NOT EQUIVALENT TO OWN A HOUSE. ON THE OTHER HAND THE PARAMETERS WHICH APPL Y TO INVESTMENT OF CAPITAL GAIN IN THE CONSTRUCTION PURCHASE OF A HOUSE WITHIN TWO YEARS 23 OF SALE OF THE ORIGINAL ASSET. THAT IS WHY THE CBD T HAS ISSUED CIRCULAR NOS. 471 DATED 15/10/1986 AND CIRCULAR NO. 672 DATE D 06/12/1993 WHICH CLARIFY THAT THE AMOUNT PAID TOWARDS BOOKING AS TO BE TREATED TOWARDS CONSTRUCTION FOR THE PURPOSE OF SECTION 54/54F. THIS ASSESSEE MADE PAYMENT TO THE BUILDER EMAAR MGF GURGAON BEFORE 3 0/09/2009 FOR BUYING A II RESIDENTIAL HOUSE. BUILDER HAS PROMISE D TO GIVE POSSESSION OF THE HOUSE BEFORE 05/06/2010 I.E. WITHIN 2 YEARS OF THE SALE OF THE ORIGINAL ASSET BUT COULD NOT GIVE POSSESSION BY THAT TIME. SECTION 54F IS A BENEFICIAL PROVISION FOR PROMOTING THE CONSTRUCTION OF RESIDENTIAL HOUSES AND REQUIRES AN ASSESSEE TO CONSTRUCT HOUSES AND FO R ACHIEVING THAT PURPOSE TO INTENT OF THE LEGISLATURE IS TO ENCOURAG E INVESTMENTS IN THE ACQUISITION OF A RESIDENTIAL HOUSE AND COMPLETION O F CONSTRUCTION OR OCCUPATION IS NOT THE REQUIREMENT OF THE LAW. IN V IEW OF THE ABOVE DISCUSSION THE ASSESSEE CANNOT BE TREATED OWNER OF NOIDA/CHANDIGARH FLATS ON 05/06/2010. AT THE SAME TIME, HE TO BE AL LOWED BENEFIT OF SECTION 54F BECAUSE HE HAS INVESTED THE CAPITAL GAI N AS PER THE REQUIREMENT OF THE ACT. 11 . NOW COMING TO A CONCOMITANT SITUATION THAT IF BOO KING OF FLATS DOES NOT TANTAMOUNT TO OWNERSHIP OF THE HOUSE THEN HOW C OME THE ASSESSEE CLAIM THAT BY BOOKING A FLAT IT HAS ACQUIRED NEW H OUSE AND BECOMES 24 ENTITLE FOR THIS EXEMPTION. SIMILAR SITUATIONS REP EATEDLY AROSE AND TO SETTLED THEM, THE CBDT ISSUED A CIRCULAR NO. 471 DA TED 15/10/1986 CLARIFYING THAT PAYMENT MADE TO A BUILDER/DEVELOPER IS A SUFFICIENT COMPLIANCE FOR EXEMPTION UNDER SECTION 54F OF THE A CT. LD. CIT(A) HAS GONE BY SHEER TECHNICALITIES TO HOLD THAT THE FLAT AT EMAAR-MGF, GURGAON IS NOT COVERED UNDER SECTION 54F OF THE ACT. TO ME ET SUCH RECURRENCE OF SITUATIONS IN THE MODERN DAYS WHERE PROPERTIES ARE BOOKED AND THEREAFTER PURCHASED, THE CBDT IN THEIR WISDOM FURTHER CLARIFI ES VIDE CIRCULAR NO. 672 DATED 16/12/1993 THAT IF ANY AMOUNT OUT OF NET SALE CONSIDERATION OF THE ORIGINAL ASSET IS PAID TO ANY BUILDER OR DEVELO PER, THIS AMOUNT SHOULD BE CONSIDERED TOWARDS THE TERMS PURCHASE/CONSTRUCT FOR THE PURPOSE OF SECTIONS 54/54F OF THE ACT. IT IS NOT DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS NOT MADE PAYMENT FOR PURCHASE OF RESID ENTIAL HOUSE IN GURGAON IN VIEW OF THE ABOVE CLARIFICATIONS OF CBDT , THIS IS ENOUGH COMPLIANCE OF THE PROVISION OF SECTION 54F OF THE A CT AND THE ASSESSEE BECAME ENTITLED TO THIS EXEMPTION. 12 . WE HAVE FOUND THAT SECTION 54F OF THE ACT IS A BE NEFICIAL PROVISION AIMED AT PROMOTING EXISTENCE OF NEW RESIDENTIAL HOU SES TO FURTHER THE NEEDS OF THE SOCIETY. THUS, THE INTENTION OF THE L EGISLATOR IS TO 25 ENCOURAGE INVESTMENT IN THE ACQUISITION OF RESIDENT IAL HOUSES AND SECTION 54F OF THE ACT PRESCRIBES AND PROSCRIBES THE CONDIT IONS FOR AVAILING ITS BENEFIT. THE TERMS/WORDS USED IN THIS SECTION HAVE BEEN VERY SELECTIVELY & PRUDENTIALLY USED BY THE LEGISLATURE. THIS BENEF IT IS AGAINST THE CAPITAL GAIN ARISING OUT OF TRANSFER OF ANY LONG TERM CAPIT AL ASSET NOT BEING A RESIDENTIAL HOUSE AND WHICH HAS BEEN REFERRED TO AS AN ORIGINAL ASSET SUBJECT TO A CONDITION THAT IF THE NET-SALE-CONSID ERATION IS INVESTED EITHER IN PURCHASING/CONSTRUCTING A RESIDENTIAL HOU SE OR IN CONSTRUCTING THE SAME WITHIN THE PERIOD PRESCRIBED IN THIS SECTI ON. HOWEVER, IF THE ASSESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE OTHE R THAN THE NEW ASSET ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, THIS BENEFIT IS NOT AVAILABLE TO HIM. IN THE GIVEN CASE, UNDISPUTEDLY, THE ASSES SEE HAD SOLD A CAPITAL ASSET IN THE FORM OF LAND ON 03/10/2008 AND EARNED LONG TERM CAPITAL GAIN OF RS. 2,03,76,237/- (THIS LTCG HAS BEEN CALCU LATED BY THE ASSESSING OFFICER AT RS. 2,04,37,654/-) AS THERE WAS SOME ERR OR IN THE COMPUTATION FILED BY THE ASSESSEE WITH THE RETURN BECAUSE IN TH E INDEXING OF THE COST OF LAND IN F.Y. 1991-92, THE ASSESSEES HALF SHARE WAS NOT CONSIDERED. THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54 F (1)(B) OF THE ACT TO THE EXTENT OF RS. 1,26,52,789/- AS AGAINST TOTAL INVESTMENT OF RS. 1,29,66,275/-. THUS, BY NOW WE HAVE COME TO THE CO NCLUSION THAT THE 26 ASSESSEE DID NOT OWN MORE THAN ONE RESIDENTIAL HOUS E ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THEREFORE, ONE CON DITION OF THIS PROVISION STANDS SATISFIED. 13 . AS WE HAVE ALREADY HELD THAT OWNING OF A RESIDENT IAL HOUSE AT THE TIME OF TRANSFER OF THE ORIGINAL ASSET HAS DIFFEREN T MEANING AND CONNOTATION AND ACQUISITION OF NEW ASSET WHICH IS EQUIVALENT TO PURCHASE OF NEW RESIDENTIAL HOUSE HAS ENTIRELY DIFFERENT ME ANING AND CONNOTATION. THIS PROVISION ENCOURAGES PEOPLE TO PURCHASE OR CON STRUCT NEW RESIDENTIAL HOUSES. IF THE CAPITAL GAIN IS INVESTED IN THE MANN ER PRESCRIBED IN THIS SECTION TO THAT EXTENT THE CAPITAL GAIN IS SPENT OR INVESTED HAS TO BE ALLOWED AS DEDUCTION. SO, WITH REGARD TO PURCHASE OF NEW RESIDENTIAL HOUSE, THE PROVISIONS DOES NOT LAID DOWN A CONDITIO N THAT A NEW HOUSE SHOULD EITHER BE COMPLETE OR IT SHOULD BE PURCHASED AS A COMPLETE LIVABLE HOUSE. THE AIM IS TO DIRECT THE MINDS OF THE SOCIE TY IN PURCHASING NEW RESIDENTIAL HOUSE SO THAT THE MENACE OF SHORTAGE OF HOUSES IS TACKLED TO SOME EXTENT. THEREFORE, KEEPING IN VIEW THE AIM AN D OBJECT OF THE LEGISLATOR AND IN VIEW OF THAT CLARIFICATIONS OF TH E CBDT, IN OUR CONSIDERED OPINION, LD. CIT(A) HAS MISDIRECTED HIMSELF IN GIVI NG THE SAME MEANING TO THE RESIDENTIAL HOUSE OWNED AT THE TIME OF TRANSFER OF THE ORIGINAL ASSET 27 AND THE INVESTMENT MADE OUT OF THE CAPITAL GAIN IN THE PURCHASE OR CONSTRUCTION OF NEW HOUSE, WHICH HAS BEEN DEFINED A S NEW ASSET IN THE ACT. THEREFORE, ANY PAYMENT MADE TOWARDS ACQUISITIO N OF A NEW RESIDENTIAL HOUSE BY WAY OF MAKING PAYMENT IN ADVAN CE EVEN BY BOOKING OR BY PAYING INSTALLMENTS WITHIN THE PRESCRIBED HAS TO BE IS TREATED AS INVESTMENT TOWARDS PURCHASE / CONSTRUCTION OF A NEW HOUSE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE ACT OF LTCG OF RS. 2,04,37,654/-. WE FURTHER D ERIVE SUPPORT FOR OUR ABOVE FINDING FROM THE FOLLOWING DECISIONS:- 1. SARDARMAL KOTHARI [2008] 302 ITR 286 (MAD) 2. CIT VS. SAMBANDAM UDAYKUMAR (2012) 345 ITR 389. 3. SMT. RANJEET SANDHU VS. DCIT [2011] 16 TAXMANN.C OM 201 (CHANDIGARH) 4. SMT. USHA VAID VS. ITO, DASUAYA [2010] 25 TAXMAN N.COM 188 (AMRITSAR)/[2012] 53 SOT 385 (AMRITSAR) 5. SMT. V.A. THARABAI VS. DCIT, CIRCLE I, VELLORE [2012] 19 TAXMANN. COM 276 (CHENNAI). 14 . IN VIEW OF OUR FOREGOING DISCUSSION, WE ALLOW GRO UNDS RAISED IN THIS APPEAL, WHICH ARE IN FACT IN RELATION TO ONLY ONE I SSUE I.E. AVAILABILITY OF DEDUCTION OF SECTION 54F(1)(A)(I) OF THE ACT OR TO SAY UNDER SECTION 54F OF 28 THE ACT. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE STANDS ALLOWED AND THE ENTIRE ADDITION STANDS DELETED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS A LLOWED. (ORDER PRONOUNCED IN THE COURT ON 05 TH MAY, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 5 TH MAY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R. ASSISTANT REGISTRAR, ITAT, JAIPUR.