Smt Siriki Appeala Kondamma., Visakhapatnam V. The ITO, Visakhapatnam

ITA 294/VIZ/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7029 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Question of law
• Section: 54F; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 294 & 295 / VIZ /201 6 (ASST. YEAR : 20 0 8 - 0 9 & 2009 - 10 ) SMT. SIRIKI APPALA KONDAMMA, W/O S. NARAYANA, D.NO. HIG - 58, SIMHAPURI COLONY, VEPAGUNTA, VISAKHAPATNAM. V S . IT O , WARD - 4 ( 2 ), VISAKHAPATNAM. PAN NO. CBRPS 1600 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. SUBRAHMANYAM , FCA . DEPARTMENT BY : SMT. SUMAN MALIK , SR. DR DATE OF HEARING : 02 / 0 7 /201 9 . DATE OF PRONOUNCEMENT : 31 / 0 7 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , VISAKHAPATNAM , DATED 18 /0 4 /201 6 FOR THE ASSESSMENT YEARS 200 8 - 0 9 & 2009 - 10 . SINCE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT FOR THE A.Y. 2008 - 09 , THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS SOLD CERTAIN 2 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) PROPERTY AND EARNED INCOME BY WAY OF CAPITAL GAIN , BUT NOT FILED THE RETURN OF INCOME , T HEREFORE, NOTICE U/SEC. 148 WAS ISSUED . IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED A REPLY STATING THAT THE RETURN OF INCOME ALREADY FILED ON 18/11/2008 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE SAID NOTICE. IT WAS NOTICED THAT THE ASSESSEE HAD FILED RETURN OF INCOME ON 18/11/2008 DECLARING TOTAL INCOME OF RS. 1,80,000/ - BEING INTEREST INCOME FROM MONEY LENDING AND ALSO AGRICULTURAL INCOME OF RS. 1.00 LAKH . THE ASSESSEE HAS ALSO SHOWN CAPITAL GAINS ON SALE OF LA ND AND CLAIMED EXEMPTION U/SEC. 54F FOR INVESTMENT/CONSTRUCTION OF HOUSE PROPERTY AT P LOT NO. HIG - 43, SIMHAPURI LAYOUT, VISAKHAPATNAM. THE ASSESSING OFFICER AFTER CONSIDERING THE DETAILS , DETERMINED THE LONG TERM CAPITAL GAIN AT RS. 21,86,635/ - . FOR THE A.Y. 2009 - 10 ALSO, THE ASSESSING OFFICER I NITIATED PROCEEDINGS U/SEC. 148. I N RESPONSE TO WHICH , THE ASSESSEE FILED A LETTER STATING THAT SHE HAS ALREADY FILED THE RETURN OF INCOME. IT WAS NOT IC ED THAT THE ASSESSEE FILED RETURN OF INCOME ON 09/01/2013 . IT WAS NOTED THAT IN THE SAID RETURN , THE ASSESSEE HAD DECLARED INCOME FROM MONEY LENDING BUSINESS AT RS. 1,89,000/ - AND CLAIMED INCOME FROM CAPITAL GAINS AS EXEMPT U/SEC. 54F . THE ASSES SING OFFICER AFTER CONSIDERING THE DETAILS FILED , DETERMINED THE CAPITAL GAINS AT RS.94,44,845/ - . IN CONCISE, T HE ASSESSEE HAS COMPUTED THE 3 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) CAPITAL GAINS AT RS. 7,42,508/ - FOR THE A.Y. 2008 - 09 AND RS. 70,42,282/ - FOR THE A.Y. 2009 - 10 WHEREAS , THE ASSESSING OFFICER HAS DETERMINED CAPITAL GAINS AT RS. 21,86,635/ - FOR THE A.Y. 2008 - 09 AND RS. 94,44,845/ - FOR THE A.Y. 2009 - 10 . THE ASSESSEE HAS NOT RAISED ANY OBJECTION FOR COMPUTATION OF CAPITAL GAINS DETERMINED BY THE ASSESSING OFFICER . THE ONLY ISSUE BEFORE US IS IN RESPECT OF DENIAL OF DEDUCTION CLAIMED BY THE ASSESSEE U/SEC. 54F OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE MAINLY ON THE GROUND THAT THE INVESTMENT MADE IN THE HOUSE PROPERTY WAS NOT IN THE ASSESSEES NAME. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE CONSTRUCTION BILLS/VOUCHERS , PLAN APPROVAL, PROPERTY TAX ASSESSMENT DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE THE CLAIM OF DEDU CTION U/SEC. 54F WAS DISALLOWED. DURING THE REMAND PROCEEDINGS , THE ASSESSEE FILED A COPY OF PLAN APPROVAL WITHOUT ANY DATE AND ALSO COPY OF GVMC PROPERTY TAX CHALLAN WHICH RELATE D TO 2015 . T HEREFORE, THE ASSESSING OFFICER STATED IN HIS REPORT THAT NO PROOF WHATSOEVER COULD BE FURNISHED BY THE ASSESSEE WITHIN THE STIPULATED PERIOD OF 03 YEARS AS REQUIRED U/SEC. 54F OF THE ACT AND ALSO OBSERVED THAT THE SAID PROPERTY WAS STATED TO BE CONSTRUCTE D IN THE LAND BELONGING TO THE HUSBAND OF THE ASSESSEE AND THE PROPERTY TAX 4 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) ASSESSMENT WAS MADE IN THE NAME OF THE HUSBAND OF THE ASSESSEE . T HEREFORE , THE ASSESSING OFFICER BY REL YING ON THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF GANTA V IJAYA LAKSHMI VS. ITO IN ITA NO. 253/VIZ/2012 , DATED 22/07/2013 DENIED THE DEDUCTION CLAIMED U/SEC. 54F OF THE ACT. 3 . ON APPEAL, B EFORE THE LD. CIT(A), THE ASSESSEES REPRESENTATIVE SUBMITTED THAT THE CONSTRUCTION WAS MADE IN THE PLOT OWNED BY THE ASSESSEES HUSBAND AT HIG - 43, SIMHAPURI LAYOUT, VISAKHAPATNAM . IT WAS SUBMITTED THAT THE CONSTRUCTION WAS COMPLETED AND OCCUPIED IN DECEMBER 2008 AND MINOR WORKS WERE COMPLETED BY MARCH, 2009 . IT WAS ALSO SUBMITTED THAT THE HOUSE PROPERTY WAS SUBJECT ED TO TAX ASSESSMENT OF GVMC AND THEREFORE, THE OBJECTION RAISED BY THE ASSESSING OFFICER WITH REGARD TO CONSTRUCTION IS NOT COMPLETED WITHIN THREE YEARS , IS IN CORRECT . 4 . THE LD. CIT(A) AFTER CONSIDERING THE GVMC TAX ASSESSMENT RECEIPT , IT WAS OBSERVED THAT DOOR NUMBER WAS GIVEN AS 24 - 266 , WHEREAS IN THE PLAN , THE REFERENCE WAS TO HIG - 43 AND THERE WAS REFERENCE TO D.NO. 26 - 100 . THE ASSESSEE WAS ASKED TO CLARIFY . THE AR CLARIFIED THAT THE HOUSE WAS CONSTRUCTED IN PLOT NO. HIG - 43 AND THAT THE D.NO. 24 - 266 WAS SUBSEQUENTLY ALLOTTED. IT WAS FURTHER SUBMITTED TH A T REFERENCE TO D.NO. 26 - 100 WAS TO ANOTHER 5 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) HOUSE NEAR THE PLOT, AND IN THE PLAN ALSO DOOR NUMBER MENTION ED AS NEAR D.NO.26 - 100. THE AR FURTHER SUBMITTED THAT THE TAX PAYMENT WAS MADE FOR THE PERIOD OF 2008 - 09 ONWARDS AND FILED THE DETAILS OF P AYMENT. THE LD. CIT(A) AFTER CONSIDERING THE GVMC TAX ASSESSMENT FOR THE A.Y. 2008 - 09 HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN SAYING THAT THE CONSTRUCTION IS NOT COMPLETED WITHIN THE STIPULATED PERIOD . HOWEVER, ANOTHER OBJECTION RAISED BY THE ASSESSING OFFICER IN RESPECT OF CONSTRUCTION OF THE HOUSE IS NOT IN THE NAME OF THE A SSESSEE , THE LD. CIT(A) HAS EXPRESSED A VIEW THAT THE ASSESSING OFFICER IS JUSTIFIED IN DENYING THE CLAIM U/SEC. 54F THAT THE ASSESSEE HAS NOT CONSTRUCTED THE HOUSE IN THE PLOT OWNED BY HER AND IT IS CONSTRUCTED IN THE PLOT OF THE ASSESSEES HUSBAND , THEREFORE SHE IS NOT ENTITLED. 5. ON APPEAL, BEFORE US, LD. AR SUBMITTED THAT SECTION 54F IS A BENEFICIAL PROVISION . THE WORD ASSESSEE MUST BE GIVEN A WIDE AND LIBERAL INTERPRETATION SO AS TO INCLUDE SPOUSE ALSO. FOR THE ABOVE PROPOSITION , THE ASSESSEES REPRESENTATIVE HAS RELIED ON THE JUDGMENT OF THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF LATE MIR GULAM ALI KHAN VS. CIT [(1987) 165 ITR 228] AND ALSO THE DECISION IN THE CASE OF PR.CIT VS. M/S. B. SURENDRA CHOWDARY IN ITTA NO. 519/2017 , DATED 21/08/2017 . HE ALSO RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMAL 6 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) WAHAL [(2013) 351 ITR 04] AND ALS O THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V. NATARAJAN [(2008) 287 ITR 271] . INSOFAR AS CASE - LAW RELIED ON BY THE LD. CIT(A) IN THE CASE OF GANTA VIJAYALAKSHMI (SUPRA) HAS NO APPLICATION TO THE FACTS OF THE CASE. 6 . ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED THE ORDERS PASSED BY THE AUTHORITIES BELOW. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ASSESSEE HAS SOLD CERTAIN PROPERTY AND SALE PROCEEDS RECEIVED , HAS INVESTED IN CONSTRUCTION OF THE PLOT BELONGING TO HER HUSBAND AND THE SAME IS CLAIMED EXEMPTION U/SEC. 54F OF THE ACT. THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT SHE HAS NOT CONSTRUCTED THE HOUSE WITHIN THE STIPULATED PERIOD OF 03 YEARS AND INVESTMENT MADE BY HER IS NOT IN HER NAME AND IS IN THE NAME OF HER HUSBAND . ACCORDINGLY, ASSESSMENT IS COMPLETED BY TAXING THE SALE PROCEEDS RECEIVED BY THE ASSESSEE UNDER THE HEAD CAPITAL G A I N S . ON APPEAL, LD.CIT(A) AFTER EXAMINING THE DETAILS , SUCH AS , GVMC TAX ASSESSMENT RECEIPT AND THE HOUSE DOOR NUMBER OF THE ASSESSEE, HE GAVE A CATEGORICAL FINDING THAT AS PER THE GVMC TAX ASSESSMENT FOR THE A.Y. 2008 - 09 CLEARLY SHOWS THAT ASSESSEE HAS COMPLETED THE CONSTRUCTION WITHIN 7 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) THE STIPULATED PERIOD. SO FAR AS THIS FINDING OF THE LD. CIT(A) , THE REVENUE HAS NOT CHALLENGED THE S A ME BY WAY OF APPEAL , HENCE, IT IS ATTAINED FINALITY . HOWEVER, T HE LD.CIT(A) DENIED THE CLAIM OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THE SALE PROCEE DS RECEIVED BY THE ASSESSEE ARE NOT INVESTED I N HER NAME , INVESTED IN THE NAME OF HER HUSBAND, THEREFORE, SHE IS NOT ENTITLED FOR EXEMPTION U/SEC. 54F. THE ONLY ISSUE BEFORE US IS WHETHER SALE PROCEEDS RECEIVED BY THE ASSESSEE INVESTED IN THE PLOT BELONGI NG TO HER HUSBAND IS ALLOWED DEDUCTION U/SEC. 54F OR NOT. IN THIS CASE , WE FIND THAT THE ASSESSEE HAS SOLD CERTAIN LAND AND RECEIVED SALE PROCEEDS AND INVESTED IN CONSTRUCTION OF A HOUSE IN PLOT BELONGING TO THE HUSBAND. IT IS A FACT THAT THE ASSESSEE AND HER HUSBAND ARE LIVING TOGETHER AND ALSO A FACT THAT SALE PROCEEDS RECEIVED BY THE ASSESSEE ARE USED FOR CONSTRUCTION OF THE HOUSE. THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSESSEE ONLY ON THE GROUND THAT SALE PROCEEDS OUGHT TO HAVE BEEN INVESTED IN HER NAME INSTEAD OF HER HUSBAND NAME. BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THE BENEFIT U/SEC. 54F CANNOT BE DENIED T O THE ASSESSEE SIMPLY BECAUSE SALE PROCEEDS INVESTED IN A PLOT BELONGING TO HER HUSBAND . SECTION 54F IS BEING A BENEFICIAL PROVISION . A S PER THE JUDGMENTS OF VARIOUS HIGH COURTS AND THE TRIBUNAL S WHERE INVESTMENT IS MADE BY THE 8 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) SPOUSE, BENEFIT HAS BEEN ALL OWED BY CONSTRUING THE DEFINITION OF ASSESSEE LIBERALLY. 9. IN THE CASE OF PR.CIT VS. M/S. B. SURENDRA CHOWDARY IN ITTA NO. 519/2017 DATED 21/08/2017 , THE HON'BLE HIGH COURT OF TELANGANA & ANDHRA PRADES H HAS FRAMED THE FOLLOWING QUESTION : - (II) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS CORRECT IN ALLOWING DEDUCTION U/SEC. 54F OF THE ACT FOR A PROPERTY ALLEGED TO H A VE BEEN PURCHASED IN THE NAME OF ASSESSEES WIFE INSTEAD OF PURCHASING THE SAME IN HER NAME AS PROVI DED UNDER THE PROVISIONS OF SEC. 54F OF THE ACT? 9.1 IN THIS CASE THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE U/SEC. 54F ON THE GROUND THAT INVESTMENT MADE BY THE ASSESSEE WAS IN THE NAME OF HIS WIFE AND NOT IN THE ASSESSEES NAME . HOWEVER, THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AND THE SAID ORDER WAS ALSO CONFIRMED BY THE T RIBUNAL . AGGRIEVED BY THE CONCURRENT ORDERS PASSED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL, THE REVENUE HAS FILED AN APPEAL BEFORE THE HON'BLE HIGH COURT . 9.2 THE HON'BLE HIGH COURT HAS OBSERVED FROM THE ORDERS OF THE COMMISSIONER (APPEALS) AND THE TRIBUNAL THAT BOTH OF THEM PROCEEDED ON THE BASIS OF THE INTERPRETATION GIVEN BY VARIOUS COURTS , INCLUDING THE MEMBERS OF THE FAMILY OF THE AS SESSEE, WITHIN THE DEFINITION OF THE EXPRESSION ASSESSEE . THE 9 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HELD THAT THE INVESTMENT MADE BY THE ASSESSEE WAS QUALIFIED FOR THE BENEFIT OF SECTION 54F AND THE APPEAL OF THE REVENUE IS DISMISSED. 10 . THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMAL WAHAL [(20 13 ) 351 ITR 004 ] HAS CONSIDERED SECTION 54F AND HELD AS UNDER: - 7. WE HAVE NO HESITATION IN AGREEING WITH THE VIEW TAKEN BY THE TRIBUNAL. APART FROM THE FACT THAT THE JUDGMENTS OF THE MADRAS AND KARNATAKA HIGH COURTS (SUPRA) ARE IN FAVOUR OF THE ASSESSEE, THE REVENUE FAIRLY BROUGHT TO OUR NOTICE A SIMILAR VIEW OF THIS COURT IN CIT VS. RAVINDER KUMAR ARORA : (2012) 342 ITR 38 (DEL.). THAT WAS ALSO A CASE WHICH AROSE UNDER SECTION 54F OF THE ACT. THE NEW RESIDENTIAL PROPERTY WAS ACQUIRED IN THE JOINT NAMES OF THE ASSESSEE AND HIS WIFE. THE INCOME TAX AUTHORITIES RESTRICTED THE DEDUCTION UNDER SECTION 54F TO 50 % ON THE FOOTING THAT THE DEDUCTION WAS NOT AVAILABLE ON THE PORTION OF THE INVESTMENT WHICH STANDS IN THE NAME OF THE ASSESSEE'S WIFE. THIS VIEW WAS DISAPPROVED BY THIS COURT. IT NOT ED THAT THE ENTIRE PURCHASE CONSIDERATION WAS PAID ONLY BY THE ASSESSEE AND NOT A SINGLE PENNY WAS CONTRIBUTED BY THE ASSESSEE'S WIFE. IT ALSO NOTED THAT A PURPOSIVE CONSTRUCTION IS TO BE PREFERRED AS AGAINST A LITERAL CONSTRUCTION, MORE SO WHEN EVEN APPLY ING THE LITERAL CONSTRUCTION, THERE IS NOTHING IN THE SECTION TO SHOW THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. AS A MATTER OF FACT, SECTION 54F IN TERMS DOES NOT REQUIRE THAT TH E NEW RESIDENTIAL PROPERTY SHALL BE PURCHASED IN THE NAME OF THE ASSESSEE; IT MERELY SAYS THAT THE ASSESSEE SHOULD HAVE PURCHASED/CONSTRUCTED 'A RESIDENTIAL HOUSE'. 8. THIS COURT IN THE DECISION CITED ALONE ALSO NOTICED THE JUDGMENT OF THE MADRAS HIGH COUR T (SUPRA) AND AGREED WITH THE SAME, OBSERVING THAT THOUGH THE MADRAS CASE WAS DECIDED IN RELATION TO SECTION 54 OF THE ACT, THAT SECTION WAS IN PARI MATERIA WITH SECTION 54F . THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. GURNAM SINGH : (2014) 327 ITR 278 IN WHICH THE SAME VIEW WAS TAKEN WITH REFERENCE TO SECTION 54F WAS ALSO NOTIC ED BY THIS COURT. 9. IT THUS APPEARS TO US THAT THE PREDOMINANT JUDICIAL VIEW, INCLUDING THAT OF THIS COURT, IS THAT FOR THE PURPOSES OF SECTION 54F , THE NEW RESIDENTIAL HOUSE NEED NOT BE PURCHASED BY THE 10 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) ASSESSEE IN HIS OWN NAME NOR IS IT NECESSARY THAT IT SHOULD BE PURCHASED EXCLUSIVELY IN HIS NAME. IT IS MOREOVER TO BE NOTED THAT THE ASSESSEE IN THE PRESENT CASE HAS NOT PURCHASED THE NEW HOUSE IN THE NAME OF A STRANGER OR SOMEBODY WHO IS UNCONNECTED WITH HIM. HE HAS PURCHASED IT ONLY IN THE NAME OF HIS WIFE. THERE IS ALSO NO DISPUTE THAT THE ENTIRE INVESTMENT HAS COME OUT OF THE SALE PROCEEDS AND THAT THERE WAS NO CONTRIBUTION FROM THE ASSESSEE'S WIFE. 10. HAVING REGARD TO THE RULE OF PURPOSIVE CONSTRUCTI ON AND THE OBJECT WHICH SECTION 54F SEEKS TO ACHIEVE AND RESPECTFULLY AGREEING WITH THE JUDGMENT OF THIS COURT, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN THE AFFIRMATIVE, IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE. 11 . I N THE CASE OF CIT VS. V.NATARAJAN [(2007) 287 ITR 271] THE HON'BLE MADRAS HIGH COURT HAS OBSERVED THAT ASSESSEE HAS SOLD THE PROPERTY AND PURCHASED ANOTHER PROPERTY IN THE NAME OF HI S WIFE AND HELD THAT ASSESSEE WAS ENTITLED FOR EXEMPTION U/SEC. 54 OF THE ACT. 12 . THE ITAT , HYDERABAD BENCH IN THE CASE OF N. RAM KUMAR VS. ACIT IN ITA NO. 1901/HYD/2011 , DATED 10/08/2012 HAS CONSIDERED THE DEDUCTION U/SEC. 54 F AND ALSO CONSIDERED THE DECISIONS OF VARIOUS HIGH COURTS AND THE TRIBUNALS AND ALLOWED THE CLAIM OF THE ASSESSEE U/SEC. 54F(1) OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD AND ALSO GONE THROUG H THE DECISIONS RELIED UPON BY BOTH THE PARTIES. UNDISPUTEDLY, THE ASSESSEE HAS MADE INVESTMENTS IN PURCHASING THE FLAT OUT OF THE CONSIDERATION RECEIVE D FROM SALE OF SHARES. THE AO HAS DISALLOWED EXEMPTION CLAIMED U/S 54F SOLELY ON THE GROUND THAT THE FL AT HAS BEEN REGISTERED IN THE NAME OF HIS MINOR DAUGHTER. THE AO ON INTERPRETING SECTION 54F CAME TO HOLD 11 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) THAT FOR CLAIMING EXEMPTION U/S 54F, THE HOUSE HAS TO BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. AT THIS STAGE, IT IS NECESSARY TO LOOK INTO THE P ROVISIONS OF SECTION 54F(1) OF THE ACT WHICH ARE QUOTED HEREUNDER. .......THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED A RESIDENTIAL HOUSE....... A BARE READING OF SECTION 54F (1) MAKES IT CLEAR THAT THERE IS NO REQUIREMENT THAT THE HOUSE HAS TO BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. THE ONLY REQUIREMENT OF THE PROVISION IS THE ASSESSEE MUST HAVE PURCHASED THE HOUSE. IN THE PRESENT APPEAL, THE FACT REMAINS THAT THE MINOR DAUGHTER HAS NO OSTENSIBLE SOURCE TO MAKE SUCH INVESTMENT IN PURCHASE OF FLAT. IT IS THE ASSESSEE WHO HAD ACTUALLY MADE THE INVESTMENT OUT OF THE CONSIDERATION RECEIVED TOWARDS SALE OF SHARES. T HE ASSESSEE HAS ALSO EXPLAINED THE REASON BEHIND REGISTRATION OF THE HOUSE IN THE NAME OF HIS MINOR DAUGHTER. IN THE AFORESAID FACTUAL BACKDROP, THE DECISIONS CITED AT THE BAR ARE FOUND TO BE EXPRESSING DIVERGENT VIEW. THE A P HIGH COURT IN THE CASE OF LAT E MIR GULAM ALI KHAN VS. CIT (165 ITR 228) WHILE EXAMINING HE ALLOW ABILITY OF EXEMPTION U/S 54 OF THE ACT HELD THAT THE WORD ASSESSEE MUST BE GIVEN A WIDE AND LIBERAL INTERPRETATION SO AS TO INCLUDE HIS LEGAL HEIRS ALSO. THE HONOURABLE AP HIGH COURT FUR THER HELD THE PROVISION CONTAINED U/S 54 OF THE ACT ALSO MUST BE GIVEN A LIBERAL INTERPRETATION. FOR THE SAKE OF CONVENIENCE, THE OBSERVATION MAD BY THE HONOURABLE HIGH COURT IS EXTRACTED HEREUNDER: - RELYING UPON THE EXPRESSION ASSESSEE OCCURRING IN SE CTION 54 OF THE ACT, IT IS CONTENDED FOR THE DEPARTMENT THAT IN ORDER TO CLAIM THE EXEMPTION, THE PERSON WHO SOLD THE HOUSE MUST BE THE SAME AS THE PERSON WHO PURCHASED THE HOUSE, THAT IS, THE ASSESSEE MUST BE ONE AND THE SAME PERSON. THE IDENTITY MUST BE THE SAME. WE ARE UNABLE TO ACCEPT THIS CONTENTION. THE OBJECT OF GRATING EXEMPTION U/S 54 OF THE ACT IS THAT A PERSON WHO SELLS A RESIDENTIAL HOUSE FOR THE PURPOSE OF PURCHASING ANOTHER CONVENIENT HOUSE MUST BE GIVEN EXEMPTION SO FAR AS CAPITAL GAINS ARE C ONCERNED. AS LONG AS THE SALE OF THE HOUSE AND PURCHASEOF ANOTHER HOUSE ARE PART OF THE SAME SCHEME, THE LAPSE OF SOMETIME BETWEEN THE SALE AND PURCHASE MAKES NO DIFFERENCE. THE WORD ASSESSEE MUST BE GIVEN A WISE AND LIBERAL INTERPRETATION SO AS TO INCLU DE HIS LEGAL HEIRS ALSO. THERE IS NO WARRANT FOR GIVING TOO STRICT AN INTERPRETATION THE WORD ASSESSEE AS THAT WOULD FRUSTRATE THE OBJECT OF GRANTING THE EXEMPTION AND WHAT IS MORE, IN THE INSTANT 12 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) CASE, THE VERY SAME ASSESSEE IMMEDIATELY AFTER THE SALE O F THE HOUSE ENTERED INTO AN AGREEMENT FOR PURCHASING ANOTHER HOUSE AND PAID A SUM OF RS.1,000 AS EARNEST MONEY AND SUBSEQUENTLY THE LEGAL REPRESENTATIVE COMPLETED THE TRANSACTION WITHIN A PERIOD OF ONE YEAR FROM THE DATE OF THE DEATH OF THE DECEASED. THE S ALE AND PURCHASE ARE TWO LINKS IN THE SAME CHAIN. WE ARE FORTIFIED IN THIS VIEW BY A DECISION OF THE MADRAS HIGH COURT IN C.V. RAMANATHAN V. CIT (198)) 125 ITR 191. 7. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVINDER KUMAR ARORA (2011) 42(1) ITCL 0498 FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF LATE MIR GULAM ALI KHAN VS. CIT(SUPRA) HELD THAT THE LANGUAGE OF SECTION 54F DOES NOT MANDATE THAT THE HOUSE PROPERTY SHOULD BE PURCHASED IN THE NAME OF TH E ASSESSEE ALONE. THE HONOURABLE DELHI HIGH COURT HELD THAT THE WORD ASSESSEE MUST BE GIVEN WIDE AND LIBERAL INTERPRETATION AS HELD BY THE HONBLE AP HIGH COURT IN THE CASE OF LATE MIR GULAM ALI KHAN (SUPRA). THE HONBLE DELHI HIGH COURT FURTHER HELD THA T LANGUAGE CONTAINED U/S 54F(1) IS PARI MATERIA WITH SECTION 54 OF THE ACT. SIMILAR IS ALSO THE VIEW IN THE CASE OF CIT VS. GURNAM SINGH (2010) 327 ITR 278 AND HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V. NATARAJAN (2006) 287 ITR 271. THE ITAT, MADR AS BENCH IN THE CASE REPORTED IN 33 TTJ 466 WHILE CONSIDERING A CASE OF IDENTICAL NATURE WHERE THE ASSESSEE PURCHASED THE PROPERTY IN THE NAME OF HIS WIFE AND CLAIMED EXEMPTION U/S 54 HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 54 OF THE ACT. HOWEV ER, IT IS SEEN THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JAI NARAYAN VS. ITO 306 ITR 335 (P & H) AND IN THE CASE OF PRAKASH VS. ITO 220 CTR 249 (MUMBAI) AND ITAT IN THE CASE OF ITO VS. PRAKASH TIMAJI DHANJODE ITAT NAGPUR 81 TTJ 694 HAVE H ELD A DIFFERENT VIEW TO THE EFFECT THAT FOR GETTING EXEMPTION U/S 54F, THE PROPERTY HAS TO BE PURCHASED IN ASSESSEES NAME. THE INTENTION OF THE LEGISLATURE IN INTRODUCING SEC. 54F AS EXPLAINED IN BOARDS CIRCULAR NO.346 DATED 30TH JUNE, 1982 IS FOR ENCOUR AGING HOUSE CONSTRUCTION. IT IS AN ENCOURAGEMENT GIVEN TO THE ASSESSEE TO EXCHANGE ONE OF THE RESIDENTIAL HOUSES FOR ANOTHER OR WHERE HE HAS NONE TO CONVERT ANY OF HIS LONG TERM ASSETS INTO A RESIDENTIAL HOUSE. THE OBJECT BEHIND SUCH A PROVISION IS TO ENCO URAGE LARGE SCALE HOUSE BUILDING ACTIVITY OR INVESTMENT IN HOUSE PROPERTY TO MEET ACUTE HOUSING SHORTAGE IN THE COUNTRY. THEREFORE, LOOKING AT THE LEGISLATIVE INTENT, A LIBERAL INTERPRETATION HAS TO BE GIVEN TO SECTION 54F WHICH IS A BENEFICIAL PROVISION. THE HONBLE SUPREME COURT IN CASE OF K.P. VERGHESE VS. ITO REPORTED IN 131 ITR 597 HAS OBSERVED IN THE FOLLOWING MANNER: - 13 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) A STATUTORY PROVISION MUST BE SO CONSTRUED, IF POSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED. WHERE THE PLAIN LITERAL INTERPRETATION OF A STATUTORY PROVISION PRODUCES A MANIFESTLY ABSURD AND UNJUST RESULT WHICH COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE, THE COURT MAY MODIFY THE LANGUAGE USED BY THE LEGISLATURE OR EVEN DO SOME VIOLENCE TO IT, SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AND PRODUCE A RATIONAL CONSTRUCTION. IT IS ALSO WELL SETTLED PRINCIPLE OF LAW THAT WHEN THER E ARE DIVERGENT VIEWS, TO GIVE EFFECT TO A BENEFICIAL PROVISION THE VIEW FAVOURABLE TO THE ASSESSEE HAS TO BE ADOPTED. IN THE AFORESAID VIEW OF THE MATTER, FOLLOWING THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN CASE OF LATE MIR GULAM ALI KHAN(SU PRA), BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. RAVINDER KUMAR ARORA (SUPRA) AND ALSO BY THE ITAT, MADRAS BENCH IN 33 TTJ 466 (SUPRA), WE HOLD THAT THE ASSESSEE WILL BE ENTITLED FOR DEDUCTION U/S 54F FOR THE FLAT PURCHASED IN THE NAME OF HIS DAUGH TER SUBJECT TO THE RESTRICTIONS UNDER THE PROVISO TO SECTION 54F(1) OF THE ACT. HENCE THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 13 . SO FAR AS CASE - LAW RELIED ON BY THE LD. CIT(A) IN THE CASE OF GANTA VIJAYALAKSHMI (SUPRA) FACTS ARE ENTIRELY DIFFEREN T TO THE PRESENT CASE. IN THAT CASE, THE TERM ASSESSEE USED IN SECTION 54B/54F COULD NOT BE EXTENDED TO MEAN MAJOR MARRIED DAUGHTERS. IN THE PRESENT CASE, THE SALE PROCEEDS HAS BEEN INVESTED IN THE PLOT BELONGING TO THE ASSESSEES HUSBAND, THEREFORE, TH E CASE LAW RELIED ON BY THE LD. CIT(A) HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 14 . KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BY FOLLOWING THE JUDGMENTS OF HON'BLE TELANGANA & ANDHRA PRADESH , HON'BLE DELHI HIGH COURT AND HON'BLE MADRAS HIGH COURT AND ALSO THE DECISION OF ITAT, HYDERABAD BENCH , WE 14 ITA NO. 294 & 295/VIZ/2016 ( SMT. SIRIKI APPALA KONDAMMA ) ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/SEC. 54F OF THE ACT. THUS, TH E S E APPEAL S FILED BY THE ASSESSEE ARE ALLOWED. 1 5 . IN THE RESULT, APPEAL S FILED BY THE ASSESSEE ARE P A R T L Y ALLOWED ORDER PRONOUNCED IN OPEN COURT ON TH IS 3 1 S T DAY OF JU LY , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 3 1 S T JU LY , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE SMT. SIRIKI APPALA KONDAMMA, W/O S. NARAYANA, D.NO.HIG - 58, SIMHAPURI COLONY, VEPAGUNTA, VISAKHAPATNAM. 2. THE REVENUE ITO, WARD - 4(2), VISAKHAPATNAM. 3. THE CIT - 2, VISAKHAPATNAM. 4. THE CIT(A) - 2, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.