ITO 8(3)(1), MUMBAI V. BHAVNA Y SANGHAVI, MUMBAI

ITA 2286/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2344 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 04-04-2014
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Benefit of exemption
• Section: 54F; 133(6); 148; 54; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.2286/MUM/2014 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER - 8(3) - 1, ROOM NO.201, 2ND FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 / VS. SMT. BHAVNA Y. SANGHAVI, A-38, NANDJYOT INDUSTRIAL ESTATE, KURLA ANDHERI ROAD, ANDHERI (EAST), MUMBAI-400072 ( ' / REVENUE) ( #$ % /ASSESSEE) P.A. NO. AAPPS4898H ' / REVENUE BY SHRI MOHAMMED RIZWAN-DR #$ % / ASSESSEE BY NONE & '' ( % ) / DATE OF HEARING : 26/10/2016 ( % ) / DATE OF ORDER: 26/10/2016 SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 15/01/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED BY THE REVENUE PERTAINS TO HOLDI NG BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THAT THE PU RCHASE OF PROPERTY BY THE ASSESSEE IS TO BE TREATED AS CONSTR UCTION FOLLOWING CBDT CIRCULAR NO.471 DATED 15/10/1986 AND NO.672 DATED 16/12/1993, BY IGNORING THAT EXEMPTION TO BE ALLOWED ONLY IF IT FITS INTO THE SPECIFIC SCHEME OF ALLOTMENT BY WAY OF SELF-FINANCING I.E. AN INSTALLMENTS SCHEME, ETC. 2. DURING HEARING THE LD. DR, SHRI MOHAMMED RIZWAN, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED. NONE WAS PRESENT FOR THE ASSESSEE IN SPITE OF ISSUA NCE OF REGISTERED AD NOTICE. THIS APPEAL WAS ADJOURNED ON 28/09/2015 AND BOTH THE PARTIES WERE INFORMED. TODA Y, THE ASSESSEE NEITHER PRESENT HERSELF NOR MOVED ANY ADJO URNMENT PETITION, THEREFORE, IT CANNOT BE KEPT PENDING FOR INDEFINITE PERIOD. CONSIDERING THE FACTS, WE HAVE NO OPTION BU T TO PROCEED EX-PARTE, QUA THE ASSESSEE, AND TEND TO DIS POSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD . 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS AND BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DECLARED TOT AL INCOME OF RS.15,23,456/- IN HER RETURN FILED ON 17/12/2010, W HICH WAS SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 3 PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 ON THE REASONS STATED IN THE ASSESSMENT ORDER. THE ASSESSE E PURCHASED A PROPERTY IN JUHU, VILE PARLE, FOR A CON SIDERATION OF RS.1,11,00,000/- ON 13/07/2005 AND SOLD ON 02/04 /2009 FOR RS.3,01,00,000/-. THE ASSESSEE EARNED LONG TER M CAPITAL GAIN ON SALE OF ASSET AFTER INDEXATION AMOUNTING TO RS.1,59,84,909/-. THE ASSESSEE DEPOSITED RS.2,06, 11,000/- IN THE CAPITAL GAIN ACCOUNT ON 28/07/2010 AND INVES TED RS. 2,94,13,720/- ON 09/03/2012 IN ANOTHER PROPERTY UND ER CONSTRUCTION. IT IS PERTINENT TO MENTION HERE THA T WHILE COMPUTING THE LONG TERM CAPITAL GAIN INADVERTENTLY DID NOT INCLUDE THE COST OF ACQUISITION/OTHER COMPONENTS LI KE STAMP DUTY, REGISTRATION AND DIRECT INCIDENTAL COST. THI S MISTAKE WAS RECTIFIED AND THUS THE CORRECT COST OF ACQUISITION WAS CALCULATED AT RS.1,16,75,545/-. THE ASSESSEE CLAI MED DEDUCTION U/S 54 OF THE ACT, WHICH WAS DENIED BY TH E ASSESSING OFFICER AND HE ADDED THE AMOUNT OF RS.1,59,84,909/- TO THE TOTAL INCOME OF THE ASSESSE E. 2.2. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE ASSESSEE FILED CERTAIN DOCUMENTS, WHICH WERE REMANDED TO THE ASSESSING OFFICER. THE LD. ASSESSIN G OFFICER VIDE LETTER DATED 29/11/2013 RESPONDED TO THE DOCUM ENTS AS MENTIONED AT PAGE-5 OF THE IMPUGNED ORDER. THIS CO PY OF THE REMAND REPORT WAS ALSO FORWARDED TO THE ASSESSEE FO R HER COMMENTS. THE ASSESSEE RESPONDED VIDE LETTER DATED 10/01/2004. AS PER THE COMMUNICATION BETWEEN THE A SSESSEE SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 4 AND THE REMAND REPORT OF THE ASSESSING OFFICER, IT IS CLEAR THAT THE ASSESSEE SOLD THE PROPERTY ON 02/04/2009 ON A CONSIDERATION OF RS.3,01,00,000/- AND THE AMOUNT OF RS. 2 CRORES WAS INVESTED IN CAPITAL GAIN BONDS ON 29/07/ 2010. WHILE CLOSING THE CAPITAL GAIN ACCOUNT, THE ASSESSE E CLAIMED TO HAVE MADE INVESTMENT OF RS.2,94,13,720/- ON 09/03/2 012 IN A RESIDENTIAL HOUSE PROPERTY, WHICH WAS UNDER CONST RUCTION. IN THE REMAND REPORT, THE ASSESSING OFFICER CONFIRM ED THIS FACT BY ISSUING NOTICE U/S 133(6) OF THE ACT TO THE MUNI CIPAL CORPORATION, PUNE, WHEREIN, IT WAS CLARIFIED THAT C OMPLETION CERTIFICATE WAS ISSUED ON 14/03/2012. THE ISSUE BE FORE US, WHETHER THE ASSESSEE WAS WITHIN THE PROVISION OF TH E ACT FOR MAKING THE INVESTMENT AND ALSO WHETHER CONSTRUCTION OF A RESIDENTIAL HOUSE, BY THE BUILDER, IS TO BE CONSIDE RED AS A PURCHASE OF RESIDENTIAL FLAT/HOUSE. THIS ISSUE HAS BEEN CLARIFIED BY CBDT CIRCULAR NO.471 DATED 15/10/1986 AND CIRCULAR NO.672 DATED 16/12/1993. IN THE CIRCULAR, IT WAS CLARIFIED THAT IN THE CASES OF ALLOTMENT OF FLATS U NDER THE SELF- FINANCING SCHEME OF DELHI DEVELOPMENT AUTHORITY SHO ULD BE TREATED AS CONSTRUCTION FOR THE PURPOSES OF SECTION 54 AND 54F OF THE ACT. IT IS ALSO NOTED THAT WHILE COMING TO A PARTICULAR CONCLUSION, THE LD. COMMISSIONER OF INCOME TAX (APP EAL) HAS RELIED UPON THE DECISION FROM BOMBAY TRIBUNAL IN TH E CASE OF ACIT VS SUNDER KAUR SAJJAN SINGH GADH 3 SOT 206, WH EREIN, THE BOARD CIRCULAR HAS BEEN DISCUSSED. NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY THE REVENUE. SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 5 3. BEFORE ADVERTING FURTHER, WE ARE REPRODUCING HER EUNDER SECTION 54 OF THE ACT FOR READY REFERENCE AND ANALY SIS:- 54. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIV IDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TER M CAPITAL ASSET, BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD 'INCOM E FROM HOUSE PROPERTY' (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 DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE [CONSTRUCTED, ONE RESID ENTIAL HOUSE IN INDIA], THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS TO SAY, ( I ) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THA N THE COST OF THE RESIDENTIAL HOUSE SO PURCHASED OR CONSTRUCTED (HEREAFTER IN THI S SECTION REFERRED TO AS THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT O F THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SE CTION 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUT ING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFE R WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE NIL ; OR ( II ) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UN DER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSE T ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAPITAL GAIN. (2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT APP ROPRIATED 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 RETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE D UE DATE APPLICABLE 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 INSTITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION I N THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB -SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILISED BY THE ASSESSEE FO R THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMO UNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONST RUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THE N, SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 6 ( I ) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDE R SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. EXPLANATION .[ OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993. ] IN THE AFORESAID SECTION, THE LEGISLATURE HAS PROVI DED A TIME FRAME WITHIN WHICH THE ASSESSEE HAS TO INVEST THE SALE PROCEEDS, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), IN A RESIDENTIAL HOUSE. IN THE PRESENT CASE, THE ASSESS EE INVESTED THE SALE PROCEEDS OF THE EXISTING ASSET IN THE NEW PROPERTY WITHIN THE STIPULATED PERIOD. THUS, THE ASSESSEE HA S ESTABLISHED HER BONA FIDES BY MAKING THE INVESTMENT IN THE NEW PROPERTY, WHICH WAS ALREADY UNDER CONSTRUCTION, IN OUR VIEW, IS A SUBSTANTIAL COMPLIANCE OF THE PROVISIONS OF THE ACT. THE RATIO LAID DOWN BY HON'BLE BOMBAY HIGH COURT IN CIT VS MRS. HILLA J.B. WADIA (216 ITR 376)(BOM.) HOLDING T HAT THE ASSESSEE SHOULD HAVE INVESTED SUBSTANTIAL AMOUNT WI THIN TWO YEARS AFTER THE DATE OF SALE OF THE PROPERTY SUPPOR TS THE CASE OF THE ASSESSEE. AS PER THE PROVISION OF ACT, THE ASSE SSEE WAS EITHER TO CONSTRUCT THE HOUSE OR TO INVEST THE SALE PROCEEDS WITHIN THE STIPULATED PERIOD OF 2/3 YEARS FROM THE DATE OF TRANSFER OF ASSET. THE HON'BLE CALCUTTA HIGH COURT IN CIT VS BHARATI C. KOTHARI (244 ITR 352)(CAL.) HELD AS UNDE R:- 1. ON AN APPLICATION UNDER SECTION 256(1) OF THE INCOME-TAX ACT, 1961, THE FOLLOWING QUESTION SET OUT AT PAGE 2 OF T HE APPLICATION, HAS BEEN REFERRED BY THE TRIBUNAL FOR OUR OPINION : 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN HOLD ING THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 54( 1) SINCE THE AGREEMENT OF PURCHASE WAS MADE WITHIN ONE YEAR FROM THE DATE OF SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 7 SALE AND SINCE SUBSTANTIAL PARTS OF INSTALMENTS WER E PAID WITHIN TWO YEARS FROM THE DATE OF SALE AND THEREBY TREATING TH E DATE OF AGREEMENT AS THE DATE OF PURCHASE ?' 2. THE ASSESSEE HAD SOLD HER FLAT AT RS. 1,40,000 O N APRIL 30, 1981. THE ASSES-SEE THEREUPON ENTERED INTO AN AGREEMENT O N APRIL 29, 1982, FOR PURCHASE OF OWNERSHIP FLAT FROM AKASH DEE P CORPORATION FOR A SUM OF RS. 1,40,000. AS PER THE AGREEMENT, SH E HAD TO PAY RS. 10,000 ON OR BEFORE THE EXECUTION OF THE AGREEMENT AND THE BALANCE AMOUNT SHE HAS TO PAY AS UNDER : DATE OF PAYMENT AMOUNT (RS.) 22-4-1982 10,000 25-3- 1983 10,000 25-4-1983 10,000 4-6-1983 10,000 5-7-1983 10,000 27 -7-1983 10,000 14-11-1983 50,000 21-1-1984 20,000 3-3-1984 10,000 3. THE ASSESSEE CLAIMED THE BENEFIT OF EXEMPTION UN DER SECTION 54(1) OF THE INCOME-TAX ACT, 1961. ACCORDING TO THE ASSE SSING OFFICER, THE ASSESSEE IS ENTITLED TO ONLY THE BENEF IT TO THE EXTENT OF RS. 30,000 WHICH SHE HAS INVESTED DURING TWO YEARS FROM THE DATE OF SALE. 4. IN APPEAL BEFORE THE DEPUTY COMMISSIONER OF INCO ME-TAX (APPEALS), THE DEPUTY COMMISSIONER OF INCOME-TAX (A PPEALS) DISMISSED THE APPEAL OF THE ASSESSEE. 5. IN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL HAS CONSIDERED THE DECISION OF THE ANDHRA PRADESH HIGH COURT IN THE CA SE OF CIT V. MRS. SHAHZADA BEGUM , AND ALSO CONSIDERED THE DECISION OF THE APEX COURT IN THE CASE OF CIT V. J.H. GOTLA AND ALLOWED THE CLAIM OF THE ASSESSEE. WHEN THE ASSESSEE HAS INVESTED THE ENTIRE AMOUNT WITHIN THREE YEARS, SHE IS ENTITLED TO EXEMPTION UNDERSECT ION 54(1) OF THE ACT. 6. THE FACTS ARE NOT IN DISPUTE THAT AFTER SALE OF HER FLAT ON APRIL 30, 1981, SHE ENTERED INTO AN AGREEMENT FOR PURCHASE OF AN OWNERSHIP FLAT ON APRIL 29, 1982, AND THE ENTIRE AMOUNT OF TH E FLAT, THAT IS, RS. 1,40,000 HAS BEEN PAID WITHIN THREE YEARS FROM THE DATE OF SALE OF HER FLAT. 7. IN MRS. SHAHZADA BEGUM'S CASE THE ANDHRA PRADESH HIGH COURT HAS TAKEN THE VIEW THAT THE EXPRESSION 'PURCHASED' WOULD UNDOUBTEDLY CONNOTE THE DOMAIN AND CONTROL OF THE P ROPERTY GIVEN INTO THE ASSESSEE'S HANDS. THEREFORE, REGISTRATION IS NOT NECESSARY. IF MONEY IS PAID AND POSSESSION HAS BEEN TAKEN WITHIN THE STIPULATED PERIOD UNDER SECTION 54(1) , THE ASSESSEE IS ENTITLED TO BENEFIT UNDER SECTION 54(1) . 8. THE PROVISIONS OF SECTION 54(1) OF THE ACT PROVIDE THAT SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE CAPITAL GA IN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, THE INCOME O F WHICH IS SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 8 CHARGEABLE UNDER THE HEAD 'INCOME FROM THE HOUSE PR OPERTY' AND THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH A TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE, THEN, INSTEAD OF CAPITAL GAIN BEING CHARGED TO INCO ME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLA CE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS IN THE SECTI ON. 9. THE ADMITTED FACTS ARE THAT THE ASSESSEE HAS ENT ERED INTO AN AGREEMENT WITHIN TWO YEARS FOR PURCHASE OF A RESIDE NTIAL FLAT AND THE FLAT WAS UNDER CONSTRUCTION. THE AMOUNT WAS PAID IN INSTALMENTS, BUT ALL THE INSTALMENTS ARE PAID WITHIN THREE YEARS FROM THE DATE OF SALE OF HER FLAT, I.E., ON APRIL 30, 1981. THE PROV ISIONS OF SECTION 54(1) PERMIT THE ASSESSEE IN CASE THE ASSESSEE INVESTS T HE SALE PROCEEDS IN THE CONSTRUCTION OF A HOUSE WITHIN THRE E YEARS, THE ASSESSEE IS EXEMPTED FROM THE CAPITAL GAIN TAX ARIS ING OUT OF THE SALE OF THE EARLIER HOUSE. HERE NO DOUBT, THE ASSESSEE H AS NOT CONSTRUCTED HERSELF THE HOUSE, BUT SHE PURCHASED TH E FLAT WHICH WAS BEING CONSTRUCTED AND WITHIN THREE YEARS, SHE PAID THE ENTIRE AMOUNT AGAINST THAT FLAT WHICH WAS BEING CONSTRUCTE D. THEREFORE, THE QUESTION DOES ARISE, WHETHER THE SALE PROCEEDS WHICH SHE HAS INVESTED IN THE FLAT WHICH WAS UNDER CONSTRUCTION A MOUNTS TO AN INVESTMENT OF THE SALE PROCEEDS UNDERSECTION 54(1) --WHETHER IT IS NECESSARY THAT SHE SHOULD HERSELF CONSTRUCT A HOUSE , THEN ONLY SHE IS ENTITLED FOR EXEMPTION UNDER SECTION 54(1) OF THE ACT. 10. IF THE ASSESSEE HAS INVESTED THAT SALE PROCEEDS IN A HOUSE, WHICH IS BEING CONSTRUCTED BY THE THIRD PARTY FOR HER, TH AT IN OUR CONSIDERED VIEW, ENTITLES THE ASSESSEE FOR THE BENE FIT OR THE EXEMPTION UNDER SECTION 54(1) . IF THE BENEFIT IS NOT GIVEN TO THE ASSESSEE, THOUGH SHE HAS INVESTED THE SALE PROCEEDS IN THE HOUSE WHICH IS BEING CONSTRUCTED FOR HER, THAT VIEW MAY N OT BE IN CONFORMITY WITH THE OBJECT BEHIND THE PROVISION. TH E PURPOSE BEHIND THIS EXEMPTION IS THAT WHEN THE ASSESSEE SEL LS HER RESIDENTIAL HOUSE AND IF SHE PURCHASED ANY NEW HOUSE OR ACQUIRE D THE NEW HOUSE FROM THOSE SALE PROCEEDS, THE ASSESSEE IS EXE MPTED FROM THE CAPITAL GAIN TAX. 11. IN J.H. GOTLA'S CASE , THEIR LORDSHIPS AT PAGE 339 HAVE OBSERVED AS UNDER : 'WHERE THE PLAIN LITERAL INTERPRETATION OF A STATUT ORY PROVISION PRODUCES A MANIFESTLY UNJUST RESULT WHICH COULD NEV ER HAVE BEEN INTENDED BY THE LEGISLATURE, THE COURT MIGHT MODIFY THE LANGUAGE USED BY THE LEGISLATURE SO AS TO ACHIEVE THE INTENT ION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. TH E TASK OF INTERPRETATION OF A STATUTORY PROVISION IS AN ATTEM PT TO DISCOVER THE INTENTION OF THE LEGISLATURE FROM THE LANGUAGE USED . IT IS NECESSARY TO REMEMBER THAT LANGUAGE IS AT BEST AN IMPERFECT I NSTRUMENT FOR THE EXPRESSION OF HUMAN INTENTION. IT IS WELL TO RE MEMBER THE SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 9 WARNING ADMINISTERED BY JUDGE LEARNED HAND THAT ONE SHOULD NOT MAKE A FORTRESS OUT OF THE DICTIONARY BUT REMEMBER THAT STATUTES ALWAYS HAVE SOME PURPOSE OR OBJECT TO ACCOMPLISH AN D SYMPATHETIC AND IMAGINATIVE DISCOVERY IS THE SUREST GUIDE TO TH EIR MEANING.' 12. KEEPING IN VIEW THE ABOVE OBSERVATIONS OF THE A PEX COURT, WHERE THE PLAIN LITERAL EXPRESSION OF THE STATUTORY PROVI SIONS PRODUCES MANIFESTLY UNJUST RESULT, WHICH COULD NEVER HAVE BE EN INTENDED BY THE LEGISLATURE, THE COURT CAN MODIFY THE LANGUAGE TO ACHIEVE THE INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. 13. THE PURPOSE BEHIND THE EXEMPTION UNDER SECTION 54(1) IS THAT IF ANY ASSESSEE SELLS HIS RESIDENTIAL HOUSE AND PURCHA SES A NEW HOUSE AGAINST THOSE SALE CONSIDERATIONS THAT CAPITAL GAIN S TAX ARISING OUT OF THE SALE OF THE EARLIER HOUSE SHOULD NOT BE TAXED. WHETHER THE ASSESSEE HIMSELF CONSTRUCTS THE HOUSE OR HE GETS IT CONSTRUCTED BY A CONTRACTOR OR A THIRD PARTY THAT DOES NOT MAKE ANY DIFFERENCE. THE BASIC REQUIREMENT FOR THE PURPOSE OF RELIEF UNDER S ECTION 54(1) , IS THAT THE ASSESSEE SHOULD INVEST THE SALE PROCEEDS I N THE CONSTRUCTION OF A RESIDENTIAL HOUSE, WHICH HAS BEEN CONSTRUCTED FOR THE ASSESSEE. KEEPING IN VIEW THE ABOVE OBSERVATIONS AND REASONS GIVEN BY THE TRIBUNAL, NO CASE IS MADE OUT FOR INTERFERENCE. 14. IN THE RESULT, WE ANSWER THE QUESTION IN THE AF FIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15. THE APPLICATION IS, THUS, DISPOSED OF. AS MENTIONED EARLIER, THE CBDT VIDE CIRCULAR NO .471, DATED 15/10/1986, DEALING WITH THE INVESTMENT IN FL ATS, UNDER SELF FINANCING SCHEME OF DELHI DEVELOPMENT AUTHORIT Y STATES THAT WHEN ALLOTMENT LETTER IS ISSUED TO THE ALLOTTE E UNDER THE SCHEME ON PAYMENT OF FIRST INSTALMENTS OF THE COST OF CONSTRUCTION, THE ALLOTMENT IS FINAL, UNLESS IT IS CANCELLED. THE ALLOTTEE, THEREUPON GETS TITLE OF THE PROPERTY ON T HE ISSUANCE OF ALLOTMENT LETTER AND THE PAYMENT OF INSTALMENTS IS ONLY A FOLLOW OF ACTION AND TAKING DELIVERY OF POSSESSION IS ONLY A FORMALITY. CONSIDERING THE INTENTION OF THE LEGISLA TURE FOR THIS BENEFICIAL PROVISION AND THE PURPOSE BEHIND U/S 54( 1) IS THAT IF ANY ASSESSEE SELLS HIS/HER RESIDENTIAL HOUSE AND PU RCHASES A SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 10 NEW HOUSE AGAINST THE SALE CONSIDERATION, THE CAPIT AL GAIN TAX ARISING OUT OF SALE OF EARLIER HOUSE PROPERTY, IT S HOULD NOT BE TAXED. THE BASIC REQUIREMENT FOR THE PURPOSE OF REL IEF U/S 54(1) IS THAT ASSESSEE SHOULD INVEST THE SALE PROCEEDS IN THE CONSTRUCTION OF THE RESIDENTIAL HOUSE. THE EXPRESSI ON FOR THE PURPOSE OF HIS OWN RESIDENCE IN SECTION 54(1) WOUL D SUGGEST THAT THE BENEFIT OF THAT PROVISION IS INTENDED FOR THE NEW ASSET, WHICH IS MEANT AT THE TIME OF PURCHASE OR CONSTRUCT ION, TO BE USED FOR THE DWELLING PURPOSE BY THE ASSESSEE. THE RATIO LAID DOWN IN CIT VS SMT. SUNITA AGRAWAL (2006) 284 ITR 2 0 (DEL.), CIT VS V. NARAJAN (2006) 287 ITR 271 (MAD.), DIT VS MS. JENNIFER BHIDE (2012) 349 ITR 80 (KARN.) SUPPORTS T HE CASE OF THE ASSESSEE. KEEPING IN VIEW, THE TOTALITY OF FACT S AND THE FOREGOING DISCUSSION, THE ASSESSEE HAS MADE SUBSTAN TIAL COMPLIANCE OF THE PROVISION BY INVESTING REQUIRED A MOUNT WITHIN STIPULATED PERIOD, THEREFORE, WE FIND NO INF IRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), IT IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 26/10/2016. SD/- SD/- ( N. K. PRADHAN ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; * DATED :26/10/2016 SMT. BHAVNA Y. SANGHAVI ITA NOS.2286/MUM/2014 11 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /-. / THE RESPONDENT. 3. 0 0 & 1% ( +, ) / THE CIT, MUMBAI. 4. 0 0 & 1% / CIT(A)- , MUMBAI 5. 3'4 % , 0 +,) + 5 , & ' / DR, ITAT, MUMBAI 6. 6# 7' / GUARD FILE. / BY ORDER, /3,% % //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI,