THE DCIT, Visakhapatnam V. Bollina Srihari Rao, Visakhapatnam

ITA 548/VIZ/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6410 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANANDAM
• Keywords: Capital asset; Benefit of exemption
• Section: 54F; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 548 / VIZ /201 4 (ASST. YEAR : 20 10 - 1 1 ) DCIT, CIRCLE - 3(1), VISAKHAPATNAM. V . SRI BOLLINA SRIHARI RAO, 49 - 54 - 15, BALAYYA SASTRY LAYOUT, SEETHAMMADHARA, VISAKHAPATNAM. PAN NO. AAOPR 4804 P (APPELLANT) (RESPONDENT) C.O.NO.04/VIZ/2015 ( ITA NO. 548 / VIZ /201 4) (ASST. YEAR : 20 10 - 1 1 ) SRI BOLLINA SRIHARI RAO, 49 - 54 - 15, BALAYYA SASTRY LAYOUT, SEETHAMMADHARA, VISAKHAPATNAM. V . DCIT, CIRCLE - 3(1), VISAKHAPATNAM. PAN NO. AAOPR 4804 P (APP LICANT ) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI T. SATYANANDAM - DR DATE OF HEARING : 08 / 0 3 /201 7 . DATE OF PRONOUNCEMENT : 28 / 0 3 /201 7 . O R D E R PER G. MANJUNATHA , ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE AND THE CROSS O BJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM , DATED 14/08/2014 AND IT PERTAINS TO THE ASSESSMENT YEAR 2010 - 11. 2 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM BUSINESS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 ON 29/09/2010 , DECLARING TOTAL INCOME OF 50,24,759/ - CONSISTING OF INCOME FROM BUSINESS, INCOME FROM LONG TERM CAPITAL GAIN AND INCOME FROM OTHER SOURCES, BESIDES AGRICULTURAL INCOME OF 40,000/ - . THE CASE OF THE ASSESSEE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS ( C OMPUTER A IDED S ELECTIVE S CRUTINY ) AND ACCORDINGLY , NOTICES UNDER SECTION S 143(2) & 142(1) WERE ISSUED . IN RESPONSE TO THE NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED RELEVANT INFORMATION AS CALLED F OR . 3 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER NOTICED FROM THE STATEMENT OF COMPUTATION OF TOTAL INCOME THAT THE ASSESSEE HAD ADMITTED LONG TERM CAPITAL GAIN OF 1,80,66,004/ - FROM SALE OF TWO SITES ADMEASURING 283.33 SQ. Y DS AND 1247.50 SQ.YDS AT MADHAVADHARA ON 12/11/2009 AN D 29/03/ 2010 RESPECTIVELY AND CLAIMED EXEMPTION UNDER SECTION 54 TOWARDS REINVESTMENT IN A RESIDENTIAL HOUSE FOR 1,71,56,598/ - AND ARRIVED AT NET LONG TERM CAPITAL GAIN OF 9,09,406/ - . THE ASSESSING OFFICER , ON EXAMINATION OF THE INFORMATION FILED DURING THE COURSE OF ASSESSMENT, NOTED THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION UNDER SECTION 54 OF THE ACT , BUT SQUARELY ENTITLED TO SIMILAR EXEMPTION UNDER SECTION 54F OF THE ACT, TOWARDS REINVESTMENT OF SALE CONSIDERATION FOR CONSTRUCTION OF 3 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 RESIDENTIAL HOUSE PROPERTY. THE ASSESSING OFFICER FURTHER NOTED THAT EVEN THE EXEMPTION ALLOWABLE UNDER SECTION 54F IS ANALYSED TO BE NOT ADMISSIBLE TO TH A T EXTENT AS CLAIMED BY THE ASSESSEE TOWARDS I NVESTMENT MADE IN THE CONSTRUCTION OF A RESIDENTIAL HOUSE , WHICH WAS FOUND TO HAVE BEEN STARTED BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET. ACCORDINGLY , A SHOW - CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AND ASKED TO FURNISH AS TO WHY EXEMPTION CANNOT BE D ENIED . IN RESPONSE TO SHOW - CAUSE NOTICE, THE ASSESSEE CONTENDED THAT WITH REGARD TO I N VES T MENT IN HOUSE PROPERTY BY WAY OF CONSTRUCTION, S E CTION 54F STIPULATES THAT CONSTRUCTION SHALL BE COMPLETED WITHIN A PERIOD OF 03 YEARS AFTER THE DATE OF TRANSFER, HOWEVER, AS THERE IS NO STIPULATION TO THE DATE OF COMMENCEMENT OF CONSTRUCTION AND , T HEREFORE, IT WAS CONTENDED THAT HE IS ENTITLED TO DEDUCTION FOR THE ENTIRE AMOUNT UNDER SECTION 54F OF THE ACT. IN SUPPORT OF HIS ARGUMENT, RELIED UPON THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. J.R. SUBRAHMANYA BHAT (165 ITR 571) AND THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V S. H.K. KAPOOR (234 ITR 753 )( ALLAHABAD ) ; AND ALSO THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BEENA KUMARI JAIN ( 217 ITR 363) (BOM.) . 4 . THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE , OBSERVED THAT SECTION 54/54F OF THE ACT, UNAMBIGUOUSLY STATE THAT CONSTRUCTION OF THE NEW PROPERTY SHOULD INVARIABLY BE AFTER THE TRANSFER OF THE EXISTING PROPERTY AND SUCH EXEMPTION IS NOT AVAILABLE 4 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 WHEN THE NEW CONSTRUCTION IS MADE OR COMMENCED BEFORE THE TRANSFER OR SALE OF THE ORIGINAL ASSET . FOR THIS PURPOSE, THE ASSESSING OFFICER RELIED UPON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SMT. SHANTABEN P. GANDHI VS. CIT (129 ITR 218)(GUJ.) . THE ASSESSING OFFICER FURTHER NOTED TH A T IT IS WELL SETTLED RULE OF LEGAL CONSTRUCTION THAT GRAMMATICAL SEN S E OF THE WORDS IS TO BE ADHERED TO. WHEN THERE IS NO AMBIGUITY IN THE PROVISIONS OF THE STATUTE , THE PROVISIONS CANNOT BE INTERPRETED TO CONFER THE BENEFIT ON THE ASSESSEE. THE ASSESSING OFFICER FURTHER NOTED THAT THERE IS A CLEAR CASE OF CASUS OMISSUS , WHICH MEANS MATTERS WHICH SHOULD HAVE BEEN PROVIDED BUT HAVE NOT BEEN PROVIDED FOR IN THE STATUTE . IN SUCH SITUATION , IT IS WELL SETTLED THAT SUCH OMISSIONS CANNOT BE READ BEYOND AND SUPPLIED BY THE COURTS. AS A RESULT, THE ASSES SING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54 F OF THE ACT, IN RESPECT OF INVESTMENT MADE IN CONSTRUCTION BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET. ACCORDINGLY , RECOMPUTED LONG TERM CAPITAL GAIN FROM THE SALE OF TWO SITES A T 1,4 7 ,14,369/ - . 5. AGGRIEVED BY THE ASSESSMENT ORDER , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE RE ITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE ASSESSEE FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 54F OF THE ACT, DO NOT HAVE ANY STIPULATION AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF HOUSE 5 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 PROPERTY . THE ACT ONLY PRESCRIBES THE DA TE OF COMPLETION OF CONSTRUCTION OF HOUSE PROPERTY WHICH SAYS TH A T THE NEW HOUSE PROPERTY SHOULD BE CONSTRUCTED WITHIN THREE YEARS AFTER DATE OF TRANSFER OF ORIGINAL ASSET. THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER WRONGLY RELIED UPON THE RATIO OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHANTABEN P. GANDHI ( (SUPRA), AS THE FACTS OF THE CASE BEFORE THE HON'BLE HIGH COURT ARE ENTIRELY DIFFERENT FROM THE FACTS OF THE PRESENT CASE. IT WAS SUBMITTED THAT IN THE CASE OF SH ANTABEN P. GANDHI (SUPRA) , THE ENTIRE CONSTRUCTION WAS COMPLETED PRIOR TO THE DATE OF TRANS F ER OF THE CAPITAL ASSET . UNDER THESE CIRCUMSTA N CES, THE HON'BLE HIGH COURT OBSERVED THAT ANY AMOUNT INVESTED FOR CONSTRUCTION OF RESIDENTIAL HOUSE PROPERLY PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT. 6. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE , FURTHER SUBMITTED TH A T THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF J.R. SUBRAHMANYA BHAT (SUPRA) , HELD THAT INVESTMENT MADE TOWARDS CONSTRUCTION OF THE PROPERTY PRIOR TO THE DATE OF TRANSFER SHOULD ALSO BE ALLOWABLE AS DEDUCTION FOR THE PURPOSE OF SECTION 54F OF THE ACT. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BHARATHI MISHRA [(2014) 98 DTR 01 (DEL. )] BY FOLLOWING THE DECISION OF HON'BLE KARNATAKA HIGH COURT , H AS EXPRESSED A SIMILAR PRO POSITION WITH REGARD TO EXEMPTION PROVIDED UNDER SECTION 54F OF THE ACT. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER ARGUED THAT AS THERE IS NO CONDITION PRECEDENT THAT THE 6 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 SALE CONSIDERATION OF THE PROPERTY TRANSFER RED SHOULD BE UTILIZED FOR CONSTRUCTION OF NEW HOUSE , THE RESTRICTED INTERPRETATION MADE BY THE ASSESSING OFFICER THAT THE BENEFIT OF SECTION 54F SHOULD NOT BE APPLICABLE IN RESPECT OF CONSTRUCTION MADE PRIOR TO THE DATE OF TRANSFER IS NOT JUSTIFIED. 7 . THE COMMISSIONER OF INCOME TAX (APPEALS) , AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO BY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE KA RNATAKA HIGH COURT IN THE CASE OF J.R. SUBRAHMANYA BHAT (SUPRA) AND ALSO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF BHARATHI MISHRA (SUPRA) , OBSERVED THAT THE PREVALENT JUDICIAL VIEWS SUGGESTS THAT THE ASSESSEE CANNOT BE DENIED BENEFIT OF SECTION 54F , BECAUSE CONSTRUCTION OF HOUSE WAS COMMENCED BEFORE THE SALE OF CAPITAL ASSET. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ALLOW EXEMPTION UNDER SECTION 54F OF THE ACT, FOR THE AMOUNT INVESTED PRIOR TO THE DATE OF SALE OF ORIGINAL ASSET. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEALS)S ORDER , THE REVENUE IS IN APPEAL BEFORE US . 8 . THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN INTERPRETING THE FISCAL STATUTE ON THE BASIS OF THE LANGUAGE USED UNDER SECTION 54/54F AS THE SAID SECTION UNAMBIGUOUSLY STATE S THAT CONSTRUCTION OF THE NEW PROPERTY SHOULD INVARIABLY BE AFTER THE TRANSFER OF THE EXISTING PROPERTY AND SUCH EXEMPTION IS NOT AVAILABLE WHEN THE NEW CONSTRUCTION IS MADE OR 7 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 COMMENCED BEFORE THE TRANSFER OR SALE OF THE EXISTING PROPERTY OR HOUSE . THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THERE IS NO PRESCRIPTION UNDER THE ACT THAT THE CONSTRUCTION SHOULD HAVE COMMENCED AFTER THE DATE OF TRANSFER . THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING TH A T THE ASSESSEE CANNOT BE DENIED BENEFIT OF SECTION 54F BECAUSE OF THE REASON THAT CONS T RUCTION OF HOUSE HAD COMMENCED BEFORE THE SALE OF CAPITAL ASSET , BUT FACT IS THAT THE PROVISIONS OF SECTION 54F CLEARLY STATES TH A T CONSTRUCTION OF HOUSE SHOULD BE COMPLETED WITHIN THREE YEARS AFTER THE DATE OF TRANSFER WHICH MEANS THAT THE CONSTRUCTION OF HOUSE PROPERTY SHOULD INVARIABLY COMMENCED ON OR AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET. 9 . ON THE OTHER HAND, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED TH A T THERE IS NO CONDITION AS TO DATE OF COMMENCEMENT OF CONSTRUCTI ON IN THE PROVISION OF SECTION 54/54F AND THE SAID SECTION STIPULATES THAT THE CONSTRUCTION OF NEW HOUSE PROPERTY SHOULD BE COMPLETED WITHIN THREE YEARS AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF DCIT VS. DR. CHALASANI MALLIKARJUNA RAO (2016) 161 ITD 721 (VISAKHAPATNAM) , WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL , UNDER SIMILAR CIRCUMSTAN CES , ALLOWED THE BENEFIT 8 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 OF EXEMPTION UNDER SECTION 54F , TOWARDS AMOUNT INVESTED IN CONSTRUCTION OF HOUSE PROPERTY PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET. THE COMMISSIONER OF INCOME TAX (APPEALS) , AFTER CONSIDERING THE RELEVANT PROVISIONS OF THE ACT AND ALSO BY FOLLOWING THE JUDICIAL PRECEDENT S , HAS RIGHTLY ALLOWED EXEMPTION UNDER SECTION 54F AND HIS ORDER SHOULD BE UPHELD. 10 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD . THE ASSESSING OFFICER DISALLOWED EXEMPTION CLAIMED UN DER SECTION 54F ON THE GROUND T H A T CONSTRUCTION OF NEW HOUSE PROPERTY HAS BEEN COMMENCED PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET. ACCORDING TO THE ASSESSING OFFICER, EXEMPTION UNDER SECTION 54F IS AVAILABLE FOR THE AMOUNT INVE STED IN THE CONSTRUCTION OF HOUSE PROPERTY AFTER THE DATE OF TRANSFER O F ORIGINAL ASSET. THE ASSESSING OFFICER , REFERRING TO THE PROVISIONS OF SECTION 54F OF THE ACT AND ALSO BY FOLLOWING CERTAIN JUDICIAL PRECEDENTS , HAS OBSERVED T H A T WHEN THERE IS NO AMB IGUITY IN THE PROVISIONS OF THE STATUTE, PROVISIONS CANNOT BE INTERPRETED TO CONFER THE BENEFIT ON THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE TH A T THERE IS NO RESTRICTION IN THE PROVISIONS OF SECTION 54F AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF HOUSE PROPERTY AND THE A CT STIPULATES ONLY COMPLETION OF CONSTRUCTION OF HOUSE PROPERTY, WHICH SHOULD BE INVARIABLE COMPLETED WITHIN THREE YEARS AFTER THE DATE O F TRANSFER OF ORIGINAL ASSET. THE ASSESSEE REFERRING TO CERTAIN JUDICIAL PRECEDENTS SUBMITTED THAT IT IS WELL SETTLED POSITION OF LAW THAT THE 9 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 BENEFIT OF EXEMPTION UNDER SECTION 54F IS AVAI L ABL E EVEN THOUGH CONSTRUCTION OF HOUSE PROPERTY COMMENCED PRIOR TO THE DATE OF TRANSFER OF O RIGINAL ASSET. IN SUPPORT OF HIS ARGUMENT, RELIED UPON THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF DR. CHALASANI MALLIKARJUNA RAO (SUPRA) . 11. HAVING HEARD BOTH THE SIDES, W E FIND TH A T THE COORDINATE BENCH OF THIS TRIBUNAL , UNDER SIMILAR CIRCUMSTANCES HAS HELD TH A T THE ACT DOES NOT PRESCRIBED ANY CONDITION AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF NEW HOUSE PROPERTY AND ONLY CONDITION IS THAT CONSTRUCTION OF HOUSE PROPERTY SHOULD BE COMPLETED WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET . THE DATE OF COMMENCEMENT OF CONSTRUCTION IS IRRELEVANT AND THE CONSTRUCTION MAY BE COMMENCED EVEN BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET . A SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE DELHI HIGH COURT , IN THE CASE OF BHARATHI MISHRA (SUPRA) , WHEREIN THE HON'BLE HIGH COURT OBSERVED TH A T SUB - SECTION (4) OF SECTION 54F PRESCRIBES APPROPRIATION OF SALE CONSIDERATION OF ORIGINAL ASSET TOWARDS PURCHASE OF NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET , TWO YEARS FROM THE DATE OF TRANSFER OR CONSTRUCTION OF NEW HOUSE PROP ER TY , WITHIN THREE YEARS FROM THE DATE OF TRANSFE R OF ORIGINAL ASSET. THE ACT DOES NOT PRESCRIBE ANY CONDITION AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF HOUSE PROPERTY WHICH MAY EVEN COMMENCED BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE 10 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 OF J.R. SU BRAHMANYA BHAT (SUPRA) , HAS ALSO EXPRESSED SIMILAR VIEW AND HELD TH A T THE INVESTMENT MADE TOWARDS CONSTRUCTION OF HOUSE PROPERTY PRIOR TO THE DATE OF TRANSFER SHOULD ALSO BE ALLOWABLE AS DEDUCTION FOR THE PURPOSE OF SECTION 54F OF THE ACT. 12. T HE COORDINATE BENCH OF VISAKHAPATNAM ITAT , IN THE CASE OF DR.CHALASANI MALLIKARJUNA RAO (SUPRA) HAD AN OCCASION TO EXAMINE THE SIMILAR ISSUE. THE COORDINATE BENCH OF THIS TRIBUNAL , AFTER CONSIDERING RELEVANT PROVISIONS OF THE ACT AND ALSO BY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA & DELHI HIGH COURT S HAS OBSERVED AS UNDER: - 9. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION IS WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIGIBLE FOR CLAIMING EXEMPTION U/S 54 OF THE ACT. THE A.O. OBSERVED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM EXEMPTION U/S 54 OF THE ACT, FOR THE REASON THAT THE CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE WAS COMMENCED BEFORE THE DATE OF TRANSFER OF ASSET. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS COMMENCED THE CONSTRUCTION OF NEW HOUSE BEFORE THE TRANSFER OF ASSET AND ALSO HAS INVESTED AMOUNT OUT OF BORROWED FUND, THEREFORE NOT ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT THE DATE OF COMMENCEMENT OF CONSTRUCTION IS IMMATERIAL, BUT IT IS ONLY THE DATE OF COMPLETION OF CONSTRUCTION. AS PER THE PROVISIONS OF SECTION 54 OF THE ACT, THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE SHOULD BE COM PLETED WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET, HOWEVER, THE SECTION DOES NOT PRESCRIBE ANY CONDITION AS TO DATE OF COMMENCEMENT OF CONSTRUCTION. 10. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE FOR THE REASON THAT THE ACT DOES NOT PRE SCRIBE ANY CONDITION AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF NEW HOUSE PROPERTY. THE ONLY CONDITION IS THAT CONSTRUCTION OF THE HOUSE PROPERTY SHOULD BE COMPLETED WITHIN 3 YEARS FROM THE DATE OF TRANSFER. THE DATE OF COMMENCEMENT OF CONSTRUCTION IS IRRELEVANT AND THE CONSTRUCTION MAY BE COMMENCED EVEN BEFORE THE TRANSFER OF ASSET AS HELD BY THE HON'BLE HIGH COURT OF DELHI, IN THE CASE OF CIT VS. BHARATHI MISHRA (2014) 222 TAXMAN 2. A SIMILAR VIEW WAS EXPRESSED BY THE HON'BLE HIGH COURT OF KARNATA KA, IN THE CASE OF CIT VS. J.R. SUBRAHMANYA BHAT (1987) 165 ITR 571, WHICH WAS IN TURN FOLLOWED BY THE HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. H.K. KAPOOR (1998) 234 ITR 753. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIG IBLE TO CLAIM EXEMPTION U/S 54 OF THE ACT, EVEN THOUGH THE CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE WAS COMMENCED PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET. IN THE 11 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A SSESSEE HAS COMMENCED CONSTRUCTION OF NEW HOUSE PROPERTY IN THE MONTH OF NOVEMBER, 2004 AND COMPLETED CONSTRUCTION IN THE MONTH OF MARCH, 2007. THE TRANSFER OF ASSET HAS BEEN TAKEN PLACE IN THE MONTH OF JANUARY, 2007. THE CONSTRUCTION OF NEW HOUSE PROPERTY HAS BEEN COMPLETED WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF ASSET. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. 1 3 . IN THIS VIEW OF THE MATTER AND ALSO RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT AND ALSO BY FOLLOWING THE DECISION OF THE COORDINATE BENCH ITAT VISAKHAPATNAM , WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 54F DOES NOT PRESCRIBE ANY CONDITION AS TO THE DATE OF COMMENCEMENT OF CONSTRUCTION OF NEW HOUSE PROPERTY . THE CONSTRUCTION OF HOUSE PROPERTY MAY BE COMMENCED BEFORE THE DATE OF TRANSFER OF ORIGINAL ASSET, HOWEVER IT SHOULD BE COMPLETED WITHIN THREE YEARS AFTER THE DATE OF TRAN SF ER OF ORIGINAL ASSET. IN THIS CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND TH A T CONSTRUCTION OF HOUSE PROPERTY HAS BEEN COMPLETED WITHIN THREE YEARS FROM THE DATE OF TRANSFER . THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54F , TOWARDS AMOUNT INVESTED IN CONSTRUCTION OF HOUSE PROPERTY PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE RELEVANT PROVISIONS HAS RIGHTLY DELETED ADDITIONS MADE BY THE ASSESSING OFFICER. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), HENCE, WE INCLINE TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE APPEAL FILED BY THE REVENUE. 12 ITA NO. 548 / VIZ /201 4 & C.O.NO.04/VIZ/2015 1 4 . THE ASSESSEE HAS FILED CROSS OBJECTION IN SUPPORT OF ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), T HEREFORE, FOR THE REASONS RECO RDED IN THE PRECEDING PARAGRAPH S , WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE AS NOT MAINTAI NA BLE. 1 5 . IN THE RESULT, APPE AL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 2 8 T H DAY OF MARCH , 201 7 . S D / - S D / - ( V. DURGA RAO ) ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 8 T H MARCH , 201 7 . VR/ - COPY TO: 1 . THE ASSESSEE - SRI BOLLINA SRIHARI RAO, 49 - 54 - 15, BALAYYA SASTRY LAYOUT, SEETHAMMADHARA, VISAKHAPATNAM. 2 . THE REVENUE - DCIT, CIRCLE - 3(1), VISAKHAPATNAM. 3 . THE CIT - 1, VISAKHAPATNAM. 4 . THE CIT(A) , VISAKHAPATNAM. 5 . THE D.R . 6 . GUARD FILE. BY ORDER S E N I O R P R I V A T E S E C R E T A R Y I.T.A.T., VISAKHAPATNAM