Shri Ashok Kapasiawala, Surat V. The Income Tax Officer, Ward-7(1), Surat

ITA 2692/AHD/2014

• Counselvise Citation: 269220514 RSA 2014
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGHSR D R
• Keywords: Reopening of assessment; Unexplained investment; Capital asset; Period of limitation; Time period of passing order
• Section: 54F; 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO. 2692/AHD/2014 ( / ASSESSMENT YEAR : 2008-09) ASHOK KAPASIAWALA 403, GEETAJALI APARTMENT BABU NIWAS LANE TIMALIYAWAD, NANPURA,SURAT / VS. THE ITO WARD-7(1) SURAT % & ./ ./ PAN/GIR NO. : ADPPK 6904 K ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) %( + / APPELLANT BY : SHRI MEHUL SHAH, AR )*%( , + / RESPONDENT BY : SHRI NARENDRA SINGH, SR.DR -. , /& / DATE OF HEARING 27/07/2015 0123 , /& / DATE OF PRONOUNCEMENT 10/09/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT [CIT(A) IN SHORT] DATED 17/07/2014 PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- DENYING EXEMPTION U/S.54F 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(AS) ERRED IN NOT ALLOWING EXEMPTION U/S.54F. ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 2 - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(AS) ERRED IN NOT APPRECIATING THAT THE INVEST MENT IN RESIDENTIAL PROPERTY WAS MADE BEFORE THE EXPIRY OF 2 YEARS FROM THE RELEVANT DATE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(AS) ERRED IN NOT CONSIDERING THE LATEST DECISI ON ON THE ABOVE ISSUE. NOTICE U/S.148 ISSUED AFTER THE LIMITATION PERIOD 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(AS) ERRED IN CONFIRMING THE ACTION OF THE ASSE SSING OFFICER WITH REGARD TO REOPENING OF ASSESSMENT AS BEING BAR RED BY LIMITATION. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF CIT(AS) BE SET ASIDE ON THE ABOVE POINT AND EXEMPTION U/S.54F GRANTED AND RETUR NED INCOME BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS REOPENED AND THE NOTICE U/S.148 OF THE INCOME TAX ACT,1961 ( HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 27/0 3/2012 AND SERVED UPON ASSESSEE ON 28/03/2012. IN RESPONSE TO THE NO TICE, THE ASSESSEE FILED RETURN OF INCOME ON 30/04/2012 RECEIVED BY TH E ASSESSING OFFICER (AO IN SHORT) ON 01/05/2012. SUBSEQUENTLY, THE AO FRAMED ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 3 0/03/2013; THEREBY THE AO MADE ADDITION OF RS.28,07,078/- ON ACCOUNT OF LO NG TERM CAPITAL GAIN (LTCG) AS DISCUSSED IN PARA-2 OF ASSESSMENT OR DER, ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTUAL FUNDS O F RS.2,40,000/- AND ADDITION TOWARDS UNDISCLOSED INTEREST INCOME OF RS .2,882/-. AGAINST THE ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 3 - SAID ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MAT TER BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL; WHEREIN THE LD.CIT(A) DELETED T HE ADDITION OF RS.2,40,000/- AND CONFIRMED THE ADDITION MADE ON AC COUNT OF LTCG OF RS.28,07,078/-. AGGRIEVED BY THE ORDER OF THE LD.C IT(A), THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. GROUND NO.4 WHICH READS AS UNDER:- NOTICE U/S.148 ISSUED AFTER THE LIMITATION PERIOD 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(AS) ERRED IN CONFIRMING THE ACTION OF THE ASSE SSING OFFICER WITH REGARD TO REOPENING OF ASSESSMENT AS BEING BARRED B Y LIMITATION. 3.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE REOPENING OF THE AS SESSMENT WAS BAD BY LIMITATION. 3.2. ON THE CONTRARY, SR.DR SUBMITTED THAT THIS ARG UMENT OF THE ASSESSEE IS MISPLACED AND HE SUBMITTED THAT NO SUCH GROUND WAS TAKEN UP BEFORE THE LD.CIT(A). MOREOVER, THE ASSESSEE HAS N OT PLACED ON RECORD NOTICE ISSUED U/S.148 OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 4 - IN SUPPORT OF THE CONTENTION THAT THE ACTION OF THE AO IS BARRED BY TIME FOR REOPENING OF THE ASSESSMENT, THE ASSESSEE HAS N OT PLACED ANY MATERIAL ON RECORD. MOREOVER, THE LD.COUNSEL FOR THE ASSE SSEE COULD NOT POINT OUT AS TO HOW THE ORDER OF THE REOPENING IS BARRED BY T IME. AS PER SECTION 149 OF THE ACT, NO NOTICE U/S.148 CAN BE ISSUED FOR RELEVANT ASSESSMENT YEAR, IF FOUR YEARS HAVE ELAPSED FROM THE END OF TH E RELEVANT ASSESSMENT YEAR, UNLESS HE CASE FALLS UNDER CLAUSE (B). IF FO UR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RE LEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAP ED ASSESSMENT AMOUNTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEE S OR MORE FOR THAT YEAR. IN THE CASE IN HAND, IT IS NOT IN DISPUTE TH AT THE NOTICE WAS ISSUED ON 27/03/2012 AND SERVED UPON THE ASSESSEE ON 28/03/20 12. THE RELEVANT AY IS 2008-09 THAT WOULD END ON 31/03/2009 AND THE FOUR YEARS ARE TO BE RECKONED FROM 01/04/2009. THEREFORE, WE SEE NO MER IT IN THE GROUND OF ASSESSEES APPEAL AND THE SAME IS REJECTED. 5. GROUND NOS.1, 2 & 3 ARE AGAINST DENIAL OF DEDUCT ION U/S.54F OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE AO WAS NOT JUSTIFIED IN DENYING THE DEDUCTION TO THE ASSESSEE AND SUCH ACT OF THE AO WAS CONFIRMED BY THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SOLD OFFICE FOR RS. 36 LACS ON 08/01/2008. AND HAD INVESTED RS.1,06,00,000/- IN RESIDENTIAL PR OPERTY ON 05/10/2009. THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN NOT GIV ING THE BENEFIT OF ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 5 - SECTION 54F OF THE ACT. IN SUPPORT OF THE CONTENTI ON, LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON VARIOUS CASE-LAWS ENCLO SED WITH THE PAPER- BOOK OF THE ASSESSEE (AT PAGE NOS.3 TO 19); INCLUDI NG THE JUDGEMENT OF HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CAS E OF CIT VS. JAGTAR SINGH CHAWLA REPORTED AT (2013) 87 DTR 0217:: (2013 215 TAXMAN 0154 AND THE JUDGEMENT OF HONBLE HIGH COURT OF KARNATAK A IN THE CASE OF CIT VS. K.RAMACHANDRA RAO REPORTED AT (2015) 56 TAX MANN.COM 163 (KARNATAKA). 5.1. ON THE CONTRARY, LD.SR.DR SHRI NARENDRA SINGH VEHEMENTLY ARGUED THAT IT IS NOT THE CASE WHERE THE ASSESSEE HIMSELF HAS DISCLOSED THE TRANSACTION. HE SUBMITTED THAT THE AO HAS RIGHTLY DENIED THE CLAIM OF DEDUCTION U/S.54F OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE-LAW RELIED UPON BY THE LD.COUNS EL FOR THE ASSESSEE. THE ONLY QUESTION WHICH NEEDS TO BE DECIDED IS WHET HER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.54F OF THE ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. BEFORE ADVERTIN G TO THE RIVAL CONTENTIONS, IT WOULD BE APPROPRIATE FOR THE SAKE O F CLARITY TO REPRODUCE THE RELEVANT PROVISIONS OF SECTION 54F OF THE ACT. SECTION 54F OF THE ACT ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 6 - [CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHE RE IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FA MILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NO T BEING A RESIDENTIAL HOUSE (HEREINAFTER IN THIS SECTION REFERRED TO AS THE ORIGI NAL 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 RESIDENTIAL HOUSE IN INDIA] (HEREINAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHAL L BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT I S TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN S HALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NE T 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 B EARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45: [PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL AS SET; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGIN AL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THA N THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, I S CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'.] EXPLANATION : FOR THE PURPOSES OF THIS SECTION, [* * * *] ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 7 - [* *] 'NET CONSIDERATION', IN RELATION TO THE TRANSFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INC URRED 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 CONSTRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOUSE, THE I NCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERT Y' , OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TR ANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A), OR, AS THE CASE MAY BE, CLAU SE (B), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE H EAD 'CAPITAL GAINS' RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WH ICH SUCH RESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED. (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, ITS CO NSTRUCTION, 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 NEW ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WHICH SUCH NEW ASSET IS TRANSF ERRED.] [(4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE W ITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW A SSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139, S HALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING MA DE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN AC COUNT 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 IN 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 FOR THE PURCHASE OR CONSTRUCTION OF THE N EW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST 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 OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, (I) THE AMOUNT BY WHICH ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 8 - (A) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSF ER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B) OF SUB- SECTION (1), EXCEEDS, (B) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED H AD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUC TION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) BEEN THE COS T OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE P REVIOUS 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 THE UNUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 6.1. A COMBINED READING OF SECTION 54F(1) AND 54F(4 ) OF THE ACT, IT IS EVIDENT THAT THE ASSESSEE WOULD BE ENTITLED FOR EXE MPTION/DEDUCTION U/S.54F OF THE ACT IN THE EVENT HE PURCHASES NEW AS SET WITHIN ONE YEAR FROM THE DATE OF TRANSFER OF ORIGINAL ASSET OR THE AMOUNT IS UTILIZED BEFORE THE DATE OF FURNISHING THE RETURN U/S.139 OF THE AC T. IN A CASE IT IS NOT UTILIZED FOR THE PURPOSE OF AFORESAID AND THE PERIO D AFOREMENTIONED SECTION 54F(4) MANDATES THE ASSESSEE TO DEPOSIT SUC H AMOUNT BEFORE DUE DATE OF FILING OF RETURN U/S.139(1) OF THE ACT. TH EREFORE, THERE IS NO AMBIGUITY IN THE PROVISION SO FAR DEPOSIT OF THE UN UTILIZED AMOUNT IS CONCERNED, IT HAS TO BE DEPOSITED IN A SPECIFIED CA PITAL GAIN ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN U/D.193(1) OF THE ACT. THE QUESTION WHICH IS REQUIRED TO BE EXAMINED WHETHER THE ASSESS EE HAS UTILIZED THE AMOUNT BEFORE THE TIME LIMIT PRESCRIBED FOR SUCH PU RPOSE OR IF NOT WHETHER THE AMOUNT WAS DEPOSITED IN THE MANNER PRES CRIBED U/S.54F(4) ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 9 - IN THE PRESENT CASE, THE UNDISPUTED FACTS ARE THAT THE ORIGINAL ASSET WAS TRANSFERRED ON AND THE NEW ASSET WAS PURCHASED ON 05/10/2009. THE ASSESSEE HAD NOT FILED INCOME-TAX RETURN U/S.139(1) SO THAT MATTER U/S.139 OF THE ACT. IT WAS ONLY IN RESPONSE TO NOTICE U/S. 148 OF THE ACT DATED 27/03/2012 THE ASSESSEE FILED RETURN ON 30/04/2012. THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT WAS UTILIZED BEFORE DUE DATE OF FILING OF RETURN. AS PER ASSESSEE, THE PERIOD AS PRESCRIBED UNDER SECTION 54F(4) FOR DEPOSIT IN THE CAPITAL GAIN ACCOUNT SHOULD BE RECKO NED FROM THE DUE DATE OF FILING OF RETURN U/S.139(4) OF THE ACT. IN SUPP ORT OF THIS CONTENTION, LD.COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. JAGTAR SINGH CHAWLA AND JUDGEMENT OF HONBLE KARNATAKA HIGH COURT RENDE RED IN THE CASE OF CIT VS. K. RAMACHANDRA RAO. THE HONBLE HIGH COURT OF PUNJAB & HARYANA HELD AS UNDER:- IN THE CASE OF FATHIMA BAI VS. ITO, ITA NO.435 OF 2004 IT WAS HELD THAT THE EXTENDED DUE DATE U/S. 139(4) WOULD BE 31. 3.1990. THE ASSESSEE DID NOT FILE THE RETURN WITHIN THE EXTENDED DUE DAT E. HOWEVER, THE ASSESSEE HAD UTILIZED THE ENTIRE CAPITAL GAINS BY P URCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIOD OF SECTION 54 (2) I.E., BEFORE THE EXTENDED DUE DATE FOR RETURN U/S 139. THE ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RETURN U/S 139(4). BUT, HOWEVER, UTILIZED THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE E XTENDED DUE DATE U/S 139(4). THE CONTENTIOR OF THE REVENUE THAT THE DEPO SIT IN THE SCHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE A ND NOT THE EXTENDED DUE DATE WAS HELD TO BE AN UNTENABLE CONTENTION. IN THE PRESENT CASE, THE ASSESSEE HAD PROVED THE PAYMENT OF SUBSTANTIAL AMOUNT OF SALE CONSIDERATION FOR PURCHASE OF A RESIDENTIAL PROPERTY ON OR BEFORE 31.3.2008, THAT WAS WITHIN EXTENDED PERIOD OF LIMIT ATION OF FILING OF ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 10 - RETURN. ONLY A SUM OF RS.24 LACS WAS PAID OUT OF TOTAL SALE CONSIDERATION ON 23.4.2008, THOUGH POSSESSION WAS DELIVERED TO THE ASSESSEE ON EXECUTION OF THE POWER OF ATTORNEY ON 3 0.3.2008. SINCE THE ASSESSEE, HAS ACQUIRED A RESIDENTIAL HOUSE BEFORE T HE END OF THE NEXT FY IN WHICH SALE HAD TAKEN PLACE, THEREFORE, THE ASSES SEE IS NOT LIABLE TO PAY ANY CAPITAL GAIN. SUCH WAS THE VIEW TAKER BY TH E ITAT. IN VIEW OF THE ABOVE, NO MERIT WAS FOUND IN THE APPEAL. 6.2. THE HONBLE KARNATAKA HIGH COURT IN THE CASE O F CIT VS. K.RAMACHANDRA RAO (SUPRA) ANSWERED THE QUESTION IN FAVOUR OF ASSESSEE I.E. WHEN THE ASSESSEE HAD INVESTED THE ENTIRE SALE CONSIDERATION IN CONSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THE THRE E YEARS FROM THE DATE OF TRANSFER. COULD HE BE DENIED EXEMPTION UNDER SECT ION 54 F ON THE GROUND THAT HE DID NOT DEPOSIT THE SAID AMOUNT IN C APITAL GAIN ACCOUNT SCHEME BEFORE THE DUE DATE PRESCRIBED U/S.139(1) OF THE ACT. THE HONBLE HIGH COURT OF KARNATAKA HIGH COURT HELD AS UNDER:- AS IT CLEAR FROM SUB-SECTION (4) IN THE EVENT OF T HE ASSESSEE NOT INVESTING THE CAPITAL GAINS EITHER IN PURCHASING TH E RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE WITHIN THE PERI OD STIPULATED IN SECTION 54F(1), IF THE ASSESSEE WANTS THE BENEFIT O F SECTION 54F, THEN HE SHOULD DEPOSIT THE SAID CAPITAL GAINS IN AN ACCOUNT WHICH IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT. IN OTHER WORDS IF HE WANT OF CLAIM EXEMPTION FROM PAYMENT OF INCOME TAX BY RETAINING T HE CASH, THEN THE SAID AMOUNT IS TO BE INVESTED IN THE SAID ACCOUNT. IF THE INTENTION IS NOT TO RETAIN CASH BUT TO INVEST IN CONSTRUCTION OR ANY PURCHASE OF THE PROPERTY AND IF SUCH INVESTMENT IS MADE WITHIN THE PERIOD STIPULATED THEREIN, THEN SECTION 54F(4) IS NOT AT ALL ATTRACTE D AND THEREFORE THE CONTENTION THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE BANK ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 11 - ACCOUNT AS STIPULATED AND THEREFORE, HE IS NOT ENTI TLED TO THE BENEFIT EVEN THOUGH HE HAS INVESTED THE MONEY IN CONSTRUCTION IS ALSO NOT CORRECT.' 6.3. IN THE PRESENT CASE, THE ASSESSEE PURCHASED NE W ASSET ON 05/10/2009 AND HAD TRANSFERRED THE ORIGINAL ASSET ON 8/01/2008. AS PER SECTION 54F (1) OF THE ACT, THE EXEMPTION WOULD BE AVAILABLE IF THE ASSESSEE PURCHASED THE RESIDENTIAL HOUSE WITHIN TWO YEARS AFTER THE DATE WHEN TRANSFER TOOK PLACE. AS PER THE JUDGMENT OF H ONBLE KARNATAKA HIGH COURT, THE PROVISIONS OF SECTION 54F(4) WOULD NOT BE ATTRACTED IN THE EVENT IF THE ASSESSEE HAS PURCHASED OR CONSTRUCTED THE RESIDENTIAL HOUSE WITHIN THE PERIOD PRESCRIBED UNDER SECTION 54(1) OF THE ACT. IN THE CASE IN HAND, THERE IS NO DISPUTE WITH REGARD TO THE FAC T THAT THE ASSESSEE HAD PURCHASED WITHIN TWO YEARS [THE PERIOD PRESCRIBED U /S.54(F(1)] A NEW ASSET ON 05/10/2009 FROM THE DATE OF TRANSFER OF TH E ORIGINAL ASSET. THE REVENUE HAS NOT CITED OR PLACED ON RECORD ANY CONTR ARY JUDGMENT BY THE HONBLE JURISDICTIONAL HIGH COURT OR HONBLE SUPREM E COURT. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DO WN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS K.RAMACH ANDRA RAO (SUPRA), WE HEREBY SET ASIDE THE IMPUGNED ORDER AND DIRECT T HE AO TO RE-COMPUTE THE ASSESSED INCOME AFTER GRANTING THE BENEFIT OF S ECTION 54F OF THE ACT TO THE ASSESSEE. ITA NO.2692/AHD /2014 ASHOK KAPASIAWALA VS. ITO ASST.YEAR 2008-09 - 12 - 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 10 TH DAY OF SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 10/09/2015 6/..-, .-../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 789 : / CONCERNED CIT 4. : ( ) / THE CIT(A)-V, SURAT 5. ;< )-89 , / 893 , 7 / DR, ITAT, AHMEDABAD 6. <= >. / GUARD FILE. / BY ORDER, *; ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 21.8.15 (DICTATION-PAD 12 + PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 27.8.15/1.9.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.14.9.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.9.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER