Chetan Vithal Thube, Pune V. ACIT, Cir.1(2), Pune, Pune

ITA 416/PUN/2009

• Counselvise Citation: 41624514 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L SUNITA RAO
• Assessee Lawyers: S U PATHAK
• Keywords: Capital asset; Cost of acquisition
• Section: 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI G.S. PANNU, AM. I.T.A. NO. 416/PN/2009 : A.Y. 2005-06 CHETAN VITHAL TUPE S.NO. 147 MAGARPATTA, HADAPSAR PUNE 411 028 PAN ABEPT 3130 F .. APPELLANT VS. ASSTT. CIT CIR. 1(2) PUNE .. RESP ONDENT APPELLANT BY: SHRI S.U. PATHAK RESPONDENT BY: SMT. L. SUNITA RAO ORDER PER SHAILNDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DENYING THE DEDUCTION OF RS. 63,00,552.00 U/S 54 F OF THE ACT TO THE APPELLANT FROM LONG TERM CAPITAL GAINS ON TRANSFER OF LAND BY THE APPELLANT TO M/S. MAGARPATTA TOWNSHIP DEVELOPMENT AND CONSTRUCTION LTD. THE AFORESAID DEDUCTION MAY PLEASE BE GRANTED TO THE APPELLANT. 2. THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT THE LEARNED ASSESSING OFFICE R HAS CORRECTLY AND RIGHTLY WORKED OUT THE LONG TERM CAPITAL GAINS ON SALE OF LAND BY THE APPELLANT TO M/S. MAGARPATTA TOWNSHIP DEVELOPMENT AND CONSTRUCTION LTD., AT RS. 77,24,527/-. THE AFORESAID DECISION OF THE LEARNED CIT(A) BEING PATENTLY ILLEGAL, BAD IN LAW, ARBITRARY AND DEVOID OF MERITS THE SAME MAY PLEASE BE VACATED AND IT MAY PLEASE BE HELD THAT THE LONG TERM CAPITAL GAINS ON ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 2 SALE OF LAND BY THE APPELLANT TO M/S. MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION LTD., WORK OUT TO RS. 1`4,23,976/- AFTER ALLOWING THE DEDUCTIO N OF RS. 63,00,552/- U/S 54F OF THE ACT AS CLAIMED BY THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR THE YEA R UNDER CONSIDERATION, THE ASSESSEE DERIVED INCOME FR OM CAPITAL GAIN ON TRANSFER OF ANCESTRAL AGRICULTURAL LAND ON 31-3-2005 TO MAGARPATTA TOWNSHIP CONSTRUCTION AND DEVELOPMENT CO. (HEREINAFTER REFERRED TO AS MTCDC ). THE ASSESSEE CLAIMED DEDUCTION U/S 54F OF THE ACT AMOUNTING TO RS. 63,00,552/- FROM THE CAPITAL GAIN S ON THE GROUND THAT THE ASSESSEE HAS INVESTED THE SALE PROCEEDS IN A RESIDENTIAL HOUSE. THE COMPUTATION O F NET CAPITAL GAINS OF RS. 14,23,975/- OFFERED TO TAX AFT ER CONSIDERING THE DEDUCTION U/S 54F OF THE ACT IS GIV EN ON PAGE 2 OF THE CIT(A)S ORDER WHICH IS REPRODUCED AS UNDER: THE INCOME FROM CAPITAL GAIN WAS OUT OF SALE OF ANCESTRAL PROPERTY SITUATED AT HADAPSAR PUNE WHICH WAS SOLD TO BUILDER I.E. MAGARPATTA TOWNSHIP CONSTRUCTION & DEVELOPMENT CO. LTD. AS ON 31 ST MARCH 2005. THE TAXABLE LONG TERM CAPITAL GAIN OF RS. 14,23,975/- ARE WORKED OUT AS UNDER: INCOME FROM CAPITAL GAIN SALE PRICE OF LAND AS PER LAND COST CERTIFICATE 94,21,505/- LESS: INDEX COST OF ACQUISITION 16,96,978/- --------------- LONG TERM CAPITAL GAIN 77,24,527/- LESS: EXEMPTION U/S 54F I.E. 63,00,552/- ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 3 REINVESTMENT OF CAPITAL GAIN IN PURCHASE OF PLOT AND CONSTRUCTION OF BUNGALOW AT MAGARPATTA CITY -------------- TAXABLE LONG TERM CAPITAL GAIN AS PER STATEMENT OF TOTAL INCOME 14,23,975/- ========== 3. IN FACT, THE ASSESSEE TRANSFERRED HIS ANCESTRAL AGRICULTURAL LAND TO MTCDC ON 31-3-2005 AND CONSIDERATION WAS ADJUSTED BY THE COMPANY AGAINST T HE BUNGALOW AND PLOTS WHICH WERE BOOKED BY THE ASSESSE E AS PER THE RECEIPTS ANNEXED AT PAGE 23 AND 24 OF TH E PAPER BOOK CERTIFIED TO HAVE BEEN FILED BEFORE THE AUTHORITIES BELOW. OUT OF THE ABOVE PURCHASE CONSIDERATION, A SUM OF RS. 7,50,000/- WAS TOWARDS COST OF BUNGALOW AND RS. 69,34,700/- WAS TOWARDS COST OF PLOTS NO. 37 TO 43 TOTALING TO RS. 76,84,700/-. T HUS, CONSIDERATION RECEIVABLE BY THE ASSESSEE ON TRANSFE R OF LAND WAS CLAIMED TO BE ADJUSTED AGAINST THE ABOVE RESIDENTIAL BUNGALOW WHICH WAS BOOKED ON THE SAME DATE AND IN FACT THE ASSESSEE DID NOT RECEIVE CONSIDERATION AT THE RELEVANT POINT OF TIME. THE ASSESSEE RECEIVED POSSESSION OF THE NEWLY CONSTRUCT ED BUNGALOW ON 31-3-2008 AS PER POSSESSION LETTER DATE D 31-3-2008 ANNEXED AT PAGE 28 OF THE PAPER BOOK. ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 4 4. THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE DEN IED THE DEDUCTION U/S 54F OF THE ACT IN RESPECT OF THE ABOVE INVESTMENT IN THE CONSTRUCTION OF NEW BUNGALOW ON T HE GROUND THAT THE BUNGALOW PLAN WAS SANCTIONED ON 6-1 - 2007. THE ASSESSEE PURCHASED PLOTS NO. 37 TO 43 TOTALING THE AREA OF 17,336 SQ.FT. WHILE THE BUNGAL OW IS ON PLOT NO. 37 ONLY AND THE AREA OF THE BUNGALOW IS ABOUT 4000 SQ.FT. THIRDLY, WHEN THE CONSTRUCTION W AS NOT STARTED PRIOR TO THE DUE DATE OF FILING OF THE RETURN U/S 1391) OF THE ACT FOR A.Y. 2005-06 (I.E. 31-7-20 05), THE ASSESSEE SHOULD HAVE DEPOSITED THE CONSIDERATIO N RECEIVED ON TRANSFER OF THE LAND IN THE CAPITAL GAI NS ACCOUNT WITH THE BANK WHICH HAS NOT BEEN DONE. 5. THE STAND OF THE ASSESSEE IS THAT THE CONSIDERAT ION RECEIVABLE FOR THE SALE OF THE LAND TO THE MTCDC W AS APPROPRIATED AGAINST THE COST OF NEW HOUSE ON THE D ATE ITSELF AS PER RECEIPTS ANNEXED ON PAGES 23 AND 24 A S DISCUSSED IN PRECEDING PARAGRAPH. SECONDLY, SECTIO N 54F OF THE ACT ONLY SPECIFIES THAT THE ASSESSEE SHO ULD CONSTRUCT A RESIDENTIAL HOUSE WITHIN A PERIOD OF 3 YEARS AND THAT CONDITION IS ALSO FULFILLED AS THE ASSESSE E RECEIVED THE POSSESSION OF THE NEW HOUSE ON 31-3-20 08 I.E. WITHIN THREE YEARS FROM THE DATE OF TRANSFER I .E. ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 5 31-3-2005. THIRDLY, SECTION 54F OF THE ACT ONLY ST ATES THAT THE CAPITAL GAINS SHOULD BE INVESTED IN A NEW HOUSE. THE ASSESSEE WANTED TO CONSTRUCT A SPACIOUS HOUSE WITH A GARDEN AND THEREFORE, HE HAS PURCHASED THE TOTAL PLOT OF 17,336 SQ.FT. AND THE BUNGALOW AR EA IS ABOUT 4000 SQ.FT. IT WAS UNJUSTIFIED TO HOLD THAT THE OTHER PLOTS DO NOT QUALIFY FOR THE DEDUCTION U/S 54 F OF THE ACT. THE CIT(A) FAILED TO APPRECIATE THAT ALL THESE PLOTS NO. 37 TO 43 ARE ADJACENT TO EACH OTHER AND COMBINED TOGETHER AND PRACTICALLY ONE RESIDENTIAL U NIT FOR THE ASSESSEE IRRESPECTIVE OF DIFFERENT NUMBERS. THUS, THE NEW RESIDENTIAL UNIT CONSISTED OF ALL THESE PLO TS AND THE BUNGALOW. THERE IS NO RESTRICTION PROVIDED IN SECTION 54F OF THE ACT ABOUT THE SIZE OF THE NEW RESIDENTIAL UNIT OR THE AREA OF THE NEW RESIDENTIAL UNIT. HENCE, THE ASSESSING OFFICER AND THE CIT(A) WERE NO T JUSTIFIED IN DENYING THE RELIEF U/S 54F OF THE ACT. IT IS ALSO NOTED THAT THE ASSESSING OFFICER AND THE CIT(A ) HELD THAT THE COMMENCEMENT OF THE CONSTRUCTION STARTED MUCH AFTER THE END OF THE YEAR. IN THIS REGARD THE STAND OF THE ASSESSEE THAT THE PROVISIONS ONLY STATES THA T THE ASSESSEE SHOULD UTILIZE THE CONSIDERATION ON SALE O F ASSETS IN BUYING NEW RESIDENTIAL HOUSE AND IF THE AMOUNT OF SUCH CONSTRUCTION IS NOT APPROPRIATED FOR ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 6 ACQUISITION OF A NEW HOUSE PRIOR TO THE DUE DATE OF FILING OF THE RETURN U/S 139(1) OF THE ACT, THE SAME SHOUL D BE DEPOSITED IN CAPITAL GAIN SCHEME IN BANK ACCOUNT. IN THE PRESENT CASE, AS CLARIFIED EARLIER THE ENTIRE P URCHASE PRICE WAS ADJUSTED AGAINST CONSIDERATION BY MTCDC O N 31-3-2005 ITSELF AND THE SAME WAS UTILIZED BY THE ASSESSEE AND THE QUESTION OF INVESTING IN THE CAPIT AL GAIN SCHEME IN THE BANK DID NOT ARISE. IN THIS REG ARD, RELIANCE HAS BEEN PLACED ON THE DECISION OF I.T.A.T . MADRAS BENCH IN THE CASE OF M.A. KHALEEL VS. DCIT ( 47 TTJ 639), WHEREIN THE ASSESSEE HIMSELF WAS A BUILDE R. HE RECEIVED A CONSIDERATION ON SALE OF AN ASSET AND TRANSFERRED IT TO HIS DIVISION OF CONSTRUCTION ACTI VITY FOR BUYING A NEW HOUSE. THE TRIBUNAL IN SUCH A SITUATI ON HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/ S 54F OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN IN THE CAS E OF P.K. DATTA (100 TTJ 133) (PUNE) WHEREIN SUBSTANTIAL PAYMENT WAS MADE TO THE BUILDER FOR PURCHASE OF A N EW HOUSE BY THE ASSESSEE AND THEREFORE, THE TRIBUNAL H ELD THAT THE ASSESSEE HAS PAID SUBSTANTIAL PAYMENT TO T HE BUILDER, THE DEDUCTION U/S 54F WAS ALLOWABLE ALTHOU GH THE PROPERTY WAS NOT YET READY. THUS, THE SUBSTANT IAL INVESTMENT IRRESPECTIVE OF CONSTRUCTION OF PROPERT Y WAS HELD THE BASIS FOR ALLOWING DEDUCTION U/S 54F OF TH E ACT. ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 7 IN THE PRESENT CASE, THE ENTIRE PURCHASE PRICE OF A NEW HOUSE WAS ADJUSTED BY THE MTCDC AGAINST THE SALE CONSIDERATION AND THE ASSESSEE NEVER RECEIVED THE A BOVE SAID CONSIDERATION IN ANY MANNER. IN VIEW OF THIS, DEDUCTION IS ALLOWABLE TO THE ASSESSEE. SIMILAR VI EW HAS BEEN CLAIMED TO HAVE BEEN TAKEN IN THE CASE OF CIT VS. MRS. HILLA J.B. WADIA (216 ITR 376 (BOM) AND ALSO I N THE CASE OF CIT VS. SMT. BRINDA KUMARI (253 ITR 343 (DEL) WHEREIN IT WAS HELD THAT IF A SUBSTANTIAL PAY MENT IS MADE TO THE BUILDER WITHIN THE STIPULATED PERIOD AS ENVISAGED IN THE PROVISIONS OF SECTION 54F OF THE A CT, DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE EVEN THOUGH THE CONSTRUCTION HAS NOT COMPLETED AND POSSESSION IS NOT GIVEN TO THE ASSESSEE. IN THE PR ESENT CASE, THE POSSESSION OF THE NEWLY CONSTRUCTED BUNGA LOW BY THE MTCDC WAS GIVEN ON 31-3-2008 ITSELF AS PER T HE POSSESSION LETTER DISCUSSED ABOVE AND PLACED ON PAG E 28 OF THE PAPER BOOK AND EVEN OTHERWISE THE ENTIRE PURCHASE PRICE OF THE NEWLY CONSTRUCTED PROPERTY WA S PAID BY THE ASSESSEE TO MTCDC ON 31-3-2005 ITSELF O N THE DATE OF TRANSFER OF AGRICULTURAL LAND THE ASSES SEE HAS SUBSTANTIAL DOMAIN OVER THE NEW RESIDENTIAL HOUSE A ND THUS THE DEDUCTION U/S 54F OF THE ACT IS ALLOWABLE. ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 8 6. ON THE OTHER HAND, THE LEARNED DR HEAVILY RELIED ON THE DECISION OF THE CIT(A). HE DREW OUR ATTENTION T O VARIOUS RELEVANT PORTION OF THE CIT(A)S ORDER. AC CORDING TO THE LEARNED DR, THE ASSESSEE TRANSFERRED CAPITAL ASSET IN QUESTION ON 31-3-2005 AND THE CAPITAL GAIN ARISI NG THEREON HAS TO BE UTILIZED IN THE CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN THE STIPULATED PERIOD UNDE R THE PROVISIONS OF SECTION 54F OF THE ACT. THE SALE PRO CEEDS ON TRANSFER OF CAPITAL ASSET WAS RETAINED BY THE PURCHASER TOWARDS THE COST OF PLOT AND CONSTRUCTION OF RESIDENTIAL HOUSE IN RESPECT OF WHICH DEDUCTION U/S 54F OF THE ACT IS CLAIMED. THE DATE OF COMMENCEMENT FO R THE CONSTRUCTION OF RESIDENTIAL PROPERTY ON THE PLOT IN RESPECT OF WHICH DEDUCTION U/S 54F WAS CLAIMED, WAS OBTAINED ON 6-1-2007 AS PER COMMENCEMENT CERTIFICAT E ISSUED BY THE LOCAL AUTHORITY. FURTHER, THE SANCTI ONED PLAN FOR RESIDENTIAL BUNGALOW PREPARED BY ARCHITECT S NAMELY, SPACE DESIGNERS BEARS THE DATE 4-12-2007. ACCORDING TO THE LEARNED DR THE PROVISIONS OF SUB- SECTION (4) OF SECTION 54F SPECIFICALLY REQUIRES TH AT THE AMOUNT OF NET CONSIDERATION NOT APPROPRIATED TOWARD S PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE BE DEPOS ITED IN THE SPECIFIED ACCOUNT BEFORE THE DUE DATE FOR FI LING OF RETURN U/S 139(1) OF THE ACT. IN CASE OF THE ASSES SEE, ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 9 THE DATE OF COMMENCEMENT OF CONSTRUCTION OF RESIDEN TIAL HOUSE IS 6-1-2007 AND THE SANCTIONED PLAN BEARS THE DATE AFTER THAT AND UNTIL THEN THE AMOUNT OF NET CONSIDERATION REMAINED WITH THE BUILDER ONLY. SINCE THE ASSESSEE HAS NOT STARTED CONSTRUCTION BEFORE THE DU E DATE FOR FILING OF RETURN U/S 139(1) OF THE ACT OR NOT EVEN OBTAINED THE SANCTIONED PLAN BEFORE THAT DATE, IT C ANNOT BE SAID THAT THE AMOUNT DEPOSITED WITH THE BUILDER WAS UTILIZED FOR THE PURPOSE OF CONSTRUCTION OF RESIDEN TIAL PROPERTY. ACCORDINGLY, THE ASSESSEE HAS RIGHTLY BE EN DENIED THE DEDUCTION. 7. AFTER GOING THROUGH THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIN D THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS TRANSFERRE D HIS ANCESTRAL AGRICULTURAL LAND ON 31-3-2005 TO MTCDC A ND SIMULTANEOUSLY THE RECEIVABLE AMOUNT WAS ADJUSTED TOWARDS BUNGALOW WHICH INCLUDED PLOTS NO. 37 TO 43 TOTALING TO 17,336 SQ.FT. INCLUDING BUNGALOW ON PLO T NO. 37. THE RECEIPTS PLACED AT PAGES 23 AND 24 OF THE PAPER BOOK CLEARLY INDICATE THAT THE ASSESSEE ENTERED INT O SUCH AN UNDERSTANDING WITH THE COMPANY ON 31-3-2005 ITSE LF. ACCORDING TO THE REVENUE IN CASE THE CONSTRUCTION I S NOT STARTED PRIOR TO DUE DATE FOR FILING OF THE RETURN I.E. ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 10 31-7-2005, THE ASSESSEE SHOULD HAVE DEPOSITED THE CONSIDERATION RECEIVED ON TRANSFER OF THE LAND IN T HE CAPITAL GAINS ACCOUNT WITH THE BANK WHICH HAS NOT B EEN DONE IN THIS CASE. THERE IS NO OCCASION FOR DEPOSI TING THE AMOUNT IN QUESTION AS IT WAS NOT RECEIVED BY TH E ASSESSEE AT ANY POINT OF TIME. HAD THE ASSESSEE RE CEIVED THE AMOUNT, THE PROVISION OF DEPOSITING IN THE ABOV E SAID MANNER WOULD HAVE ARISEN BUT IN THIS CASE THE AMOUNT RECEIVABLE FROM THE ANCESTRAL AGRICULTURAL L AND TRANSFERRED IN QUESTION HAS NEVER BEEN RECEIVED BY THE ASSESSEE AT ANY POINT OF TIME AND ON THE DATE OF TR ANSFER IT HAS BEEN APPROPRIATED TOWARDS PURCHASE OF A BUNGALOW ON PLOT NO. 37 AND ADJACENT VACANT PLOT NO S. 38 TO 43. THE PROVISIONS OF SECTION 54F READ AS UN DER: THE AMOUNT OF NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TO OK PLACE, OR WHICH IS NOT UTILIZED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME U/S 139 SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURNS (SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF T HE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139) IN AN ACCOUNT IN AN Y SUCH BANK OF INSTITUTION AS MAY BE SPECIFIED IN, AN D UTILIZED IN ACCORDANCE WITH, ANY SCHEME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT AND, FOR THE PURPOSE OF SUB- SECTION (1) THE AMOUNT, IF ANY, ALREADY UTILIZED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF TH E NEW ASSET TOGETHER WHICH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET. ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 11 8. THUS, THE PROVISIONS OF SUB-SECTION (4) OF SECTI ON 54F OF THE ACT SPECIFICALLY REQUIRES THAT THE AMOUN T OF NET CONSIDERATION NOT APPROPRIATED TOWARDS PURCHASE / CONSTRUCTION OF RESIDENTIAL HOUSE BE DEPOSITED IN T HE SPECIFIED ACCOUNT BEFORE THE DUE DATE FOR FILING OF RETURN U/S 139(1) OF THE ACT. THOUGH THE DATE OF COMMENCEMENT OF CONSTRUCTION OF RESIDENTIAL HOUSE I S 6-1-2007 AND THE SANCTION PLAN ALSO BEARS THE DATE AFTER THAT, THE STAND OF THE REVENUE IS THAT COMMENCEMENT OF CONSTRUCTION WAS STARTED MUCH AFTER THE END OF THE YEAR. THE PROVISION STATES THAT ASSESSEE SHOULD UTILIZE T HE CONSIDERATION ON SALE OF ASSET IN BUYING A NEW RESIDENTIAL HOUSE AND IF PART OF SUCH CONSIDERATION IS NOT APPROPRIATED FOR THE ACQUISITION OF THE NEW HOU SE PRIOR TO THE DUE DATE OF FILING OF THE RETURN, THE SAME SHOULD BE DEPOSITED IN THE CAPITAL GAIN SCHEME IN T HE BANK ACCOUNT. IN THIS CASE, AS DISCUSSED ABOVE, T HE ENTIRE PURCHASE PRICE WAS ADJUSTED AGAINST THE CONSIDERATION BY MTCDC ON 31-3-2005 ITSELF, THE SA ME WAS UTILIZED BY THE ASSESSEE AND THE QUESTION OF INVESTING IN THE CAPITAL GAIN SCHEME IN THE BANK DI D NOT ARISE. THIS VIEW IS FORTIFIED BY THE DECISION OF I TAT MADRAS BENCH IN THE CASE OF M.A. KHALEEL (SUPRA) WHEREIN THE ASSESSEE WAS A BUILDER HIMSELF. HE REC EIVED ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 12 CONSIDERATION ON SALE OF ASSET FOR TRANSFER AND TRANSFERRED THE SAME TO HIS DIVISION ACTIVITY FOR B UYING A NEW HOUSE. IN SUCH A SITUATION, THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 54F OF T HE ACT. SIMILAR VIEW HAS BEEN TAKEN BY PUNE BENCH OF T HE TRIBUNAL IN THE CASE OF P.K. DATTA (SUPRA) WHEREIN SUBSTANTIAL PAYMENT WAS MADE TO THE BUILDER FOR PURCHASE OF NEW HOUSE BY THE ASSESSEE AND IT WAS HE LD ALLOWABLE UNDER THE PROVISIONS OF SECTION 54F OF TH E ACT ALTHOUGH THE PROPERTY WAS NOT READY AT THAT TIME. IN THE CASE BEFORE US, THE WHOLE AMOUNT HAS BEEN ADJUSTED BY THE COMPANY FOR NEW HOUSE AGAINST THE SALE CONSIDERATION. IN FACT, THE ASSESSEE NEVER RECEIVED THE ABOVE CONSIDERATION IN HIS HAND AT ANY POINT OF TIM E. SIMILAR VIEW HAS BEEN TAKEN BY THE BOMBAY HIGH COUR T IN THE CASE OF MRS. HILLA J.B. WADIA (SUPRA) WHEREI N THE COURT HAS GONE TO THE EXTENT THAT IF THE SUBSTANTIA L PAYMENT IS MADE WITHIN THE STIPULATED PERIOD DEDUCT ION U/S 54F OF THE ACT SHOULD BE ALLOWED TO THE ASSESSE E EVEN THOUGH CONSTRUCTION OF NEW HOUSE IS NOT COMPLE TED AND THE POSSESSION IS NOT GIVEN. IN THE CASE BEFOR E US, POSSESSION OF NEW CONSTRUCTED BUNGALOW HAS BEEN GIV EN BY THE MTCDC TO THE ASSESSEE ON 31-3-2008 AS EVIDENCED FROM THE POSSESSION LETTER PLACED ON PAGE 28 ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 13 OF THE PAPER BOOK AND EVEN OTHERWISE AS THE ENTIRE PURCHASE PRICE OF THE NEW HOUSE PROPERTY WAS PAID B Y THE ASSESSEE TO MTCDC ON 31-3-2005 ITSELF I.E. THE DATE OF TRANSFER OF THE AGRICULTURAL LAND IN QUESTION I. E. CAPITAL ASSET. THUS, THE ASSESSEE HAS SUBSTANTIAL DOMAIN OVER THE NEW RESIDENTIAL HOUSE. THUS, DEDUCT ION U/S 54F OF THE ACT IS JUSTIFIED. THE SAME SHOULD B E ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTION AS CLAIMED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY 2011. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE: DATED: 31 ST MAY, 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) I PUNE 4. THE CIT, - I PUNE 5. THE D.R, B BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE ITA NO. 416/PN/2009 CHETAN TUPE A.Y. 2005- 06 14