Smt. Dhillkushi Gurmurti, Vadodara V. The Income Tax Officer, Ward-4(2)(3), Vadodara

ITA 2808/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9838 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 06-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURENDRA MODIYANI
• Keywords: Capital asset
• Section: 54F; 54; 139

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH * ** * IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] ] ] ] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 2808/AHD/2015 ( / ASSESSMENT YEAR : 2012-13) DHILLKUSHI GURMURTI, B-63, NILAMBER VILLA, WAGHODIYA DABHOI ROAD, VADODARA 380 025. / VS. ACIT, CIRCLE-4, BARODA. ./ ./ PAN/GIR NO. : AFHPG 3916 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SURENDRA MODIYANI, A.R. / RESPONDENT BY : SHRI VIRENDRA SINGH, SR. D.R. / DATE OF HEARING 22/10/2018 !'# / DATE OF PRONOUNCEMENT 03/12/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)4, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/4-433 /2014-15 DATED 08.06.2015 ARISING IN THE MATTER OF ASSESSMENT ORDE R PASSED UNDER S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961(HER E-IN-AFTER REFERRED TO AS 'THE ACT') DATED 16.03.2015 RELEVANT TO ASSESSME NT YEAR (AY) 2012- 13. ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- THE ORDER OF THE LEARNED COMMISSIONER(APPEALS) IS AGAINST LAW AND FACTS. THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.20,99,561/- BY DISALLOWING THE EXEM PTION UNDER SECTION 54 OF THE INCOME TAX ACT. YOUR APPELLANT SUBMITS THAT THE DISALLOWANCE IS N OT JUSTIFIED AND PRAYS THAT THE SAME BE DELETED. YOUR APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT LD . CIT(A) ERRED IN DISALLOWING THE EXEMPTION CLAIMED BY THE ASSESSEE F OR RS.20,99,561/- U/S 54 OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND DECLARED HER INCOME UNDER THE HEAD C APITAL GAIN, INCOME FROM OTHER SOURCES AND LOSSES UNDER THE HEAD HOUSE PROPERTY. 4.1 THE ASSESSEE DURING THE YEAR HAS SOLD ONE RESID ENTIAL HOUSE DATED 21.10.2011 AND WORKED OUT THE CAPITAL GAIN INCOME A FTER CLAIMING THE EXEMPTION U/S 54 OF THE ACT AS DETAILED UNDER: SALES CONSIDERATION OF BUILDING ON 21.10.2011 : RS.55,01,000/- LESS: INDEXED COST OF BUILDING (F.Y. 2006-07: RS.16,53,500&1653500*785/519): RS.2 5,00,959/- ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 3 - : RS.30,00,041/- DEDUCTION U/S 54 (INVESTMENT IN HOUSE PROPERTY) : RS.20,99,561/- LONG TERM CAPITAL GAIN : RS. 9,00,48 0/- 4.2 THE ASSESSEE IN RESPECT OF THE DEDUCTION CLAIME D U/S 54 OF THE ACT HAD FILED THE RECEIPTS AMOUNTING TO RS.1,00,000/- & RS. 17,79,000/- FOR THE PURCHASE OF THE FLAT DATED 20.07.2013 AND 17.09 .2013. BESIDES THIS, THE ASSESSEE ALSO CLAIMED TO HAVE INCURRED AN EXPEN SE OF RS. 2,20,561/- ON THE CONSTRUCTION OF SAID FLAT. THE ASSESSEE IN S UPPORT OF THE EXPENSES AS DISCUSSED ABOVE HAS FILED A COPY OF TOTAL COST C ERTIFICATE DATED 29.09.2013 ISSUED BY THE DEVELOPER. HOWEVER, THE AO FROM THE ABOVE DETAILS NOTED THAT T HE ASSESSEE HAD NOT MADE THE INVESTMENT WITHIN TIME AS SPECIFIED U/S 54 OF THE ACT FOR CLAIMING THE EXEMPTION. 4.3 ON A QUESTION BY THE AO THE ASSESSEE FURTHER CL AIMED THAT HE HAS SOLD THE PROPERTY DATED 21.10.2011 AND IMMEDIATELY AFTER THAT HE HAS INVESTED A SUM OF RS. 29,70,000/- IN A RESIDENTIAL SCHEME DATED 16.11.2011, BUT THE BUILDER COULD NOT DELIVER THE P OSSESSION AS PROMISED BY HIM. THEREFORE, THE BUILDER HAS RETURNED THE SAI D ADVANCE OF RS. 29,70,000/- DATED 11.09.2013. ACCORDINGLY, THE ASSE SSEE HAS PURCHASED ANOTHER PROPERTY AS DISCUSSED ABOVE. ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 4 - HOWEVER, THE AO DISAGREED WITH THE SUBMISSION OF TH E ASSESSEE AND OBSERVED CERTAIN FACTS AS DETAILED UNDER: I. THE ASSESSEE WAS REQUIRED TO DEPOSIT THE UNUTILIZED AMOUNT IN THE CAPITAL GAIN DEPOSIT SCHEME BEFORE THE DUE DATE OF FURNISHING THE RETURN OF INCOME U/S 139 OF THE ACT, I.E. 31.07.2012 BUT THE ASSESSEE FAILED TO COMPLY THE SA ME. II. THE AO DISBELIEVED THE VERSION OF THE ASSESSEE FOR HAVING MADE THE INVESTMENT OF RS. 29,70,000/- WHICH WAS SUBSEQU ENTLY CANCELED BY THE BUILDER DUE TO NON-DELIVERY OF THE POSSESSION OF THE PROPERTY AND THE FRESH INVESTMENT MADE BY THE A SSESSEE FOR RS.20,99,561/-. IN VIEW OF THE ABOVE, THE AO DENIED THE EXEMPTION C LAIMED BY THE ASSESSEE AMOUNTING TO RS. 20,99,561/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A) AND SUBMITTED THAT HE HAD MADE THE INVESTMENT OF RS. 29 ,70,000/- WITHIN ONE YEAR FROM THE DATE OF TRANSFER. THEREFORE, THERE WA S NO REQUIREMENT TO DEPOSIT THE SAME IN THE CAPITAL GAIN ACCOUNT SCHEME . 5.1 THE ASSESSEE CANNOT BE PANELIZED FOR THE DEFAUL T COMMITTED BY THE BUILDER DUE TO NON-COMPLETION OF THE PROJECT. ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 5 - 5.2 AS THE AMOUNT WAS INVESTED WITHIN THE SPECIFIED TIME AS REQUIRED UNDER THE PROVISION OF SECTION 54 OF THE ACT BUT TH E BUILDER DID NOT DELIVER THE POSSESSION IN THE SUBSEQUENT YEAR. THUS , AT THE MOST, THE INCOME CAN BE CHARGED IN THE YEAR IN WHICH THE DEFA ULT WAS COMMITTED BY THE ASSESSEE. HOWEVER, THE LD. CIT(A) DISREGARDED T HE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSER VING AS UNDER: THE ASSESSEE HAS CLAIMED THAT SHE HAD INVESTED A S UM OF RS.29,70,000/- OUT OF THE ABOVE CAPITAL GAINS IN FL AT NO. A/401 IN RICHMOND GRAND, AHMEDABAD, BUT DUE TO PROBLEMS, THE PROJECT COULD NOT TAKE OFF AND THE AMOUNT PAID BY HERON 16.11.201 1 WAS RETURNED BY THE BUILDER ON 11.09.2013. AS PER SECTION 54(1) OF THE ACT, THE CAPITAL GAIN OUT OF THE TRANSFER OF THE RESIDENTIAL PROPERT Y WAS TO BE INVESTED IN EITHER PURCHASING OR CONSTRUCTING A RESIDENTIAL HOU SE WITHIN THE TIME AVAILABLE U/S 54(1). SINCE THE ASSESSEE HAS FAILED TO EITHER PURCHASE OR CONSTRUCT A HOUSE WITHIN THE TIME AVAILABLE U/S 54( 1) OF THE ACT, IT IS CLEAR THAT SHE HAS FAILED TO FULFILL THE REQUIREMEN TS OF SECTION 54(1) OF THE ACT. SECTION 54(2) CONTEMPLATES A SITUATION WHE RE THE ASSESSEE IS UNABLE TO UTILIZE THE CAPITAL GAINS IN ACQUIRING A NEW ASSET BEFORE FILING OF THE RETURN, IT PRESCRIBES THAT THE CAPITAL GAINS BE DEPOSITED IN A NOTIFIED ACCOUNT AND PROOF OF SUCH DEPOSIT BE ENCLO SED WITH THE RETURN OF INCOME, IT IS ADMITTED THAT THE ASSESSEE HAD FAI LED TO EITHER DEPOSIT THE CAPITAL GAINS IN THE RELEVANT NOTIFIED CAPITAL GAINS ACCOUNT OR TO FURNISH A RETURN U/S 139(1) OF THE ACT, WITHIN THE DUE DATE. THEREFORE, EVEN THE CONDITIONS PRESCRIBED U/S 54(2) WERE NOT F ULFILLED BY THE ASSESSEE TO ENABLE HER TO AVAIL THE EXEMPTION U/S 5 4 OF THE ACT. 6.6 IN VIEW OF THE ABOVE DISCUSSION, IT IS OBVIOUS THAT TH E ASSESSEE HAS FAILED TO FULFILL THE CONDITIONS PRESCRIBED EITHER U/S 54(1) OR 54(2) OF THE ACT AND THEREFORE, WAS NOT ENTITLED TO CLAIM THE BENEFITS O F EXEMPTION U/S 54 OF THE ACT. THE DECISIONS CITED BY THE ASSESSEE ARE WA Y OFF THE MARK AS THE FACTS OF THE PRESENT AND THE CITED CASES ARE ENTIRE LY DIFFERENT. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING EXEMPTION OF RS.20,99,561/- U/S 54 OF THE ACT IS UPHELD. THE ASS ESSEE FAILS ON THIS GROUND OF APPEAL. ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 6 - BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) ASSE SSEE IS IN APPEAL BEFORE US. 6. THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1-48 AND SUBMITTED AS UNDER: IT IS SUBMITTED THAT THE DISALLOWANCE IS NOT JUSTI FIED IN VIEW OF THE FOLLOWING: A) IT IS FIRSTLY SUBMITTED THAT IN THIS CASE, NEITHER FACTS ARE IN DISPUTE NOR GENUINENESS OF TRANSACTION IS IN DOUBT. B) IT IS SUBMITTED THAT THE PROVISIONS OF SECTION 54 A RE APPARENTLY TO PROVIDE RELIEF FROM TAX TO A PERSON WHO IS IN THE P ROCESS ACQUIRING A HOUSE TO MEET HIS VERY BASIC NECESSITY. C) IT IS SUBMITTED THAT THE ASSESSEE IN THIS CASE HAS DONE EVERYTHING ON HER PART TO MEET THE REQUIREMENTS OF SECTION 54. SH E IS NOT ABLE TO GET A HOUSE WITHIN THE PRESCRIBED PERIOD IS DUE TO CIRC UMSTANCES BEYOND HER CONTROL. D) IT IS SUBMITTED THAT THE FACTS OF THE CASE ARE PECU LIAR AND THE LAW HAS NOT ENVISAGED AND PROVIDED FOR SUCH SPECIFIC SITUAT ION. HOWEVER, IT IS SUBMITTED THAT THE EXEMPTION IS ALLOWABLE WHEN W E CONSIDER ALL THE FACTS IN TOTALITY, CONSIDER APPROPRIATE JUDICIA L DECISIONS AND INTERPRET THE LAW SO AS TO FURTHER THE OBJECTIVES O F THE PROVISIONS. E) IT IS SUBMITTED THAT IN THIS CASE, THE AMOUNT OF CA PITAL GAINS WAS UTILISED FOR ACQUISITION OF HOUSE 16/11/2011, WHICH WAS WITHIN A MONTH OF TRANSFER OF OLD HOUSE ON 16/11/2011. THIS WAS ALSO VERY MUCH BEFORE THE DUE DATE FOR FILING OF THE RETURN O F INCOME. HENCE, THERE WAS NO QUESTION OF MAKING DEPOSIT UNDER SECTI ON 54(2) IN THE CAPITAL GAINS ACCOUNT SCHEME AS THE AMOUNT STOOD AL READY UTILISED. WHILE THIS AMOUNT WAS LATER REFUNDED (FOR NO FAULT OF THE ASSESSE), INCOME-TAX ACT DOES NOT PROVIDE FOR WITHDRAWAL OF E XEMPTION IN SUCH SITUATION. WITHDRAWAL OF EXEMPTION IS ALSO NOT JUSTIFIED FROM THE PERSPECTIVE OF A FAIR INTERPRETATION, SPECIALLY CON SIDERING THAT WITHIN A WEEK OF REFUND AND ALSO WITHIN THE PERIOD OF 3 YE ARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET ALLOWED UNDER SECTION 54, THE ASSESSEE ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 7 - HAS UTILISED / INVESTED THE AMOUNT FOR ANOTHER HOUS E. IN CASE OF T. SHIVA KUMAR V. INCOME-TAX OFFICER REPORTED AT 68 TA XMANN.COM 43, BANGALORE BENCH OF ITAT HELD THAT EXEMPTION UND ER SECTION 54F OUGHT TO BE ALLOWED WHEN THE ASSESSEE INVESTED THE NECESSARY AMOUNT FOR CONSTRUCTION OF PROPERTY, NOTWITHSTANDIN G SUBSEQUENT REFUND OF THE AMOUNT PAID. F) THE SECOND REASON FOR THE DISALLOWANCE IS PROBABLY THAT WHILE THE AMOUNT IS UTILISED FOR CONSTRUCTION OF NEW HOUSE WI THIN PRESCRIBED PERIOD AS PROVIDED IN SECTION 54(1), CONSTRUCTION I S ACTUALLY NOT COMPLETE WITHIN PRESCRIBED PERIOD. REGARDING THIS ASPECT, IT IS SUBMITTED THAT SECTION 54 ALLOWS EXEMPTION BASED ON UTILISATION OF FUNDS FOR CONSTRU CTION OF HOUSE AND NOT BASED ON COMPLETION OF CONSTRUCTION. IN FAC T CONSIDERING THAT A PERIOD OF 3 YEARS IS ALLOWED FOR CONSTRUCTIO N OF THE HOUSE, COMPLETION OF CONSTRUCTION CANNOT BE DEMONSTRATED E ITHER AT THE TIME OF FILING OF RETURN OR IN MANY CASES EVEN UNTIL COM PLETION OF ASSESSMENT. IT IS SUBMITTED THAT IN THIS CASE, UTILISATION OF F UNDS TOR CONSTRUCTION OF HOUSE NOT BEING IN DOUBT, EXEMPTION OUGHT TO BE ALLOWED UNDER SECTION 54. G) IT IS SUBMITTED THAT WHILE THE COMMISSIONER(APPEALS ) HAS STATED THAT THE JUDICIAL DECISIONS CITED BEFORE HIM ARE NOT REL EVANT, IT IS SUBMITTED THAT THEY ARE VERY MUCH RELEVANT CONSIDER ING THE FOLLOWING: - IN CASE OF SMT. USHA VAID V. INCOMETAX OFFICER RE PORTED AT [2012] 25 TAXMANN.COM 188 (ASR.), THE ISSUE RELATED EXEMPTION UNDER SECTION 54F OF THE INCOME TAX ACT, 1961. IN T HAT CASE, ASSESSEE SOLD A COMMERCIAL PLOT OF LAND ON 14-10-20 05 AND INVESTED TOTAL SALE CONSIDERATION IN CONSTRUCTION OF A RESID ENTIAL HOUSE WITHIN THREE YEARS AFTER TRANSFER OF PLOT, IT WAS HELD THA T ONCE ASSESSEE HAD INVESTED TOTAL SALE CONSIDERATION INTO CONSTRUCTION OF A RESIDENTIAL HOUSE WITHIN THREE YEARS AFTER TRANSFER OF PLOT, SH E WAS ENTITLED TO ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 8 - EXEMPTION UNDER SECTION 54F EVEN THOUGH HOUSE WAS C OMPLETED AFTER EXPIRY OF THREE YEARS FROM TRANSFER OF PLOT. FOLLOWING OTHER DECISIONS ARE TO THE SAME EFFECT: HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. SAR DARMAL KOTHARI [2008] 302 ITR 286 MRS. SEETHA SUBRAMANIAN V. ASSTT. CIT [1996] 59 ITD 94 T SHIVA KUMAR V. INCOME-TAX OFFICER REPORTED AT 68 TAXMANN.COM 43 RAJEEV B. SHAH V. INCOME-TAX OFFICER REPORTED AT 71 TAXMANN.COM 198 H) REGARDING THE REQUIREMENT TO MAKE A DEPOSIT UNDER S ECTION 54(2), IT IS SUBMITTED THAT THE RE N UIR6!T!9NT DID NOT APPLY FOR TWO REASONS AS UNDER: FIRSTLY, THE AMOUNT OF CAPITAL GAINS WAS ALREADY AP PROPRIATED TO ACQUISITION OF THE PROPERTY AT AHMEDABAD LONG BEFOR E THE DUE DATE FOR FILING THE RETURN, IT IS SUBMITTED THAT THE SUBSEQU ENT REFUND OF THIS AMOUNT IS IMMATERIAL AS THERE IS NO PROVISION DENYI NG EXEMPTION ON THAT GROUND. SECONDLY THE REQUIREMENT FOR DEPOSIT APPLIES ONLY I F THE AMOUNT IS NOT APPROPRIATED BEFORE FILING OF RETURN UNDER SECTION 139 (THIS DOES NOT REFER TO SECTION 139(1). IN THIS CASE, THE AMOUNT W AS UTILIZED FO. 1 THE FIRST AS WELL AS SECOND HOUSE BEFORE THE FILING OF THE RE TURN. IN VIEW OF THE ABOVE, WE REQUEST YOUR HONOUR TO DEL ETE THE DISALLOWANCE. 7. THE LD. DR BEFORE US SUBMITTED THAT THE CONTENTI ON OF THE ASSESSEE IS NOT BELIEVABLE THAT THE BUILDER RETURNS THE MONE Y AFTER TWO YEARS OF THE TIME. AS SUCH, THE ASSESSEE FAILS TO PRODUCE ANY ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 9 - DOCUMENTARY/CORRESPONDENCE WITH THE BUILDER SHOWING THAT THE AMOUNT WAS INVESTED WITH THE GENUINE BUILDER. 7.1 AS SUCH, THERE IS A REQUIREMENT UNDER SECTION 5 4 OF THE ACT TO DEPOSIT THE MONEY IN CAPITAL GAIN ACCOUNT IF IT IS NOT UTILIZED WITHIN THE SPECIFIED TIME BUT THE ASSESSEE FAILS TO DO SO. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THERE IS NO AMBIGUITY THAT THE ASSESSEE FAILED TO PURCHASE/CONSTRUCT THE HOUSE WITHIN THE TIME AS SPE CIFIED U/S 54 OF THE ACT. THERE IS ALSO NO AMBIGUITY THAT THE ASSESSEE H AS INVESTED THE MONEY IN THE PROPERTY WHICH WAS NOT DELIVERED WITHIN THE TIME. ACCORDINGLY THE MONEY WAS RETURNED BACK BY THE BUILDER TO THE ASSES SEE. 8.1 THE ASSESSEE FURTHER INVESTED THE MONEY IN THE PROPERTY OF ANOTHER BUILDER AS EVIDENT FROM THE CERTIFICATE ISSUED BY T HE BUILDER WHICH IS PLACED ON PAGE 38 OF THE PB. THE RELEVANT EXTRACT O F THE CERTIFICATE READS AS UNDER: TOTAL COST CERTIFICATE THIS IS TO CERTIFY THAT MR./MRS./MS. DHILLKUSHI GURUMURTHY HAS BEEN ALLOTTED FLAT NO. 503 ON 5 TH FLOOR IN N TOWER. THE UNDIVIDED LAND PROPORTIONATELY DISTRIBUTED AREA OF UNIT IS 52 .27 SQ. MTR. & THE SBA AREA IS 172.05 SQ. MTR. ( 1852 SQ. FT. ) ATTACH ED TERRACE AREA IS 23.97 SQ. MTR ( 258 SQ. FT. ), THERE ON IN ANANTA S AMRUDDHI ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 10 - BEARING R. S. NO. 5 PAIKI, LOCATED MOJE: SAYAJIPURA , OPP. AMERICAN SCHOOL, AJWA-NIMETA ROAD, AJWA CROSSING ( N. H. NO. 8), VADODARA. (A) FLAT COST : RS. 18,79,000/- 1) SALE COST OF SBA : RS.13,75,000/- 2) CONSTRUCTION AGREEMENT: RS. 5,04,000/- (B) OTHER CHARGES 1) MAINTENANCE DEPOSIT :RS. 70,000/- 2) SERVICE TAX (AS ACTUAL ) :RS. 58,061/- 3) STAMP DUTY + REGISTRATION (APPROX) :RS. 82,500/ - 4) MGVCL CHARGES (APPROX) :RS. 10,000/- TOTAL COST OF B :RS.2,20,561/- TOTAL COST OF FLAT (A+B) :RS.20,99,561/- (RS. TWENTY LAC NINETY NINE THOUSAND FIVE HUNDRED S IXTY ONE ONLY) PLACE : VADODARA. DATE: 29/09/2013 THE ABOVE CERTIFICATE HAS NOT BEEN DOUBTED BY AUTHO RITIES BELOW. THEREFORE, THERE REMAINS NO DOUBT THAT THE ASSESSEE HAS MADE INVESTMENT AMOUNTING TO RS. 20,99,561/- ELIGIBLE FOR DEDUCTION U/S 54 OF THE ACT. 8.2 IT IS ALSO UNDISPUTED THAT THE INVESTMENT WAS M ADE BY THE ASSESSEE BEYOND THE PERIOD AS SPECIFIED UNDER THE PROVISION OF SECTION 54 OF THE ACT. THUS, THE ISSUE ARISES WHETHER THE DELAY IN TH E INVESTMENT IS ATTRIBUTABLE TO THE ASSESSEE OR THE BUILDER. AS PER THE ASSESSEE, THE ASSESSEE HAS MADE THE INVESTMENT WITHIN THE SPECIFI ED TIME, BUT THE BUILDER FAILED TO DELIVER THE POSSESSION OF THE PRO PERTY AS PROMISED BY ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 11 - HIM. THEREFORE, THE ADVANCE WAS TAKEN BACK AND IMME DIATELY WAS INVESTED IN ANOTHER RESIDENTIAL BUILDING. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THERE W AS NO FAILURE ON THE PART OF THE ASSESSEE FOR COMPLYING THE PROVISION OF SECTION 54 OF THE ACT. AS SUCH, THE ASSESSEE HAS MADE REQUISITE INVESTMENT IN THE PROPERTIES BUT FAILED TO GET THE POSSESSION FOR THE FAILURE OF THE BUILDER. THEREFORE IN OUR CONSIDERED VIEW, THE ASSESSEE CANNOT BE PENALIZED F OR THE FAILURE OF THE BUILDERS IN DELAYING THE DELIVERY OF THE POSSESSION OF THE PROPERTY. 8.3 IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE COMPLETION OF THE CONSTRUCTION IS NOT COMPULSORY WITHIN THE SPECI FIED TIME IF THE DELAY IS ATTRIBUTABLE TO THE BUILDER. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE ORDER OF AMRITSAR TRIBUNAL IN THE CASE OF SMT. USHA VAID VS. ITO REPORTED IN 25 TAXMANN.COM 188, WHEREIN IT WAS HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD PURCHASED THE PROPERTY IN 1987. ON VERIFICATION BY THE INSPECTOR, THE BOUN DARY WALL AND GATE WAS ALSO FOUND, IS ALSO NOT UNDER DISPUTE. THE ASSESSEE HAD CLAIMED VIDE LETTER DATED 02.06.2008 EXEMPTION UNDER SECTION 54F OF THE ACT DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO IS ALSO NOT UN DER DISPUTE. THE SALE CONSIDERATION HAS BEEN INVESTED IN THE CONSTRUCTION OF THE HOUSE HAS BEEN EXPLAINED BY THE ASSESSEE BEFORE BOTH THE AUTHORITI ES BELOW. THOUGH HOUSE WAS NOT COMPLETED BEFORE THE EXPIRY OF THREE YEARS FROM THE SALE OF THE PLOT AT FARIDABAD, BUT THE SAME WAS COMPLETED IMMEDIATEL Y AFTER FEW DAYS OF THE EXPIRY OF THREE YEARS. AS PER SECTION 54F, IF THE A SSESSEE BEING AN INDIVIDUAL, THE CAPITAL GAIN WHICH ARISES FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE AND THE ASSESS EE HAD AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WIT HIN A PERIOD OF THREE ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 12 - YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HO USE, REFERRED TO AS THE NEW ASSET, THEN THE CAPITAL GAIN IS EXEMPT, IF WHOLE OF THE NET CONSIDERATION OF THE ORIGINAL ASSET IS INVESTED IN THE NEW ASSET I.E. RE SIDENTIAL HOUSE. NOW THE QUESTION ARISES IN THE PRESENT CASE WHETHER THE ASS ESSEE HAD FULFILLED THE CONDITIONS UNDER SECTION 54F OR NOT, HAS TO BE PERU SED. IN THE PRESENT CASE, THE ASSESSEE HAD INVESTED THE TOTAL SALE CONSIDERAT ION (NET CONSIDERATION) WITHIN THREE YEARS AFTER THE TRANSFER OF THE ORIGIN AL ASSET. THE WORDS MENTIONED IN SECTION 54F ARE THAT THE AMOUNT SHOULD BE INVESTED IN THE CONSTRUCTION OF A RESIDENTIAL HOUSE. THEREFORE, ONC E THE ASSESSEE HAVING BEEN INVESTED TOTAL SALE CONSIDERATION INTO CONSTRU CTION OF A RESIDENTIAL HOUSE, THEN IT IS NOT NECESSARY THAT THE RESIDENTIA L HOUSE SHOULD HAVE BEEN COMPLETED WITHIN THREE YEARS OF THE TRANSFER OF THE ORIGINAL ASSET. THE RESIDENTIAL HOUSE MAY BE COMPLETED EVEN AFTER COMPL ETION OF THREE YEARS OF THE TRANSFER OF THE ORIGINAL ASSET. IN SUCH A SITUA TION, WHEN A HOUSE IS COMPLETED AFTER EXPIRY OF THREE YEARS FROM THE TRAN SFER OF THE ORIGINAL ASSET, THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 54F OF THE ACT. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. SARDARMAL KOTHARI [2008] 302 ITR 286 . THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS : (I) MRS. SEETHA SUBRAMANIAN V. ASSTT. CIT [1996] 59 ITD 94 (II) SMT. RANJIT SANDHU V. DY. CIT [2010] 133 TTJ 4 6 (CHD)(UO). 5.1 THE ASSESSEE HAD SUBMITTED APPLICATION UNDER RULE 46A ON HAVING COMPLETED THE HOUSE, AFTER THE EXPIRY OF THREE YEAR S FROM THE TRANSFER OF THE ORIGINAL ASSET ALONG-WITH ELECTRICITY BILL WHICH WA S NOT ACCEPTED BY THE LD. CIT(A), WHICH IN FACT, COULD NOT BE SUBMITTED BY TH E ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT. THE SAME SHOULD HAVE BEEN ACCEPTED BY THE LD. CIT(A). THEREFORE, AS HELD HEREINABOVE, THE ASSESSE E HAVING SOLD AN ASSET WHICH IS NOT A RESIDENTIAL HOUSE BEING A LONG-TERM CAPITAL ASSET HAD INVESTED THE NET SALE CONSIDERATION INTO THE CONSTRUCTION OF A RESIDENTIAL HOUSE AND THEREFORE, CLAIM OF THE ASSESSEE U/S 54F IS ALLOWAB LE. ACCORDINGLY, ALL OTHER CLAIMS OF THE ASSESSEE ARE ALLOWABLE. THE ADDITION MADE BY THE AO. IS DIRECTED TO BE DELETED AND THE ORDER OF THE LD. CIT (A) IS REVERSED. THUS, ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 8.4 WE FURTHER NOTE THAT IN THE SITUATION AS DESCRI BED ABOVE THERE WAS ALSO NO NEED TO DEPOSIT THE UNUTILIZED AMOUNT IN TH E CAPITAL GAIN ACCOUNT ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 13 - SCHEME. IN THIS REGARD, WE FIND SUPPORT AND GUIDANC E FROM THE ORDER OF CHENNAI TRIBUNAL IN THE CASE OF ACIT VS. MS SULTANA NAZIR REPORTED IN 21 TAXMANN.COM 385 WHEREIN IT WAS HELD AS UNDER: THUS, FROM A READING OF THE PROVISIONS OF SECTION 54(3) IT IS TO BE OPINED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN TREATING RS. 73.94 LAKHS AS LONG-TERM CAPITAL GAINS OF THE YEAR UNDER CONSIDERATION BECAUSE THE ASSESSEE IN ITS RETURN OF INCOME FOR AS SESSMENT YEAR 2006- 07 CLAIMED EXEMPTION WITH REFERENCE TO INVESTMENT M ADE IN THE HOUSE PROPERTY 'A'. HOWEVER, THE ASSESSEE HAS INVESTED IN PURCHASE OF NEW RESIDENTIAL HOUSE AT RS. 70.80 LAKH WITHIN THE PERI OD OF TWO YEARS IN WHICH THE TRANSFER TOOK PLACE AND, THEREFORE, THE A SSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 54F(1) IN RESPECT OF TH E SAID INVESTMENT OUT OF THIS DEEMED LONG-TERM CAPITAL GAINS. THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN NOT GRANTING EXEMPTION UNDER SECTION 5 4F WITH REFERENCE TO INVESTMENT MADE IN SECOND RESIDENTIAL HOUSE BY THE ASSESSEE IN COMPUTING THE LONG-TERM CAPITAL GAINS OF THE YEAR U NDER CONSIDERATION 8.5 WE ALSO NOTE THAT THE PROPERTY WAS SUBSEQUENTLY REGISTERED IN THE NAME OF THE ASSESSEE WHICH IS PLACED ON 11-38 OF TH E PAPER BOOK. 8.6 THE LD. DR CLAIMED THAT THE ASSESSEE HAD USED A DEVICE TO CLAIM THE DEDUCTION U/S 54 OF THE ACT BY WAY OF INVESTING RS.29.70 LACS WHICH WAS SUBSEQUENTLY RETURNED BY THE BUILDER. HOWEVER, THE ARGUMENT OF THE LD. DR WAS NOT BASED ON ANY MATERIAL. IN OUR CONSID ERED VIEW, THE ARGUMENT OF THE LD. DR MAY SOUND REASONABLE, BUT TH E SAME CANNOT BE RELIED UPON IN THE ABSENCE OF ANY MATERIAL AVAILABL E ON RECORD. IN VIEW OF ABOVE, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DE DUCTION FOR THE INVESTMENT MADE IN THE PROPERTY U/S 54 OF THE ACT. ACCORDINGLY, WE SET ITA NO.2808/AHD/2015 DHILLKUSHI GURMURTI VS. ACIT A.Y. 2012 - 14 - ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/12/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/12/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-4, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 29/10/2018 (PAGE-6) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : .. 29/11/2018 3. OTHER MEMBER.. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S30/11/2018 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 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 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