Suresh Sonnahallipura Narayanaswamy, Bengaluru V. Income Tax Officer Ward - 5 (73) (7), Bengaluru

ITA 2062/BANG/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3899 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 19-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H. V GOWTHAMA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Period of limitation; Fair market value; Benefit of exemption; Set aside; Capital Gains
• Section: 54; 37; 43CA; 43B; 139; 54B; 50C; 54F; 139(1); 139(4); 13; 20

Judgement Text

ITA.2062/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.2062/BANG/2018 (ASSESSMENT YEAR : 2015-16) SHRI. SURESH SONNAHALLIPURA NARAYANASWAMY, NO.105, 2 ND MAIN MAITHRI EXTENSION, HOPE FARM, WHITEFIELD, BENGALURU 560 066 .. APPEL LANT PAN : ACCDPN6837F V. INCOME-TAX OFFICER, WARD 5(3)(7), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. H. V GOWTHAMA, CA REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT HEARD ON : 03.09.2018 PRONOUNCED ON : 28.09.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT (A) 5, BENGALURU, DT.30.04.2018, FOR THE ASSESSMENT YEAR 2015-16, ON THE FOLLOWING GROUNDS : ITA.2062/BANG/2018 PAGE - 2 02. BRIEF FACTS ARE, THE ASSESSEE HAD FILED THE RET URN OF INCOME FOR AY 2015-16 DECLARING INCOME OF RS.3,79,950/-. HOWE VER THE AO HAS ASSESSED THE INCOME AT RS.1,83,00,900/-. THE A O HAS MADE ADDITIONS ON TWO COUNTS, NAMELY, RS.69,62,000/- BY ADOPTING THE VALUE OF THE PROPERTY SOLD BY THE ASSESSEE AT THE S TAMP VALUE CONSIDERATION AS AGAINST THE SALE CONSIDERATION DEC LARED BY THE ASSESSEE IN THE SALE DEED. THUS THE AO HAS MADE TH E ADDITION OF RS.69,62,000/- AS LONG-TERM CAPITAL GAINS. SECONDL Y THE AO HAD ALSO DENIED THE BENEFIT OF SECTION 54F AS THE ASSES SEE HAD NOT DEPOSITED THE LONG-TERM CAPITAL GAINS AMOUNT IN THE CAPITAL GAINS ITA.2062/BANG/2018 PAGE - 3 ACCOUNT BEFORE THE DATE OF FILING OF RETURN OF INCO ME. IT WAS THE CASE OF THE AO THAT ASSESSEE HAD PURCHASED THE PROP ERTY BEYOND THE DATE OF FILING OF THE RETURN OF INCOME AND HAD NOT DEPOSITED THE SAID AMOUNT AND THEREFORE THE DEDUCTION CLAIMED U/S.54F HAD BEEN DENIED BY THE AO. FEELING AGGRIEVED BY THE ABOVE D ENIAL OF THE DEDUCTION, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A). 03. IN THE APPEAL BEFORE THE CIT (A), THE ARGUMENT OF THE ASSESSEE WAS NOT ACCEPTED BY THE CIT (A) AND CONFIRMED THE A DDITION ON BOTH THE COUNTS. HENCE, THE ASSESSEE IS IN APPEAL BEFOR E US. 04. BROADLY THE GROUNDS CAN BE CLUSTERED TOGETHER A S GROUNDS 1(A), 2(A), 2(B) AND 2(C) IN RESPECT OF ADDITION TO WARDS THE LONG TERM CAPITAL GAINS AND THE OTHER AS 1(B), 3(A), 3(B) AND 3(C) IN RESPECT OF ADDITION TOWARDS DENIAL OF DEDUCTION U/S.54F OF THE ACT. 05. THE FIRST SET OF GROUNDS VIZ., 1(A), 2(A), 2(B) AND 2(C). IN THIS REGARD, SUBMISSION BEFORE US WAS AS UNDER : THE ASSESSEE IS THE OWNER OF LAND ALONG WITH THE FA MILY MEMBERS. AS HE WAS NOT HAVING EXPERIENCE OF DEVELOPING THE LAND, THEREFORE, HE ENTERED INTO AN UNREGISTERED AGREEMENT WITH MR. SURYANARAYANA AND MR. RAMANJANAPPA ON 11.11.2013 AND PURSUANT TO THIS AGREEMENT THE ASSESSEE HAD RECEIVED AMOUNTS OF RS.1 0 LAKHS BY CHEQUE AND RS.40 LAKHS BY CASH. THEREAFTER THE AMO UNT OF RS.25 LAKHS WAS PAID ON 30.08.2014, FURTHER AMOUNT WAS PA ID ON 30.08.2014, RS.26 LAKHS ON 12.12.2014 AND THE BALAN CE AMOUNT OF RS.12 LAKHS WAS PAID AT THE TIME OF REGISTRATION ON 13.03.2015. OUR ITA.2062/BANG/2018 PAGE - 4 ATTENTION WAS DRAWN TO CLAUSE (3) AND (6), OF THE A GREEMENT WHEREIN IT WAS AGREED BY THE ASSESSEE TO TRANSFER THE LAND AS A CONVERTED LAND TO THE PURCHASER, WHICH ARE REPRODUCED HEREUNDER : 3. IT IS AGREED BETWEEN THE VENDOR AND THE PURCHASERS THAT THE VENDOR SHALL FILE APPLICATION F OR CONVERSION OF THE SCHEDULE PROPERTY AND THE PURCHAS ERS SHALL PRECIPITATE THE MATTER BEFORE THE REVENUE AUTHORITIES AND GET THE LAND CONVERTED AND THE PURC HASERS HAVE AGREED TO BEAR ALL THE NECESSARY CHARGES FOR S UCH CONVERSION AND THE VENDOR HAS AGREED TO EXECUTE THE REGISTERED SALE DEED IN FAVOUR OF THE PURCHASERS AN D THE TOTAL TIME AGREED FOR COMPLETION OF THE TRANSAC TION BETWEEN THE PARTIES IS FOUR MONTHS WITHIN WHICH DAT E THE VENDOR AND THE PURCHASERS SHALL OBTAIN THE SAID DOCUMENT AND ALSO THE CONVERSION ORDER ENABLING THE VENDOR TO SELL THE SCHEDULE PROPERTY AND THE PURCHASERS TO PUCHASE THE SCHEDULE PROPERTY. 4...... 5...... 6. THE VENDOR AND THE PURCHASERS WITH AN INTENTION TO COMPLETE THE TRANSACTION HAVE ENTERED INTO THIS SALE AGREEME NT. HOWEVER IF IS AGREED BETWEEN THE PARTIES THAT IN THE EVENT IF THE PURCHASERS FAIL TO OBTAIN NECESSARY CONVERSION ORDE RS BEFORE THE COMPETENT AUTHORITIES IN RESPECT OF THE SCHEDUL E PROPERTY, THE PURCHASERS SHALL PAY THE BALANCE SALE. CONSIDER ATION AMOUNT PERTAINING TO THE SCHEDULE PROPERTY TO THE V ENDOR IMMEDIATELY AND THE PURCHASERS SHALL BE AT LIBERTY TO OBTAIN THE REGISTERED SALE DEED WHENEVER THE CONVER SION ORDER IS OBTAINED FROM THE REVENUE AUTHORITIES AND THE VENDOR HAS AGREED TO EXECUTE SUCH DEED AS AND WHEN THE PURCHASERS CALL UPON THE VENDOR TO DO SO AND IN THE EVENT IF THE VENDOR FAILS TO EXECUTE THE REGISTERED SALE DEE D INSPITE OF READINESS AND WILLINGNESS SHOWN BY THE PURCHASERS, THE PURCHASERS ARE ENTITLED TO SEEK FOR SPECIFIC PERFOR MANCE OF THE CONTRACT BASED ON THE TERMS OF THIS AGREEMENT O F SALE. ITA.2062/BANG/2018 PAGE - 5 FURTHER IT WAS THE CONDITION MENTIONED IN THE ABO VE TWO CLAUSES THAT THE PURCHASER WOULD BEAR THE COST OF CONVERSIO N. IT WAS THE CASE OF THE ASSESSEE BEFORE US THAT THE AGREEMENT E NTERED ON 11.11.2013 WAS FOR AGRICULTURAL PURPOSES AND IT WAS THE CASE OF THE ASSESSEE THAT THE GUIDANCE VALUE AS EFFECTIVE ON 15 .07.2013 FOR THE AGRICULTURAL LAND WAS RS.20 LAKHS PER ACRE WHEREAS THE CONSIDERATION RECEIVED BY THE ASSESSEE PURSUANT TO AGREEMENT DT.1 1.11.2013 WAS RS.22,25,000/- PER ACRE. ON THE BASIS OF THE ABOVE IT WAS SUBMITTED THAT THE SALE VALUE CONSIDERATION TAKEN BY THE ASSE SSEE FOR THE LAND IN QUESTION WAS MORE THAN THE GUIDANCE VALUE FOR AG RICULTURE LAND . IN ALTERNATIVE IT WAS SUBMITTED BY THE ASSESSEE THA T THE GUIDANCE VALUE AS FIXED ON 01.12.2014 FOR KUSHKI LAND (AGRIC ULTURAL LAND) WAS 21,15,750/-. IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAS TAKEN THE AGREED VALUE IN TERMS OF AGREEMENT DT.11. 11.2013 INSTEAD OF THE VALUATION TAKEN BY THE STAMP VALUE AUTHORITY AT THE TIME OF REGISTRATION, FIRSTLY IT WAS THE SALE CONSIDERATION AGREED IN TERMS OF AGREEMENT AND SECONDLY IT WAS PREVALENT AGRICULTUR AL LAND VALUE AT THE TIME OF AGREEMENT. THE ASSESSEE FURTHER RELIES UPON THE AMENDMENT TO IT ACT WHICH CAME INTO EFFECT FROM 01. 04.2017, ON THE BASIS OF WHICH THE FOLLOWING PROVISION WAS ADDE D U/S.50C : 50C. SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT ( HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORI TY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSED OR ASSESSA BLE SHALL, FOR ITA.2062/BANG/2018 PAGE - 6 THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FUL L VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. [PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMO UNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESS ED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION F OR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE W HERE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DR AFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER. ] (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), WHERE- (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE BY TH E STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS T HE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER ; (B) THE VALUE SO ADOPTED OR ASSESSED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT , THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND ( 6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, S ECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957) , SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESS ING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION 1. FOR THE PURPOSES OF THIS SECTION, ' VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, T HE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRAR Y CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. ITA.2062/BANG/2018 PAGE - 7 (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERR ED TO IN SUB- SECTION (1), THE VALUE SO ADOPTED OR ASSESSED BY SU CH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION REC EIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THE LEARNED AR SUBMITTED THAT THIS PROVISION WAS AP PLICABLE TO THE CASE OF THE ASSESSEE AND FURTHER SUBMITTED THAT THE PROVISION WAS AN ENABLING PROVISION AND WAS INSERTED IN THE STATUTE WITH A VIEW TO REDRESS THE GRIEVANCES OF VARIOUS ASSESSEES LIKE TH E PRESENT ASSESSEE BEFORE US AND THEREFORE THE SAID INSERTION BY WAY OF FINANCE ACT, 2016 SHOULD BE GIVEN RETROSPECTIVE APPLICATION BEIN G INSERTED WITH A VIEW TO CLEAR THE MALADIES IN THE INCOME TAX ACT. H E HAD DRAWN OUR ATTENTION TO THE WRITTEN SUBMISSIONS TO THE FOLLOWI NG EFFECT: ADDITION U/S.50C: THE APPELLANT INHERITED PROPERTIES FROM HIS FAMILY. ALL THE PROPERTIES RECEIVED BY HIM WAS ONLY AGRICULTURAL LA ND. IN ORDER TO DEVELOP THE AGRICULTURAL LAND INTO THE SIT ES AND THEREAFTER SELL THE SITES, AS THE ASSESSEE WAS NOT AN EXPERT, ENTERED INTO AN UNREGISTERED AGREEMENT WITH ONE MR. SATHYANARAYAN AND MR.RAMANJANNAPPA ON 11.11.2013. A T THE TIME OF EXECUTING THE SALE AGREEMENT AND THEREAFTER , THE FOLLOWING AMOUNTS ARE PAID IN INSTALMENT: 1. RS. 10,00,000/- WAS GIVEN AS ADVANCE BY CHEQUE ON 1 1.11.2013 2. RS.40,00,000/- WAS PAID IN CASH ON 11. 11.2013 3. RS.25,00,000/-WAS PAID IN MAY 2014 4. RS.25,00,000/- WAS PAID ON 30 1H AUGUST 2014 5. RS.26,00,000/- WAS PAID ON 12TH DECEMBER 2014 6. RS. 1,00,000/- BALANCE AT THE TIME OF REGISTRATION ON 13.03.2015 THE SALE DEED WAS REGISTERED ON 13.03.2015 AFTER GE TTING THE PROPERTY CONVERTED INTO NON-AGRICULTURAL LAND. THE CONDITION FOR SALE WAS THAT AFTER CONVERSION FOR NO N- AGRICULTURAL PURPOSES HE PROPERTY TO BE SOLD AS CON VERTED LAND. ITA.2062/BANG/2018 PAGE - 8 THE FACT OF GIVING ADVANCE HAS BEEN DETAILED IN SAL E DEED ITSELF. THE TOTAL SALE CONSIDERATION WAS RS.1,27,00,000/-. IN THE AGREEMENT OF SALE, IT IS SPECIFICALLY MENTIONED THA T THE REGISTRATION OF THE FINAL SALE DEED SHOULD BE MADE ONLY AFTER GETTING THE LAND CONVERTED TO NON-AGRICULTURAL LAND . THE DEVELOPMENT FEE, ETC. WAS PAID BY THE PURCHASER AND NOT THE APPELLANT. AS PER AGREEMENT FOR PURCHASE OF PRO PERTY, THE CONSIDERATION AGREED IS RS.22,50,000/- PER ACRE OF LAND. AS PER THE GUIDELINE ISSUED BY GOVT. OF KARNATAKA, FOR REGISTRATION OF THE PROPERTY, VIDE NOTIFICATION NO. CVC24 MALUR/13-14 DATED 04.07.2013, WHICH WAS EFFECTIVE F ROM 15.07.20 13 (COPY OF GUIDELINE IS ENCLOSED) THE GUI DELINE VALUE FIXED WAS RS.20,00,000/- PER ACRE. SEE THE ITEM NO. 83 OF GUIDELINE, WHEREAS THE CONSIDERATION FIXED AS PER AGREEMENT WAS RS.22,50,000/- PER ACRE, WHICH IS MOR E THAN THE GUIDELINE VALUE. THE GUIDELINE VALUE FIXED AS O N 01.12.2014 FOR KUSHKI LAND WAS RS.21,75,000/- PER ACRE. COPY OF GUIDELINE IS ENCLOSED. IT IS IMPORTAN T TO NOTE THAT AS PER AGREEMENT, THE PURCHASER WAS REQUIRED T O PAY FOR CONVERSION FEE ALSO. WHEN THE SALE DEED WAS REGISTERED ON 13.03.2015, TH E SUB- REGISTRAR, FOR THE PURPOSE OF STAMP DUTY, ADOPTED T HE VALUE OF LAND CONVERTED LAND AT RS.1,96,62,000/- AND THEREFO RE THE DIFFERENCE OF RS.69,62,000/- WAS CONSIDERED AS ADDI TIONS U/S.50C OF INCOME TAX ACT. THE PROPERTY IS SITUATED IN A PLACE CALLED MALLIYAPPANAHALLI VILLAGE AND THE GUID ELINE VALUE AT THE TIME OF REGISTRATION OF THE PROPERTY P REVAILING ON 31.3.2015 AT RS.21,75,000/- PER ACRE OF AGRICULTURAL LAND. IF THE VALUE IS CONSIDERED IN 2015 AS AN AGRI CULTURAL LAND ITSELF, THE GUIDELINE VALUE FIXED BY GOVERNMEN T OF KARNATAKA IS MUCH LOWER THAN THE AMOUNT ADOPTED FOR THE SALE IN THE PRESENT TRANSACTION. INCOME TAX ACT HAS BE EN AMENDED BY FINANCE ACT 2016 EFFECTIVE FROM 01.04.2017 I.E. ASST. YEAR 2017-18, WHEREIN IT IS STATED THAT WHERE THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR TRAN SFER OF CAPITAL ASSETS ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHO RITY AS ON DATE OF THE AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION FOR TRANSFER. IT IS ALSO FURTHER STATED THAT THE ABOVE PROVISION SHOULD BE A DOPTED FOR ITA.2062/BANG/2018 PAGE - 9 CONSIDERATION OR PART THEREOF HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR BANK DRAFT OR ANY ELECTRONI C MODE THROUGH BANK ACCOUNT BEFORE THE DATE OF AGREEM ENT FOR TRANSFER. IN THE CASE OF THE APPELLANT, SUBSTANTIAL AMOUNT OF CONSIDERATION IN INSTALMENT HAS BEEN PAID BEFORE THE DATE OF REGISTRATION. IT MAY BE OBSERVED FROM T HE AGREEMENT OF SALE AND SALE DEED THAT THE PAYMENT HAS BEEN MAD E THROUGH THE BANK ACCOUNT RIGHT FROM THE DATE OF AGREEMENT E NTERED INTO BY THE ASSESSEE WITH THE PROSPECTIVE PURCHASER. THE SALE DEED COULD NOT EVEN BE REGISTERED AT THE TIME OF ENTERIN G INTO AGREEMENT BECAUSE OF AGRICULTURAL LAND. IN THIS CONNECTION WE WOULD LIKE TO RELY ON THE DEC ISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF ALLIE D MOTORS(P)LTD. VS CIT AS REPORTED IN 224 ITR 677, WH EREIN HON'BLE HIGH COURT HAS HELD THAT 'HENCE THE FIRST P ROVISO WAS INSERTED IN SECTION 43B. THE AMENDMENT WHICH WA S MADE BY THE FINANCE ACT, 1987 IN SECTION 43B BY INS ERTING, INTER ALIA, THE FIRST PROVISO, WAS REMEDIAL IN NATU RE, DESIGNED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE U NDUE HARDSHIP TO THE ASSESSEE AND WHICH MADE THE PROVISI ON UNWORKABLE OR UNJUST IN A SPECIFIC SITUATION. LOOKI NG TO THE CURATIVE NATURE OF THE AMENDMENT MADE BY THE FINANC E ACT, 1987 IT CAN BE SAID THAT THE PROVISO WHICH IS INSERTED B Y THE AMENDING FINANCE ACT, 1987 SHOULD BE GIVEN RETROSPECTIVE EFF ECT AND BE READ AS FORMING A PART OF SECTION 43B FROM ITS INCE PTION. A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE S ECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REA SONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHO LE'. A COPY OF AGREEMENT TO SELL AND REGISTERED SALE DEE D IS ENCLOSED FOR HON'BLE COMMISSIONER'S REFERENCE. 06. PER CONTRA, THE LD. DR HAD ABLY SUBMITTED THAT : I) THE AGREEMENT DT.11.11.2013 WAS ENTERED WITH A V IEW TO TRANSFER THE LAND AFTER IT WAS CONVERTED FROM AGRIC ULTURAL TO NON- ITA.2062/BANG/2018 PAGE - 10 AGRICULTURAL USES I.E., IN SUBSTANCE THE AGREEMENT WAS FOR THE SALE OF CONVERTED LAND AND WAS NOT FOR TRANSFER OF AGRICULT URAL LAND. IT WAS SUBMITTED THAT THE GUIDANCE VALUE PREVALENT AS ON 1 1.11.2013 (01.12.1014) WAS MUCH MORE FOR NON AGRICULTURAL LA ND AND THE GUIDANCE VALUE FOR AGRICULTURE LAND WAS NOT AVAILA BLE TO THE ASSESSEE AS THE ASSESSEE HAD AGREED TO TRANSFER THE NON-AGRICULTURAL LAND FOR A CONSIDERATION TO THE PURCHASE . THEREFO RE IF AT ALL THE GUIDANCE VALUE IS REQUIRED TO BE CONSIDERED THEN IN THAT EVENTUALITY THE GUIDANCE VALUE AS PREVALENT AT THE TIME OF ENTE RING INTO AGREEMENT FOR CONVERTED LAND SHOULD BE ADOPTED. FUR THER IT WAS SUBMITTED THAT THE AMENDMENT INSERTED BY WAY OF FIN ANCE ACT, 2016, AS CANVASSED BY THE AR IS CORRECT THAT IT IS HAVING A RETROSPECTIVE APPLICATION. IT WAS SUBMITTED THAT T HE PROVISO INSERTED BY THE FINANCE ACT, 2016 IS NOT RETROSPECTIVE IN NA TURE WHICH IS CLEAR FROM THE MEMORANDUM AND EXPLANATION TO THE FI NANCE ACT, 2016. IT WAS SUBMITTED THAT EVEN THE AUTHORITIES H AVE ERRED IN TAKING THE VALUE AS TAKEN BY THE STAMP DUTY AUTHORI TIES AS IN THE ESTIMATION OF REVENUE, THE LAND VALUE SHOULD BE TAK EN AS APPLICABLE THE CONVERTED LAND INSTEAD OF AGRICULTURAL LAND. 07. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RECORD. UNDOUBTEDLY AS IS CLEAR FROM THE PERUSAL OF THE AG REEMENT DT.11.11.2013, THE PARTIES HAD AGREED TO TRANSFER T HE CONVERTED LAND FOR A VALUABLE CONSIDERATION. IT WAS MENTIONED IN CLAUSE (III) AND (VI) REPRODUCED HEREIN ABOVE AGREEMENT WAS ENTERED FOR SALE OF CONVERTED LAND AND NOT FOR AGRICULTURE LAND, THOUGH THE COST OF CONVERSION WAS TO BE BORNE BY THE PURCHASER. IN OU R VIEW THE ITA.2062/BANG/2018 PAGE - 11 METHODOLOGY ADOPTED BY THE PARTIES TO THE AGREEMENT SEEMS TO FOLLOWED WITH A VIEW TO AVOID PAYMENT OF DUE STAMP DUTY ON CONVERTED LAND BUT ALSO TO AVOID PAYMENT OF THE LON G-TERM CAPITAL GAIN ARISING ON ACCOUNT OF SALE OF NON AGRICULTURE LAND. UNDOUBTEDLY IT IS NOT THE CASE BEFORE US THAT THE S AID LAND WHICH WAS TRANSFERRED WAS NOT OF A CAPITAL ASSET, IT IS A LSO NOT DISPUTED THAT ON ACCOUNT OF TRANSFER OF CAPITAL ASSET, LONG-TERM CAPITAL GAINS AROSE TO THE ASSESSEE. ONCE THE LAND, WHICH IS A CAPITAL ASSET OTHER THAN THE AGRICULTURAL LAND HAS BEEN TRANSFERRED BY ASSES SEE, THEN IN THAT CASE, FOR THE PURPOSES OF LTCG, IF THE SALE CONSIDE RATION MENTIONED IN THE SALE DOCUMENT IS LESS THAN THE GUIDANCE VALU E TAKEN BY THE STAMP AUTHORITY, THEN THE VALUE MENTIONED BY THE ST AMPS AUTHORITY WOULD BE CONSIDERED FOR THE PURPOSE OF COMPUTING TH E LONG-TERM CAPITAL GAIN. THEREFORE AT THE TIME OF CALCULATING LONG-TERM CAPITAL GAINS ASSESSEE SHOULD HAVE TAKEN THE VALUE OF LAND AS TAKEN BY THE STAMP AUTHORITY INSTEAD OF TAKING THE VALUE MENTION ED IN THE AGREEMENT IN THE RETURN OF INCOME FOR AY 2015-16. 08. THE ARGUMENT OF THE ASSESSEE THAT FINANCE ACT, 2016 SHOULD BE GIVEN RETROSPECTIVE APPLICATION IS NOT CORRECT F OR MORE THAN ONE REASON VIZ., THE INCOME IS REQUIRED TO BE ASSESSED AND TAX IS REQUIRED TO BE PAID BY THE ASSESSEE IN ACCORDANCE W ITH THE IT ACT AS PREVALENT ON THE LAST DATE ON 31.03.15 AND ON THE BASIS OF THE LAW EXISTING AS ON 31.03.2015, THE ASSESSEE WAS REQUIRE D TO FILE THE RETURN OF INCOME ON OR BEFORE THE DUE DATE OF FILL ING THE RETURN , IN THE PRESENT CASE I,E ON OR BEFORE 31.08.2015. FURT HER THE REVENUE ITA.2062/BANG/2018 PAGE - 12 WAS DUTY BOUND TO PROCESSOR SCRUTINISE THE RETURN OF INCOME ON THE BASIS OF LAW AVAILABLE ON 31.03.2015. FURTHER WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. DR THAT THE LAND WHICH WAS SUBJECT MATTER OF AGREEMENT WAS TO BE TRANSFERRED WAS NON-AGRICULTURAL LAND AND NOT AS AG RICULTURE LAND . THEREFORE THE GUIDANCE VALUE AS PREVALENT FOR THE N ON-AGRICULTURAL LAND OR CONVERTED LAND ON 11.11.2013 IS REQUIRED TO BE CONSIDERED. IN THE ABSENCE OF GUIDANCE VALUE AS PREVALENT FOR T HE NON- AGRICULTURAL LAND, VALUE ADOPTED BY STAMP AUTHORITI ES AT THE TIME OF REGISTRATION OF THE SALE AGREEMENT WOULD BE CORRE CT VALUE FOR THE PURPOSES OF LTCG. THIRDLY, WE ARE OF THE OPINION THAT THE MEMORANDUM TO FINANCE BILL, 2016 - PROVISIONS RELATING TO DIRECT TAXES , CLEARLY SHOWS THAT THE PURPOSE FOR WHICH THIS PRO VISION WAS INSERTED AND WHETHER IT HAS RETROSPECTIVE APPLICATI ON OR NOT. THE RELEVANT PORTION TO THE MEMORANDUM TO FINANCE ACT, 2016, IS AS UNDER : RATIONALIZATION OF SECTION 50C IN CASE SALE CONSID ERATION IS FIXED UNDER AGREEMENT EXECUTED PRIOR TO THE DATE OF REGISTRATIO N OF IMMOVABLE PROPERTY UNDER THE EXISTING PROVISIONS CONTAINED IN SECTION 50C, IN CASE OF TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING ON BOTH, THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY FOR THE P URPOSE OF PAYMENT OF STAMP DUTY SHALL BE TAKEN AS THE FULL VALUE OF CONS IDERATION FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS. THE INCOME TAX SIM PLIFICATION COMMITTEE (EASWAR COMMITTEE) HAS IN ITS FIRST REPORT, POINTED OUT THAT THIS PROVISION DOES NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS EN TERED INTO AN AGREEMENT TO SELL THE PROPERTY MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION IS FIXED IN SUC H AGREEMENT, WHEREAS SIMILAR PROVISION EXISTS IN SECTION 43CA OF THE ACT I.E. WHEN AN IMMOVABLE PROPERTY IS SOLD AS A STOCK-IN-TRADE. IT IS PROPOSED TO AMEND THE PROVISIONS OF SECTION 5 0C SO AS TO PROVIDE THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT O F CONSIDERATION FOR THE TRANSFER OF IMMOVABLE PROPERTY AND THE DATE OF REGI STRATION ARE NOT THE SAME, THE STAMP DUTY VALUE ON THE DATE OF THE AGREE MENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING THE FULL VALUE OF CONSIDE RATION. ITA.2062/BANG/2018 PAGE - 13 IT IS FURTHER PROPOSED TO PROVIDE THAT THIS PROVISI ON SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THEREIN, OR A PART THEREOF, HAS BEEN PAID BY WAY OF AN ACCOUNT PAYEE C HEQUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEARING SYSTEM THR OUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFE R OF SUCH IMMOVABLE PROPERTY. THESE AMENDMENTS ARE PROPOSED TO BE MADE EFFECTIVE FROM THE 1ST DAY OF APRIL, 2017 AND SHALL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2017-18 AND SUBSEQUENT YEARS. ON THE BASIS OF THE ABOVE, IT IS CLEAR THAT LEGISLA TURE HAS NOT INTENDED TO GIVE RETROSPECTIVE APPLICATION TO THE PROVISO. F URTHER IN THE PRESENT CASE SUBSTANTIAL CONSIDERATION MENTIONED BE LOW WAS PAID IN CASH BY THE ASSESSEE, RS 40,00,000/- WAS PAID IN CASH ON 11. 11.2013 RS.25,00,000/-WAS PAID IN MAY 2014 RS.25,00,000/- WAS PAID ON 30 1H AUGUST 2014 RS.26,00,000/- WAS PAID ON 12TH DECEMBER 2014 HENCE THIS PROVISO WOULD NOT BE ATTRACTED AS MOST OF THE PAYMENTS WERE MADE IN CASH . FURTHERMORE THE LAND WAS AGRIC ULTURE AT THE TIME OF AGREEMENT THOUGH AGREED TO BE TRANSFERRED A S NON AGRICULTURE BUT LATER ON TRANSFERRED AS NON AGRICUL TURE. IN OUR VIEW SUBJECT MATTER OF AGREEMENT SHOULD BE SAME AT BOTH OCCASION I.E AT THE TIME OF AGREEMENT AS WELL AS AT THE TIME OF REG ISTRATION FOR THE PURPOSES OF APPLICATION OF THIS CLAUSE .IN VIEW THE REOF THE GROUND WITH RESPECT OF SECTION 50C URGED BEFORE US IN THE FORM OF GROUND NOS.1(A), 2(A), 2(B) AND 2(C) ARE DISMISSED. 09. THE SECOND SET OF GROUND NOS.1(B), 3(A), 3(B) A ND 3(C) ARE TAKEN UP NOW. IN THIS REGARD THE AO HAD NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S.54F OF RS.109,58,950/- IN RES PECT OF THE ITA.2062/BANG/2018 PAGE - 14 INVESTMENT MADE BY THE ASSESSEE IN PURCHASE OF VACA NT LAND ON 14.12.2015 WHICH IS BEYOND THE PERIOD OF LIMITATION . IT WAS SUBMITTED THAT AS PER THE SALE DEED DT.14.12.2015 T HE LAND WAS VACANT AND THE DATE OF FILING OF THE RETURN OF INCO ME U/S.139(1) OF THE ACT, WAS 07.09.2015. THEREFORE THE ASSESSEE HA D NOT DEPOSITED THE AMOUNT IN THE CAPITAL GAINS ACCOUNT BEFORE THE DUE DATE OF FILING THE RETURN AND HAD PURCHASED THE PROPERTY O 14.12.2 015, AFTER THE DATE OF FILING THE RETURN. AGGRIEVED ASSESSEE FILE D APPEAL BEFORE THE CIT (A). 10. THE CIT (A) ON APPEAL WAS NOT CONVINCED WITH TH E ARGUMENT OF THE ASSESSEE AND HENCE REJECTED THIS GROUND ON T HE PREMISE THAT THE SALE PROCEEDS WERE REQUIRED TO BE DEPOSITED IN THE BANK ACCOUNT BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME . AS THE AMOUNT WAS DEPOSITED IN THE CAPITAL GAINS ACCOUNT, THEREFO RE THE AUTHORITIES BELOW HAVE DENIED THE BENEFIT OF SECTION 54F TO THE ASSESSEE. 11. BEFORE US, DURING THE COURSE OF ARGUMENT, THE A SSESSEE HAS SUBMITTED THE FOLLOWING WRITTEN SUBMISSIONS AND HAS RELIED UPON THE JUDGMENTS/ DECISIONS : FATIMA BAI V. ITO [ITA.435 OF 2004, DT.17.10.2008 - KAR HC]; PCIT V. SHANKAR LAL SAINI [(2018) 89 TAXMANN.COM 23 5-RAJ]; CIT V. SMT. VRINDA P ISSAC [(2012) 24 TAXMANN.COM 1 31 KAR] ; NIPUN MEHROTRA V. ACIT [(2008) 110 ITD 520 BANG T RIB] NAND LAL SHARMA V. ITO [(2015) 61 TAXMANN.COM 271 [ JAIPUR TRIB] SABIR SALIM AHMED V. ITO [ITA.941/BANG/2010, DT.21. 01.2011] ITA.2062/BANG/2018 PAGE - 15 12. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT THE JUDGMENT RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE MATTER OF FATIMA BIBI (SUPRA) WAS PASSED IGNORING THE DECISIO N PENDING BY THE HONBLE SUPREME COURT IN THE MATTER OF PRAKASH NATH KHANNA V. CIT [135 TAXMANN 327] THEREFORE THE SAID JUDGMEN T IS NOT APPLICABLE TO THE FACTS OF THE CASE, AS THE STATUT E UNDER SECTION 54F HAS NOT CONTEMPLATED ON 139(4), BUT ONLY RESTRICTE D TO SECTION 139(1), WHERE IT DUE DATE FOR FILING THE RETURN OF INCOME IS MENTIONED. ON THE BASIS OF THE ABOVE, THE LD. DR S UBMITTED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES IS TO BE UPHELD. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTE R OF FATIMA BIBI (SUPRA), WHILE INTERPRETING THE RELEVANT PROVISION AT (PAGE 11 OF PB), HELD AS UNDER : IN THE INSTANT CASE, THE DUE DATE FOR FILING OF RET URN IS 30.7.88. U/S.139(4) THE ASSESSEE WAS ENTITLED TO F ILE RETURNS IN THE EXTENDED TIME, WHICH IS WITHIN 31.3. 1990. THE EXTENDED DUE DATE U/S.139(4) WOULD BE 31.3.199 0. THE ASSESSEE DID NOT FILE THE RETURNS WITHIN THE EX TENDED DUE DATE, BUT FILED THE RETURNS ON 27.2.2000. HOWE VER, THE ASSESSEE HAD UTILISED THE ENTIRE CAPITAL GAINS BY P URCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIODS O F SEC. 54(2) IE., BEFORE THE EXTENDED DUE DATE FOR RETURN U/S.139. THE ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RETURNS U/S.139(4). BUT, HOWEVER, UTILISED THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATE U/S.139(4). THE CONTENTION OF THE REVENUE THA T THE DEPOSIT IN THE SCHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE AND NOT THE EXTENDED DUE DATE IS A N UNTENABLE CONTENTION. ITA.2062/BANG/2018 PAGE - 16 13. SIMILARLY THE REASON PRONOUNCED BY THE HONBLE RAJASTHAN HIGH COURT IN THE MATTER OF SHANKAR LAL SAINI (SUPR A), ON WHICH THE LD. AR RELIED, AT PARA 6, 7 AND 13, IS AS UNDER : 6. HOWEVER, WHILE CONSIDERING THE MATTER, HE CONTENDED THAT THE TRIBUNAL HAS COMMITTED SERIOUS ERROR IN IGNORING TH E OBSERVATIONS MADE BY THE SUPREME COURT IN THE CASE OF P.N. KHANNA V. CIT, [2004] 135 TAXMAN 327/266 ITR 1 (SC) WHEREIN IT HAS BEEN HELD AS UNDER: 12. AS A RESULT OF THE AMENDMENT OF SECTION 139(3) BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIO NS) ACT, 1986 THE POWER OF THE INCOME TAX OFFICER TO EXTEND TIME FOR FURNISHING RETURN WAS TAKEN AWAY W.E.F. IST APRIL, 1987. 17. TWO PRINCIPLES OF CONSTRUCTION - ONE RELATING T O CASUS OMISSUS AND THE OTHER IN REGARD TO READING THE STATUTE AS A WHOLE - APPEAR TO BE WELL SETTLED. UNDER THE FIRST PRINCIPLE A CAS US OMISSUS CANNOT BE SUPPLIED BY THE COURT EXCEPT IN THE CASE OF CLEA R NECESSITY AND WHEN REASON FOR IT IS FOUND IN THE FOUR CORNERS OF THE STATUTE ITSELF BUT AT THE SAME TIME A CASUS OMISSUS SHOULD NOT BE READILY INFERRED AND FOR THAT PURPOSE ALL THE PARTS OF A ST ATUTE OR SECTION MUST BE CONSTRUED TOGETHER AND EVERY CLAUSE OF A SE CTION SHOULD BE CONSTRUED WITH REFERENCE TO THE CONTEXT AND OTHE R CLAUSES THEREOF SO THAT THE CONSTRUCTION TO BE PUT ON A PAR TICULAR PROVISION MAKES A CONSISTENT ENACTMENT OF THE WHOLE STATUTE. THIS WOULD BE MORE SO IF LITERAL CONSTRUCTION OF A PARTICULAR CLA USE LEADS TO MANIFESTLY ABSURD OR ANOMALOUS RESULTS WHICH COULD NOT HAVE BEEN INTENDED BY THE LEGISLATURE. 'AN INTENTION TO PRODUCE AN UNREASONABLE RESULT', SAID DANCKWERTS, L.J., IN ARTEMIOU V. PROCOPIOU 1966 (1) QB 876, 'IS NOT T O BE IMPUTED TO A STATUTE IF THERE IS SOME OTHER CONSTRUCTION AV AILABLE'. WHERE TO APPLY WORDS LITERALLY WOULD 'DEFEAT THE OBVIOUS INTENTION OF THE LEGISLATION AND PRODUCE A WHOLLY UNREASONABLE RESUL T', WE MUST 'DO SOME VIOLENCE TO THE WORDS' AND SO ACHIEVE THAT OBVIOUS INTENTION AND PRODUCE A RATIONAL CONSTRUCTION. (PER LORD REID IN LUKE V. IRC {1963 AC 557} WHERE AT AC P.577 HE A LSO OBSERVED: 'THIS IS NOT A NEW PROBLEM, THOUGH OUR ST ANDARD OF DRAFTING IS SUCH THAT IT RARELY EMERGES'.) 20. ANOTHER PLEA WHICH WAS URGED WITH SOME AMOUNT O F VEHEMENCE WAS THAT THE PROVISIONS OF SECTION 276CC ARE APPLICABLE ONLY WHEN THERE IS DISCOVERY OF THE FAIL URE REGARDING EVASION OF TAX. ITA.2062/BANG/2018 PAGE - 17 IT WAS SUBMITTED THAT SINCE THE RETURN UNDER SUB-SE CTION (4) OF SECTION 139 WAS FILED BEFORE THE DISCOVERY OF ANY E VASION, THE PROVISION HAS NO APPLICATION. THE CASE AT HAND CANN OT BE COVERED BY THE EXPRESSION 'IN ANY OTHER CASE'. THIS ARGUMEN T THOUGH ATTRACTIVE HAS NO SUBSTANCE. 7. HE RELIED UPON THE JUDGMENT IN THE SH. NAND LAL SHARMA V. ITO [2015] 61 TAXMANN.COM 271 (JP. - TRIB.) WHEREIN IT HAS BEEN HELD AS UNDER : 3.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. APROPOS GROUND NO. 1 I.E. DEPO SIT OF NET CONSIDERATION INTO CAPITAL GAIN ACCOUNT SCHEME ON 3 1-03-2009, WE FIND MERIT IN THE ARGUMENTS OF THE LD. AR THAT SECT ION 54 REFERS TO SECTION 139 FOR THE TIME LIMIT TO ACQUIRE ELIGIBLE NEW ASSET, WHICH INCLUDES RETURN U/S 139(4) ALSO I.E. TIME LIMIT OF ONE YEAR FROM THE END OF ASSESSMENT YEAR. VARIOUS JUDICIAL PRECEDENTS CITED ABOVE HAVE TAKEN THIS VIEW; RESPECTFULLY FOLLOWING THEM WE HOL D THAT ASSESSEE PURCHASE OF NEW RESIDENTIAL HOUSE IS ELIGIBLE FOR C LAIM OF EXEMPTION U/S 54. THUS GROUND NO. 1 OF THE ASSESSEE IS ALLOWE D. 8. ....... 9 ...... 10. ...... 11. ...... 12. ...... 13. HE ALSO CONTENDED THAT JUDGMENT OF GAUHATI HIGH CO URT IS REQUIRED TO BE VIEWED VERY SERIOUSLY INASMUCH AS RE PRODUCTION OF SUB- SECTION (2) OF SECTION 54B IS NOT CAUSING BREACH OF SECTION 139(1) WHICH HAS BEEN IGNORED BY THE GAUHATI HIGH COURT. FURTHER WE MAY NOTICE THAT THE COORDINATE BENCH IN THE MATTER OF ITO V. R. SRINIVAS [63 TAXMANN.COM 101] IN PARA 6.5 .3 HAS HELD AS UNDER : 6.5.3 THE FACT THAT THE ASSESSEE HAS INVESTED THE ENTIRE SALE CONSIDERATION/CAPITAL GAINS IN THE PURCHASE OF THE SITE AND IN THE CONSTRUCTION OF THE RESIDENTIAL PROPERTY THEREON BY 31.3.2010 IS NOT DISPUTED. THE DISPUTE RAISED BY REVENUE IS THAT SINCE THE ASSESSEE FAILED TO INVEST THE CAPITAL GAINS OF RS. 70,16,326 BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR ASS ESSMENT YEAR ITA.2062/BANG/2018 PAGE - 18 2008-09 I.E. 31.7.2008, AS LAID DOWN U/S. 139(1) OF THE ACT OR TO DEPOSIT THE SAME BY THIS DATE, I.E. 31.7.2008, IN T HE CAPITAL GAINS ACCOUNT SCHEME OF THE GOVT., THE ASSESSEE IS NOT EL IGIBLE FOR EXEMPTION UNDER SECTION 54/54F OF THE ACT. IN THIS REGARD, WE FIND THE CO-ORDINATE BENCH OF THE ITAT, BANGALORE I N THE CASE OF NIPUN MEHROTRA (SUPRA) HELD THAT IF THE SALE CONSIDERATION/CAPITAL GAINS IS UTILIZED FOR THE PUR CHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FI LING THE RETURN UNDER SECTION 139(4) OF THE ACT, THE ASSESSEE IS EN TITLED TO EXEMPTION UNDER SECTION 54F OF THE ACT. IN THE CASE ON HAND, THE FACTS CLEARLY ESTABLISH THAT THE ASSESSEE HAS UTILI ZED THE SALE CONSIDERATION/CAPITAL GAINS FOR A) PURCHASE OF A RE SIDENTIAL SITE FOR RS. 52,08,164 ON 3.4.2008 AND B) FOR COST OF CO NSTRUCTION OF THE GROUND TO 2ND FLOOR OF THE RESIDENTIAL CONSTRUC TION OF THE GROUND TO 2ND FLOOR OF THE RESIDENTIAL BUILDING UPT O 31.3.2010 AMOUNTING TO RS. 72,91,836. IN THIS FACTUAL MATRIX, WE ARE OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT. IN COMING TO THIS FINDING WE DRAW S UPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF NIPUN MEHROTRA (SUPRA),WHEREIN FOLLOWING THE DEC ISION OF THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF RAJESH KU MAR JALAN(SUPRA), IT WAS HELD THAT WHEN THE SALE CONSID ERATION/CAPITAL GAINS HAS BEEN UTILIZED FOR THE PURCHASE OR CONSTRU CTION OF THE NEW ASSET BEFORE THE DUE DATE FOR FURNISHING THE RE TURN OF INCOME UNDER SECTION 139(4) OF THE ACT, THE ASSESSEE IS EN TITLED TO EXEMPTION UNDER SECTION 54F OF THE ACT. THE LEARNED CIT (APPEALS) IN THE IMPUGNED ORDER HAS, ALSO OBSERVED THAT THE CLAIM FOR EXEMPTION, IN RESPECT OF THE OTHER CO-SEL LERS OF THE SAID PROPERTY, HAS BEEN ALLOWED BY THE DEPARTMENT. IN TH IS VIEW OF THE MATTER, FOLLOWING THE DECISION OF THE CO-ORDINATE B ENCH OF THE ITAT, BANGALORE IN NIPUN MEHROTRA (SUPRA), WE FIND THAT REVENUE HAS FAILED TO CONTROVERT THE DECISION OF TH E LEARNED CIT (APPEALS) AND THEREFORE UPHOLD THE IMPUGNED ORDER O F THE LEARNED CIT (APPEALS). CONSEQUENTLY, THE GROUNDS AT S.NOS.1 TO 11 RAISED BY REVENUE ARE DISMISSED. 14. ON THE BASIS OF THE ABOVE, IT IS CLEAR THAT THE EXPRESSION USED IN SECTION 54F IS REQUIRED TO BE INTERPRETED TO INC LUDE NOT ONLY THE DUE DATE FOR FILING THE RETURN, BUT THE EXTENDED DA TE AS MENTIONED IN SECTION 139(4) OF THE ACT, FOR RECTIFICATION OF THE RETURN OF INCOME. ITA.2062/BANG/2018 PAGE - 19 IN VIEW OF THE ABOVE AS THE ASSESSEE IN THE PRESEN T CASE HAS PURCHASED THE PROPERTY ONLY IN DECEMBER, 2015 I.E., BEFORE THE DATE OF FILING OF THE RETURN OF INCOME U/S.139(4) OF THE ACT. HENCE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.54F OF THE AC T. WE HOLD ACCORDINGLY. 15. NOW WE WILL DEAL WITH THE SUBMISSION OF THE LD. DR THAT THE HONBLE JURISDICTIONAL HIGH COURT WHILE PASSING OF THE DECISION BY THE FULL BENCH, CONSIDERED THE JUDGMENT OF THE HON BLE APEX COURT IN THE MATTER OF PRAKASH NATH KHANNA (SUPRA). IN T HIS REGARD, WE WOULD LIKE TO POINT OUT THAT THOUGH IT IS CORRECT T HAT THE HONBLE JURISDICTIONAL HIGH COURT HAS NO OCCASION TO CONSID ER THE JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF PRAKASH N ATH KHANNA (SUPRA), BUT NONETHELESS, THE RATIO LAID DOWN BY TH E HONBLE HIGH COURT STILL HOLDS GOOD AS IT HAS NOT BEEN SET ASIDE OR REVERSED BY THE HONBLE SUPREME COURT EVEN AFTER PASSING OF THE JUD GMENT IN OCTOBER, 2008. EVEN AFTER THE JUDGMENT DT.17 TH OCTOBER, 2008, THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF VRINDA P ISSAC [24 TAXMANN.COM 131 ON 18/10/2011] HAD AGAIN RELIED AND REITERATED THE RATIO LAID DOWN IN FATHIMA BAI CASE. NONETHELESS FOR THE COMPLETENESS OF THE FACTS, IT WILL SUFFICE TO M ENTION THAT HONBLE RAJASTHAN HIGH COURT IN SHANKAR LAL SAINI (SUPRA) H AS CONSIDERED THE JUDGMENT OF APEX COURT IN PRAKASH NATH KHANNA ( SUPRA) IN PARA 6 AND THEREAFTER IN PARA 17 TO 21 REITERATED T HE RATIO OF LAW TO THE FOLLOWING EFFECT : 6. HOWEVER, WHILE CONSIDERING THE MATTER, HE CONTENDED THAT THE TRIBUNAL HAS COMMITTED SERIOUS ERROR IN IGNORING TH E OBSERVATIONS MADE BY THE SUPREME COURT IN THE CASE OF P.N. ITA.2062/BANG/2018 PAGE - 20 KHANNA V. CIT, [2004] 135 TAXMAN 327/266 ITR 1 (SC) WHEREIN IT HAS BEEN HELD AS UNDER: 12. AS A RESULT OF THE AMENDMENT OF SECTION 139(3) BY THE TAXATION LAWS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 1986 THE POWER OF THE INCOME TAX OFFICER TO EXTEND TIME FOR FURNISHING RETURN WAS TAKEN AWAY W.E.F. IST APRIL, 1987. 17. TWO PRINCIPLES OF CONSTRUCTION - ONE RELATING T O CASUS OMISSUS AND THE OTHER IN REGARD TO READING THE STATUTE AS A WHOLE - APPEAR TO BE WELL SETTLED. UNDER THE FIRST PRINCIPLE A CASUS OMISSUS CANNOT BE SUPPLIED BY THE COURT EXCEPT IN THE CASE OF CLEAR N ECESSITY AND WHEN REASON FOR IT IS FOUND IN THE FOUR CORNERS OF THE S TATUTE ITSELF BUT AT THE SAME TIME A CASUS OMISSUS SHOULD NOT BE READILY INF ERRED AND FOR THAT PURPOSE ALL THE PARTS OF A STATUTE OR SECTION MUST BE CONSTRUED TOGETHER AND EVERY CLAUSE OF A SECTION SHOULD BE CO NSTRUED WITH REFERENCE TO THE CONTEXT AND OTHER CLAUSES THEREOF SO THAT THE CONSTRUCTION TO BE PUT ON A PARTICULAR PROVISION MA KES A CONSISTENT ENACTMENT OF THE WHOLE STATUTE. THIS WOULD BE MORE SO IF LITERAL CONSTRUCTION OF A PARTICULAR CLAUSE LEADS TO MANIFE STLY ABSURD OR ANOMALOUS RESULTS WHICH COULD NOT HAVE BEEN INTENDE D BY THE LEGISLATURE. 'AN INTENTION TO PRODUCE AN UNREASONAB LE RESULT', SAID DANCKWERTS, L.J., IN ARTEMIOU V. PROCOPIOU 1966 (1) QB 876, 'IS NOT TO BE IMPUTED TO A STATUTE IF THERE IS SOME OTHER C ONSTRUCTION AVAILABLE'. WHERE TO APPLY WORDS LITERALLY WOULD 'D EFEAT THE OBVIOUS INTENTION OF THE LEGISLATION AND PRODUCE A WHOLLY U NREASONABLE RESULT', WE MUST 'DO SOME VIOLENCE TO THE WORDS' AN D SO ACHIEVE THAT OBVIOUS INTENTION AND PRODUCE A RATIONAL CONSTRUCTI ON. (PER LORD REID IN LUKE V. IRC {1963 AC 557} WHERE AT AC P.577 HE ALSO OBSERVED: 'THIS IS NOT A NEW PROBLEM, THOUGH OUR ST ANDARD OF DRAFTING IS SUCH THAT IT RARELY EMERGES'.) 17. WE HAVE HEARD COUNSEL FOR THE PARTIES. 18. THE FIRST CONTENTION OF MR. PATHAK REGARDING INTER PRETATION OF PROSECUTION AND THE EXEMPTION BENEFIT IS REQUIRED T O BE ACCEPTED. ADMITTEDLY, WHILE CONSIDERING THE PROSECUTION, THE PROVISIONS ARE TO BE VERY STRICTLY CONSTRUED WHEREAS IN THE CASE OF E XEMPTION AND OTHER BENEFITS, IT IS TO BE CONSTRUED FROM THE STATUE VER Y LIBERALLY. 19. THE CONTENTION OF MR. SINGHI THAT UNDER SECTION 13 9, INVESTMENT IS TO BE MADE BEFORE THE RETURN IS FILED OTHERWISE IT WILL RENDER THE PROVISION NUGATORY IS TO BE CONSIDERED IN THE LIGHT THAT WHILE CONSIDERING THE CASE, KARNATAKA HIGH COURT IN PARA NO.6 & 7 (SUPRA) HAS CONSIDERED THE PROVISIONS AND INTERPRET ED THE SAME. EVEN THE SAME IS ACCEPTED BY THE PUNJAB AND HARYANA HIGH COURT AND GAUHATI HIGH COURT WHICH HAS TAKEN THE VIEW CON TRARY TO KERALA HIGH COURT DECISION. 20. IN THAT VIEW OF THE MATTER, THREE HIGH COURTS HAVE TAKEN THE VIEW AND THE TRIBUNAL HAS FOLLOWED THE KARNATAKA HIGH CO URT WHICH HAS ITA.2062/BANG/2018 PAGE - 21 FOLLOWED THE EARLIER GAUHATI JUDGMENT WHICH HAS BEE N INDEPENDENTLY SUPPORTED BY THE PUNJAB HARAYANA HIGH COURT. 21. IN THAT VIEW OF THE MATTER, THE ISSUE IS REQUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. IN VIEW OF THE ABOVE, THE CONTENTION PUT FORWARD BY THE LD. DR IS NOT MAINTAINABLE AND IS NOT ACCEPTED . 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (JASON P. BOAZ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBE R BENGALURU DATED : 09.2018 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.