Shri Sharad Sitaram Bhinge [HUF], Pune V. ITO wd - 5[4] Pune, Pune

ITA 619/PUN/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7180 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-06-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 26-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Cost of acquisition; Fair market value; Valuation report; Competent authority
• Section: 54F; 234B; 148; 54

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.619/PUN/2012 % % / ASSESSMENT YEAR : 2001-02 SHRI SHARAD SITARAM BHINGE (HUF), AT POST BARAMATI, DIST. PUNE PAN : AAEHB6724L . / APPELLANT V/S ITO, WARD-5(4), PUNE . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI SUHAS KULKARNI / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28-02-2011 OF THE CIT(A)-III, PUNE RELATING TO THE ASSESSMENT YEAR 2001-02. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 31-10-2001 IN INDIVIDUAL CAPACITY DECLAR ING TOTAL LOSS OF RS.84,189/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE INDIVIDUAL STATUS OF THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD OBTAINED CLEARANCE CERTIFICATE UNDER SECTION 230A OF THE ACT FOR SALE OF PROPERTY BELONG ING TO / DATE OF HEARING :15.12.2016 / DATE OF PRONOUNCEMENT:01.02.2017 2 ITA NO.619/PUN/2012 ASSESSEE'S HUF. THE CAPITAL GAIN THEREOF HAD BEEN INCLUDE D IN THE HANDS OF THE INDIVIDUAL. IT WAS BROUGHT TO THE NOTICE OF TH E ASSESSEE BY THE ASSESSING OFFICER THAT THE CAPITAL GAIN WA S TO BE TAXED IN THE HANDS OF HUF AS THE PROPERTY BELONGED TO THE HUF. THE ASSESSEE STATED THAT THE HUF WAS THE OWNER OF TH E PROPERTY AND SHOWING CAPITAL GAIN IN THE INDIVIDUAL CASE WAS A MISTAK E. HOWEVER, THE ASSESSEE POINTED OUT THAT THE WHOLE CAPITA L GAIN WAS EXEMPT UNDER SECTION 54F BECAUSE THE SAME HAD BEEN IN VESTED IN CAPITAL GAIN ACCOUNT WITH STATE BANK OF INDIA AS ENVISAGED U/S. 54F(4) OF THE ACT. AS THE ENTIRE CAPITAL GAIN WAS EXEMPT, T HE HUF THOUGHT IT FIT NOT TO FILE ANY RETURN OF INCOME. 3. THE ASSESSING OFFICER, HOWEVER, ISSUED A NOTICE UNDER SECTION 148 OF THE I.T. ACT, 1961 TO THE ASSESSEE ON 29 -2-2004, AS ACCORDING TO HIM, THE INCOME OF THE HUF WAS INCLUDED IN THE INDIVIDUAL HAND AND THE CLAIM OF DEDUCTION WAS NOT TAKEN O N THE NET CONSIDERATION. IN RESPONSE TO THIS NOTICE, THE ASSESS EE HUF FILED RETURN OF INCOME ON 15-3-2004 DECLARING TOTAL INCOME O F RS . 44,535/-, WHERE THE CAPITAL GAIN INCOME WAS OFFERED AT NIL . 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE SUBMITTED THAT THE IMPUGNED LAND AT JALOCHI, TAL. BARAMATI, DIST. PUNE BELONGED TO THE HUF AND AS PER VALUATION REPORT O F ARCHITECT M/S. NITIN FARSOLE & ASSOCIATES LTD. THE VALUE OF THE LAND IN THE YEAR 1-4-1981 WAS SHOWN AT RS.100/- PER SQ.FT. IT WAS P OINTED OUT THAT THE LAND AS ON 1-4-1981 WAS AGRICULTURAL LAND AND T OTAL AREA OF THE LAND WAS 45 GUNTAS. IN THE YEAR 1998, THE ASSESS EE HAD APPLIED FOR N.A. CONVERSION OF THE LAND AND THE TOWN PLANNIN G AUTHORITIES GRANTED PERMISSION FOR ONLY 21 GUNTAS OUT OF 45 GUNTAS 3 ITA NO.619/PUN/2012 AS N.A. PLOT. AFTER RECEIVING THE PERMISSION FOR CONVERSION OF THE LAND AS N.A. FOR 21 GUNTAS (2194 SQ.MTRS.) OUT OF THE 45 GU NTHAS (4500 SQ.MTRS.), THE ASSESSEE SOLD 1580 SQ. MTRS. OF THE CON VERTED N.A. PLOT IN APRIL, 2000 FOR A TOTAL CONSIDERATION OF RS.23,00,000 /-. SINCE THE VALUE OF THE LAND HAD INCREASED DUE TO CONVER SION INTO N.A. LAND, THE COST OF AGRICULTURAL LAND AS ON 1-4-1981 WAS TAKEN AT RS.200/- PER SQ.MTR. ACCORDINGLY, THE COST OF ACQUISITION OF THE AGRICULTURAL LAND ADMEASURING 3240 SQ.MTRS (EQUIVALENT TO 15 80 SQ.MT. OF NA LAND) AS ON 1-4-1981 IN POSSESSION OF THE ASSESSEE WAS TAKEN AT RS.3,24,000/-. OUT OF THE SALE PROCEEDS, AN A MOUNT OF RS.10 ,19,940/ - WAS DEPOSITED WITH CAPITAL GAIN ACCOUNT SCHEME IN THE STATE BANK OF INDIA, BARAMATI BRANCH UNDE R ACCOUNT NO.01190/015245 ON 24-10-2000 BESIDES SPENDING A SUM OF RS.3,00,000/- IN THE CONSTRUCTION. THE TOTAL SUM INV ESTED WAS THUS SHOWN AT RS.13,19 , 490/-. AFTER SALE OF 1580 SQ. MTRS. OUT OF THE LAND CONVERTED INTO N.A. LAND ADMEASURING 2194 SQ.M TRS., THE ASSESSEE WAS LEF T WITH 614 SQ.MTRS OF NA LAND. THIS REMAINING AREA OF 614 SQ.MTRS. WAS UTIL I ZED FOR CONSTRUCTION O F RESIDENTIAL HOUSE. IT WAS SUBMITTED THAT T H E COST OF THE LAND UTILIZED FO R CONSTRUCTION ADMEASURING 614 SQ.MTRS. WAS ALSO TO BE CON SIDERED AS BEING PART OF COST OF CONSTRUCTION, WH I CH THE ASSESSEE WORKED OUT AT RS . 8,93,797/ - AT T H E RATE OF RS.1 , 455/- PER SQ . MTR. BASED ON THE VALUATION OF 1580 SQ.MTRS . OF LA N D SOLD FOR RS . 23 LAKHS. IT WAS STATED THAT THE MEMBERS OF THE HUF HAD RELEASED THEIR RIGHTS IN FAVOUR OF THE HUF FOR MAKING AVAILABLE THE LAND FOR CONS T RUCTION OF THE RESIDENTIAL PROPERTY , WHICH AMOUNTED TO UTIL I ZATION OF THE FUNDS REALIZED OUT OF SALE OF LAND TOWARDS CONSTRUCTION OF THE PR OPERTY. THE ASSESSEE DREW ATTENTION OF THE ASSESSING OFFICER TO T HE DECISION 4 ITA NO.619/PUN/2012 OF THE ITAT NEW DELHI IN THE CASE OF TWENTY F I RST CENTURY STEELS LTD. VS. DCIT IN ITA NO . 8472/DEL . /91 DATED 3-12-2003, WHERE THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GWALIOR RAYON SILK MFG. CO. LTD . REPORTED IN 196 ITR 149 WAS FOLLOWED . THE ASSESSEE ALSO REFERRED TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. T.N. ARVINDA REDDY REPORTED I N 120 ITR 46 , WHERE ISSUE RELATING TO INTERPRETATION OF SECTION 54 HA S BEEN DEALT W I TH . IN THIS DECIS I ON, REFERENCE HAS ALSO BEEN MADE TO THE DECISION I N THE CASE OF BOBSHOW BROTHERS LTD . VS . MAYER (1956) 3 ALL ER 833. THUS , ACCORDING TO THE ASSESSEE, IN VIEW OF THE SUPREME COURT DECISION IN THE CASE OF T . N. ARVIND REDDY (SUPRA), RELEASE OF R I GHTS OF THE MEMBERS OF THE H U F IN FAVOU R OF THE HUF AMOUNTED TO UTILIZATION OF THE LAND I N THE CONSTRUCTION OF THE RESIDENTIAL HOUSE WITHIN THE MEANING OF SECTION 54 OF TH E ACT AND , THEREFORE, THE RESU L TANT CAPITAL GAIN WAS EXEMPT UNDER T H E PROVISIONS OF THE LAW. THE WORKING OF CAPITAL GA I NS AND INVESTMENT OF THE CONSIDERATION WAS FURNISHED AS UNDER:- I. SALE PROCEEDS RS.23,00,000/- II. LESS : INDEXED COST OF ACQUISITION (3,24,000 X 406/100) RS.13,15,440 DEVELOPMENT EXPENSES RS. 56,730 ----------------- RS.13,72,170/- ------------------- LONG TERM CAPITAL GAINS RS.9,27,830/- ------------------- INVESTMENT OF NET CONSIDERATION RS.23,00,000/- 1) COST OF CONSTRUCTION RS.10,19,490 2) FURTHER INVESTMENT RS. 3,00,000 3) COST OF LAND ON WHICH CONSTRUCTION HAS BEEN PUT UP RS.9,30,000 4) DEVELOPMENT EXPENSES AND COMMISSION PAID RS.56,730 ---------------- RS.23,06,220/- -------------------- 5 ITA NO.619/PUN/2012 5. DUR I NG THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE COST OF PLO T WAS TAKEN AT RS.2,37,000/- IN THE INDIVIDUAL RETURN WHILE THE SAME WAS T AKEN AT RS.3,24,000/- IN THE HUF RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. IT WAS EXPLAINED BY THE A SSESSEE THAT THE COST OF THE LAND WAS TAKEN ON ESTIMATE BASIS OF LAND COST @ 150 PER SQ . FT., WHEREAS IN THE HUF RETURN THE SAME WAS TAKEN ON TH E BAS I S OF VALUATION REPORT AS THE COST OF THE LAND HAD DOUBLED DUE TO CONVERSION OF PART OF THE LAND INTO N.A. PLOT. THE ASSESSE E STATED THAT THE LAND BELONGED TO HUF AND NO SUCH DOCUMENTS RELEASING THE RIGHTS BY THE MEMBERS WERE REQUIRED AS HUF WAS TH E OWNER OF THE LAND. 6. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE HAD CHANGED THE COST OF ACQUISITION THREE TIMES WHICH WAS C LEARLY TO AVOID PAYMENT OF CAPITAL GAIN TAX. HE OBSERVED THAT THE C APITAL GAINS WAS WORKED OUT AT RS.2,61,560/- IN THE RETURN OF INC OME OF THE INDIVIDUAL, WHICH WAS WITH THE INTENTION TO SET OFF OF TH E BUSINESS LOSS. HE ALSO OBSERVED THAT WHILE FILING THE RETURN OF INCOME THE ASSESSEE HAD WORKED OUT THE CAPITAL GAINS AN D NOT THE NET CONSIDERATION FOR CLAIM OF DEDUCTION UNDER SECTION 54F AND NO PART OF THE SALE CONSIDERATION WAS APPROPRIATED TOWARDS THE ACQUISITION OF NEW ASSET AND ONLY CAPITAL GAINS HAD BEEN IN VESTED IN THE SCHEME . REFERRING TO THE PROVISIONS OF SECTION 54F, THE ASSESSING OFFICER HELD THAT WHAT WAS MATERIAL FOR ALLOWING DEDUCTION U/S.54F(4) RELATING TO TRANSFER OF CAPITAL ASSET WAS THE DEPOSIT OF 'NET CONSIDERATION' IN THE CAPITAL GAIN SCHEME AND COST OF ACQUIS I T I ON WAS IMMATERIAL . RELYING ON THE DECISION OF THE HONBLE 6 ITA NO.619/PUN/2012 SUPREME COURT I N THE CASE OF CIT VS . GWALIOR RAYON SILK MFG. CO. LTD. REPORTED IN 196 ITR 149 THE ASSESSING OFFICER DID NOT ENTERTAIN THE ASSESSEE'S CLAIM FOR CONSIDERAT I ON OF COST OF THE LAND ADMEASURING 614 SQ.MTRS. UTILIZED FOR CONSTRUCTION OF THE HO USE. THE ASSESSING OFFICER OBSERVED THAT IN THE SAID CASE BEFOR E THE SUPREME COURT, THE PROPERTY HAD BEEN TOTALLY PARTITIONE D AND RIGHTS OF THE OTHER BROTHERS HAD GOT RELEASED IN FAVOUR OF ONE BROTHER AS JOINT OWNER OF THE PROPERTY. HOWEVER, IN ASS ESSEE'S CASE THERE WAS NO TOTAL PARTITION, NOR DID THERE ANY QUESTION OF RELEASE OF RIGHTS OF OTHER MEMBERS IN THE LAND TO THE HUF ARISE. THEREFORE, THE DECISIONS RELIED ON BY THE ASSESSEE ARE DISTINGUISHABLE . ACCORDING TO THE ASSESSING OFFICER, AS PER SECTION 54F, TH E NET CONSIDERATION WAS TO BE INVESTED IN THE NEW ASSET AND A S SUCH THE LAND ALREADY IN POSSESSION OF THE HUF COULD NOT BE SAID TO BE A NEW ASSET. THE ASSESSING OFFICER THUS CAME TO THE CONCLUS ION THAT THE ASSESSEE HAD NOT COMPLIED WITH THE PROVISIONS OF SECT ION 54F( 4) OF THE ACT FOR AVA I LING THE BENEFIT. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS CHANGING ITS STAND ACCORDING TO THE QUERIES RAISED FROM TIME TO TIME WITH AN INTENTION TO AVOID PAYMENT OF TAXES ON CAPITAL GAIN ARISING ON TRANSFER OF LAND . THE ASSESSING OFFICER OBSERVED THAT AS PER THE PROVISIONS OF S EC.54F(4) , THE NET CONSIDERATIONS, IF NOT APPROPRIATED TOWARDS THE P URCHASE OF NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT U TILIZED, SHOULD BE DEPOSITED IN THE SPECIFIED SAVINGS ACCOUNT BEFORE DUE DATE OF FILING OF THE RETURN AND PROOF THEREOF OUGHT TO BE ATTACHED W I TH THE RETURN OF INCOME. IN THE OPINION OF THE ASSESSING OFFICER , THE ASSESSEE IN THE PRESENT CASE, DID NOT APPORTION ANY SUM OF THE 7 ITA NO.619/PUN/2012 NET CONSIDERAT I ON TOWARDS PURCHASE OF NEW ASSET BEFO R E THE DUE DATE FOR FILING OF THE RETURN. THE ASSESSING OFFICER ACCORDING LY WORKED OUT THE CAPITAL GAIN AS UNDER: NET SALE CONSIDERATION RS.22,43,270/- LESS : EXPENDITURE INCURRED FOR TRANSFER I) DEVELOPMENT EXPENSES RS.33,730 II) COMMISSION PAID RS.23,000 ------------- RS.56,730/- ------------------- NET CONSIDERATION RS.22,43,270/- LESS : DEDUCTION U/S.54F(4) BEING AMOUNT DEPOSITED IN CAPITAL GAINS A/C SCHEME RS.10,19,490/- -------------------- LONG TERM CAPITAL GAINS RS.12,23,780/- -------------------- 7. BEFORE CIT(A) THE ASSESSEE STRONGLY OBJECTED TO THE CON C LUSION OF THE ASSESSING OFFICER THAT THE CAPITAL GAINS WAS WORKED OUT WITHOUT APPORTIONI N G ANY SUM OUT OF THE NET CONSIDERATION TOWARDS PURCHASE OF NEW ASSET BEFORE T H E DUE DATE OF FILING OF THE RETURN. IT WAS ARGUED THAT THE TOTAL CONSTR UCTION COST WAS OF RS.13,19 , 490/- AND THE CONSTRUCTION WAS MADE ON THE LAND ADMEASURING 614 SQ . MTRS. , VALUATION OF WHICH WAS DONE AT RS.8,93 , 797/-. IT WAS SUBMITTED THAT AS PER SECTION 54F(4), THE UNUTILIZED NET CONSIDERATION AMOUNTING TO RS.10,19 , 490/- WAS DEPOSITED IN CAPITAL GAIN ACCO U NT WITH STATE BANK OF INDIA, BARAMATI IN A/C.NO.01190/015245 ON 24-10-2000, WHICH WAS BEFORE THE DUE DATE FOR FILING THE RETURN OF THE ASSESSMEN T YEAR UNDER APPEA L . IT WAS ARGUED THAT THE VALUATION OF THE LAND ADMEASURING 614 SQ. MTRS. UTILIZED FOR CONSTRUCTION OF RESIDENTIAL HOUSE WAS DONE ON THE BASIS OF THE SALE OF LAND ADMEASUR ING 1580 SQ. MTRS. AT RS.23,00,000/-. THE SAID LAND GOT AVAILABLE BY RE LEASE 8 ITA NO.619/PUN/2012 OF THE SAME IN FAVOUR OF HUF FOR UTILIZATION OF CONSTRUCTION OF HOUSE PROPERTY AND SUCH UTILIZATION AMOUNTS TO ACQUISITION OF NEW PROPER T Y . FOR THE ABOVE PROPOSITION, THE ASSESSEE RELIED UPON THE DECIS I ON OF THE ITAT SPECIAL BENCH IN THE CASE OF TWENTY FIRST CENTURY STEE L S LTD. VS. DCIT I N ITA NO.8472/DEL . /91 ORDER DATED 03-12-2003. IT WAS ACCORDINGLY SUBMITTED THAT THE TOT AL COST OF CONSTRUCT I ON WAS RS.22 , 13,287/- WHICH INCLUDES RS.10,19,490/- BEING DEPOSIT IN CAPITA L GAIN ACCOUNT, RS.3,00,000/- BEING FURTHER AMOUNT UT I LIZED IN CONSTRUCTION AND RS.8,93,797/- BEING COST OF THE LAND AS AGAINST THE TOTAL SALE PROCEEDS OF THE LAND O F RS.23,00,000/-. IT WAS ACCORDINGLY ARGUED THAT THE WHOLE PROCEEDS OF THE LAND WERE UTILIZED FOR DEPOSIT IN CAPITAL GAINS ACCOUNT SCHEME AND I N THE CONSTRUCTION OF THE NEW HOUSE PROPERTY AND THEREFORE , THE ASSESSING OFFICER WAS NOT LEGALLY JUSTIF I ED IN TAXING LONG TERM CAPITAL GAIN OF RS.12,23,780/-, SINCE THE ASSESSEE HAD FULFILLED THE CONDITIONS OF BO T H THE SECTIONS 54F(2) AND 54F(4) OF THE ACT. 8. HOWEVER, THE CIT(A) WAS ALSO NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. HE OBSERVED THA T THE ASSESSEE DURING THE YEAR HAS RECEIVED AN AMOUNT OF RS.23 LAKHS ON ACCOUNT OF SALE OF LAND ADMEASURING 1580 SQ.MTRS OUT OF WH ICH THE ASSESSEE HAS DEPOSITED AN AMOUNT OF RS.10,19,940/- IN T HE CAPITAL GAIN ACCOUNT SCHEME OF THE STATE BANK OF IND I A, BARAMATI BRANCH AND THERE IS NO DISPUTE TO THE ABOVE. THE ASSESSEE CLA IMED TO HAVE INVESTED AN AMOUNT OF RS.3 LAKHS FOR CONST R UCTION OF RESIDEN TI A L HOUSE. THE ASSESSEE ALSO CLAIMED THAT THE R ES I DENTIAL HOUSE WAS CONSTRUCTED ON THE LAND R EMAINED WITH THE HUF ADMEASUR IN G 614 SQ.MTRS. FOR WHICH THE ASSESSEE HAD ADOPTED THE VALUATION AT 9 ITA NO.619/PUN/2012 RS.8,93 , 797/- ON THE BASIS OF THE SALE OF OTHER PART OF THE LAND ADMEASURING 1580 SQ . MTRS. FOR RS.23,00,000/-. 9. SO FAR AS INVESTMENT OF RS.3 LAKHS IN THE CONSTRUCTION O F RESIDENTIAL HOUSE PROPERTY IS CONCERNED, THE LD.CIT(A) REJ ECTED THE CLAIM OF THE ASSESSEE IN ABSENCE OF ANY SUPPORTING EVIDEN CE SUCH AS THE NATURE OF CONSTRUCTION, PERMISSION FROM THE COMPE TENT AUTHORITY FOR CONSTRUCTION, DATE OF UTILIZATION OF FUNDS FOR CONSTRUCTION, BILLS AND VOUCHERS FOR VARIOUS ITEMS OF EXPEN SES, WHETHER THE NEW BUILDING IS COMPLETE WITHIN THE SPECIFIED PER IOD OF 3 YEARS FROM THE DATE OF TRANSFER, COMPLETION CERTIFICATE, TH E NEXUS BETWEEN THE CONSIDERATION RECEIVED AND THE CAPACITY IN T HE CONSTRUCTION OF HOUSE, VALUATION REPORT ETC. 10. SO FAR AS THE CLAIM OF THE ASSESSEE THAT THE LAND ADMEASURING 1614 SQ.MTRS WAS MADE AVAILABLE TO THE ASSES SEE BY RELEASE OF THE SAME IN FAVOUR OF HUF FOR UTILIZATION OF CONST RUCTION OF HOUSE PROPERTY AND SUCH RELEASE AMOUNTS TO PURCHAS E BY THE ASSESSEE AND THEREFORE DEDUCTION U/S.54F IS AVAILABLE TOW ARDS THE COST OF THE LAND IS CONCERNED THE LD.CIT(A) ALSO REJECTED THE SAME. WHILE DOING SO, HE HELD THAT THE PROPERTY IN THE INSTANT C ASE STANDS IN THE NAME OF THE ASSESSEE HUF ITSELF AND THEREFO RE THE CLAIM THAT THERE WAS TRANSFER OF LAND BY RELEASE IN FAVOUR OF THE SAME HUF BY CO-PARCENERS DOES NOT STAND THE REASON. FURTHER, NO EVIDENCE WHATSOEVER WAS PRODUCED BY THE ASSESSEE TO SHOW THAT THE ASSESSEE RECEIVED THE LAND BY WAY OF RELEASE FROM OT HER CO- PARCENERS. WITHOUT PREJUDICE TO THE ABOVE HE OBSERVED THAT EVEN PRESUMING THAT THERE WAS A RELEASE AS CLAIMED BY THE AS SESSEE, STILL THE RELEASE WAS NOT FOR A CONSIDERATION SINCE THE ASS ESSEE HAS 10 ITA NO.619/PUN/2012 NOT PAID ANY PRICE TO THE OTHER CO-PARCENERS FOR RELEAS E OF THEIR SHARE IN FAVOUR OF THE ASSESSEE. THERE IS NO APPROPRIATI ON OR UTILIZATION OF NET SALE CONSIDERATION TOWARDS COST OF THE P LOT AS NO CONSIDERATION WAS PAID FOR ALLEGED RELEASE OF LAND AND THE A SSESSEE HAS TAKEN ONLY NOTIONAL ESTIMATED COST BASED ON THE CO NSIDERATION RECEIVED FROM SALE OF OTHER PART OF THE LAND. DISTINGUISHIN G THE VARIOUS DECISIONS CITED BEFORE HIM HE REJECTED THE CLAIM OF THE ASSESSEE THAT COST OF THE LAND RECEIVED BY WAY OF RELEAS E IS ALSO TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF DETERMININ G THE QUANTUM OF DEDUCTION U/S.54F OF THE ACT, 11. SO FAR AS THE CLAIM OF THE ASSESSEE THAT ASSESSING OFFIC ER HAS NOT ALLOWED THE CLAIM OF INDEXED COST OF ACQUISITION WHILE COMPUTING THE LONG TERM CAPITAL GAIN IS CONCERNED HE DIREC TED THE ASSESSING OFFICER TO ADOPT THE COST OF ACQUISITION AS ON 01-04- 1981 AT RS.100/- PER SQ.MTRS FOR INDEXATION PURPOSE AS A GAINST RS.200/- PER SQ.MTRS CLAIMED BY THE ASSESSEE. 12. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. C. I .T. (A) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF T HE APPELLANT THAT THE RELEASE OF LAND BY THE MEMBERS OF THE HUF IN FAVO UR OF HUF FOR UTILIZATION IN CONSTRUCTION OF RESIDENTIAL PROPERTY A ND THEREFORE WAS REQUIRED TO BE INCLUDED IN THE EXEMPTION CLAIMED U/ S. 54-F OF THE A CT . THE DECISION OF T HE LD. CIT (A) WAS CONTRARY TO T H E PROVISION S O F L A W AND WITHOUT JUR ISDICTION. T HE CLAIM OF THE APPELLANT B E ACCEPTED . 2. ON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE L D. C. I .T. ( A ) ALSO ERRED IN NOT ACCEPTING THE CLAIM O F THE APPELLANT THAT AN AMOUNT OF RS.3,00, 000/- WAS UTILIZED TOWARDS CONSTRUCTION OF RESID E N TIA L P R OPERTY AND THEREFORE , WAS REQUIRED TO BE INCLUDED IN CLAIM OF E X EMPT I ON U/S. 54-F OF THE ACT . THE ORDER OF THE LD. C . LT. (A) IS WITHOUT JURISDICTION BEING CONTRARY TO THE PROVISIO NS OF LAW AND RULES T HERETO . TH E CLAIM OF THE APPEL L ANT BE ACCEPTED. 11 ITA NO.619/PUN/2012 3. ON T HE F A C TS AND CIRCUMSTANCES OF THE CASE AND I N LAW T HE LD. C . I.T. ( A ) WAS NOT JUSTIFIED I N ESTIMATING THE COST OF ACQUISIT I ON A S ON 01-04-1981 FO R A DOPTING THE SAME FOR INDEXATION @ 100/- P ER SQ. M TR. INSTEAD OF RS.20 0/ - PE R SQ. MTRS. AS CLAIMED BY THE A PP EL L ANT. THE O RDER OF THE LD . C. I. T. ( A ) I S WITHOUT ANY LEGAL SUPPORT. THE AP P ELLANT ' S C L A IM B E ACCEPTED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE INTEREST LEVIED U/S . 234-A, 234-B AND 234-C IS NOT JUSTIFIED AND I T BE DELETED. 5. THE APPELLANT CRAVES LEAVE TO ADD/AMEND OR ALT ER A N Y O F THE ABOV E GROUNDS OF APPEAL. 13. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED T HE ORDER OF THE CIT(A). HE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A). HE ALSO RELIED ON TH E FOLLOWING DECISIONS : 1. CIT VS. GURUCHARAN SINGH REPORTED IN 292 ITR 0387 2. CIT VS. BAI SHIRINBAI K. KOOKA REPORTED IN 46 ITR 86 (SC) 14. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING O FFICER ON THE BASIS OF RETURN FILED IN INDIVIDUAL CAPACITY SHOWING CAPITA L GAIN ON SALE OF LAND BELONGING TO THE HUF OF SHRI SHARAD SITAR AM BHINGE ISSUED NOTICE U/S.148 TO THE ASSESSEE HUF. THE A SSESSEE HUF FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S.148 DE CLARING TOTAL INCOME OF RS.44,535/-. WE FIND ASSESSEE HAS SOLD 158 0 SQ.MTRS OF LAND OUT OF TOTAL LAND OF 2194 SQ.MTRS AT JALOCHI, TALUKA BARAMATI, DIST. PUNE FOR A CONSIDERATION OF RS.23 LAKHS. THE 12 ITA NO.619/PUN/2012 ASSESSEE HAS INVESTED AN AMOUNT OF RS.10,19,940/- IN CAPIT AL GAIN ACCOUNT SCHEME IN THE STATE BANK OF INDIA, BARAMATI BRANCH. THE ASSESSEE CLAIMED TO HAVE SPENT RS.3 LAKHS FOR CONSTRUCTIO N OF THE HOUSE ON THE REMAINING AREA OF 614 SQUARE METERS. TH E ASSESSEE ALSO CONSIDERED THE COST OF THE REMAINING LAND ADMEASURING 614 SQUARE METERS UTILIZED FOR CONSTRUCTION AT RS.8,93,797/- BY ADOPTING THE RATE OF RS.1455/- PER SQ.MTRS FOR THE PURPO SE OF DEDUCTION U/S.54F. THE ASSESSEE ACCORDINGLY CALCULATED T HE LONG TERM CAPITAL GAIN AT NIL AFTER INDEXATION, THE DETAILS OF WHICH ARE ALREADY GIVEN AT PARA 5 OF THE ORDER. WE FIND THE ASSES SING OFFICER IN THE ASSESSMENT ORDER ALLOWED ONLY THE INVESTMENT IN C APITAL GAIN ACCOUNT SCHEME AMOUNTING TO RS.10,99,490/- AS DEDU CTION U/S.54F. AFTER ALLOWING THE DEVELOPMENT EXPENSES OF RS.33,73 0/- AND COMMISSION OF RS.23,000/- BEING EXPENDITURE INCURRED FOR THE TRANSFER OF THE LAND, THE ASSESSING OFFICER DETERMINED THE LONG TERM CAPITAL GAINS AT RS.12,23,780/-. 16. WE FIND IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE INVESTMENT OF RS.3 LAKHS TOWARDS CONSTRUCTION OF THE HOUSE. HE ALSO REJECTED TH E CLAIM OF THE ASSESSEE THAT THE RELEASE OF LAND BY THE MEMBERS O F THE HUF IN FAVOUR OF THE HUF BE CONSIDERED AS UTILIZATION IN CONSTRUCTION OF RESIDENTIAL PROPERTY AND THEREBY ELIGIBLE FOR DEDUCTION U/S.5 4F OF THE ACT. HE HOWEVER DIRECTED THE ASSESSING OFFICER TO AD OPT THE COST OF ACQUISITION OF THE LAND AS ON 01-04-1981 FOR THE PURPOSE OF INDEXATION @ RS.100/- PER SQ.MTR AS AGAINST RS.200/- PER SQ.MTR CLAIMED BY THE ASSESSEE. 13 ITA NO.619/PUN/2012 17. WE DO NOT FIND ANY INFIRMITY IN THE ABOVE OBSERVATION O F THE LD.CIT(A. SO FAR AS THE ISSUE RELATING THE ADMISSIBILITY OF DEDUCTION U/S.54F OF THE LAND RECEIVED BY WAY OF RELEASE IS CONCERNED WE FIND THE LD.CIT(A) DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM AND RELYING ON THE CBDT CIRCU LAR NO.667 DATED 18-10-1993 HAS HELD THAT WHEN THE PROPER TY ALREADY STANDS IN THE NAME OF THE HUF AND THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE RECEIVED THE LAND BY WAY OF RELEASE FROM THE CO-OWNERS AND THE ASSESSEE HAS NOT PAID ANY PRICE TO THE CO- OWNERS, THERE IS NO JUSTIFICATION ON THE PART OF THE ASSES SEE TO CLAIM DEDUCTION U/S.54F ON THE VALUE OF 614 SQUARE METERS OF LAND. THE RELEVANT OBSERVATION OF THE CIT(A) FROM PARA NOS . 5.4 TO 5.4.7 READS AS UNDER : 5.4 THE SUBMISSIONS OF MADE BY THE LD. COUNSEL FOR THE APPELLANT ARE CAREFULLY EXAMINED WITH REFERENCE TO THE FACTS OF TH E CASE AND THE PROVISIONS OF SEC. 54F OF THE I T ACT. DURING THE YEAR UNDER, IT IS NOT IN DISPUTE THAT THE TOTAL CONSIDERATION RECEIVED BY THE APPELLANT ON SALE OF LAND IN QUESTION ADMEASURING 1580 SQ. MTRS. WAS RS.23, 00,000/-. THE CLAIM OF THE APPELLANT IS THAT AN AMOUNT OF RS.10 ,19,940/- WAS DEPOSITED WITH THE CAPITAL GAIN ACCOUNT SCHEME OF THE STATE BANK OF INDIA, BARAMATI AND ANOTHER RS.3,00,000/- WAS UTILIZE D FOR CONSTRUCTION OF RESIDENTIAL HOUSE. THE APPELLANT FURTH ER CLAIMED THAT THE RESIDENTIAL HOUSE WAS CONSTRUCTED ON THE LAND REMAI NED WITH THEM ADMEASURING 614 SQ. MTRS., VALUATION OF WHICH WAS DONE AT RS.8,93,797/-, ON THE BASIS OF THE SALE OF OTHER PART O F THE LAND ADMEASURING 1580 SQ. MTRS. FOR RS.23,00,000/-. IT IS STRE SSED UPON THAT THE SAID LAND GOT AVAILABLE TO THE APPELLANT BY RELEASE OF THE SAME IN FAVOUR OF HUF FOR UTILIZATION OF CONSTRUCTION OF HOUSE PROPERTY AND UTILIZATION AMOUNTS TO ACQUISITION OF NEW PROPERTY. A CCORDING TO THE APPELLANT, THE ENTIRE SALE PROCEEDS OF THE LAND WERE UTILIZED IN MAKING DEPOSIT IN CAPITAL GAINS ACCOUNT SCHEME AND THE CONSTR UCTION OF THE NEW HOUSE PROPERTY AND THEREFORE, THE ASSESSING OFFICER WAS NOT LEGALLY JUSTIFIED IN TAXING LONG TERM CAPITAL GAIN O F RS.12,23,780. 5.4.1 THE MAIN CONTENTION OF THE APPELLANT IS THAT R EMAINING LAND ADMEASURING 614 SQ.MTRS. WAS MADE AVAILABLE TO THE APPE LLANT BY RELEASE OF THE SAME IN FAVOUR OF HUF FOR UTILIZATION OF CONSTRUCTION OF HOUSE PROPERTY AND SUCH RELEASE AMOUNTS TO 'PURCHASE' B Y THE APPELLANT AND THEREFORE DEDUCTION UNDER SEC. 54F IS A VAILABLE TOWARDS COST OF THIS LAND. THE RELEVANT PORTION OF SECTION 54 F OF THE INCOME-TAX ACT PROVIDES AS UNDER: 14 ITA NO.619/PUN/2012 ' 54F. CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL AS SETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE . -(1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4) , WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDU AL OR A HINDU UNDIVIDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET , NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE A S SESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR [TWO YEARS] A FTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (H EREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHA LL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS 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 SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET 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 TH E COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45 : THUS, THE MAIN INGREDIENTS OF SECTION 54F OF THE ACT A RE ASUNDER: (I) CAPITAL GAIN ARISES TO AN APPELLANT BEING AN IN DIVIDUAL OR A HINDU UNDIVIDED FAMILY. (II) THE ASSET TRANSFERRED MUST BE A LONG TERM CAPITAL ASSET. (III) THE ASSET TRANSFERRED CAN BE ANY CAPITAL ASSET O THER THAN A RESIDENTIAL HOUSE. (IV) THE APPELLANT PURCHASES WITHIN A PERIOD OF ONE Y EAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK P LACE, OR CONSTRUCTS WITHIN A PERIOD OF THREE YEARS AFTER THE DA TE OF TRANSFER, A RESIDENTIAL HOUSE. (V) THE APPELLANT DOES NOT OWN MORE THAN ONE RESIDENT IAL HOUSE ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET EXCLUSIVE OF ONE PURCHASED FOR CLAIMING EXEMPTION UNDER SECTION 54F. THE CLAIM OF THE APPELLANT THAT COST OF THE LAND REC EIVED BY WAY OF 'RELEASE ' I S A L SO TO BE TAKEN INTO CONSIDERAT I ON FOR THE PURPOSE OF FOR DETERM I NING THE QUANTUM OF DEDUCTION UNDER SECTION 54F. TH I S CLAIM OF THE APPELLANT HAS NO MERIT. FIRSTLY, IN THE PRESENT CASE, THE PROPERTY STANDS IN THE NAME OF THE APPELLANT HUF HIMSELF AND TH EREFORE, THE CLAIM OF THE APPELLANT THAT THERE WAS TRANSFER OF LAN D BY RELEASE IN FAVOUR OF THE SAME HUF BY THE COPARCENERS DOES NOT STAN D TO REASON. EVEN OTHERWISE, NO EVIDENCE WHATSOEVER WAS PRODUCED BY THE APPELLANT TO SHOW THAT THE APPELLANT RECEIVED THE LA ND BY WAY OF RELEASE FROM OTHER COPARCENERS. SECONDLY, EVEN PRESUMI NG THERE WAS A RELEASE AS CLAIMED BY THE APPELLANT; RELEASE WAS NOT FOR A CONSIDERATION AS THE APPE L LANT HAS NOT PAID ANY PRICE TO THE OTHER COPARCENERS FOR RELEASE OF THEIR SHARE IN FAVOUR OF T HE APPELLANT. THERE IS NO APPROPRIATION OR UTI L IZATION OF NET SALE CONSIDERATION TOWARDS COST OF THE PLOT AS NO CONSIDERATION WAS PAID FO R ALLEGED 15 ITA NO.619/PUN/2012 RELEASE OF LAND AND THE APPELLANT HAS TAKEN ONLY NOTI ONAL ESTIMATED COST BASED ON THE CONSIDERATION RECEIVED FROM SALE OF OTHER PART OF THE LAND. THEREFORE, THE CLAIM OF THE APPELLANT THA T COST OF THE LAND RECEIVED BY WAY OF 'RELEASE' IS ALSO TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF FOR DETERMINING THE QUANTUM OF DEDUCT ION UNDER SECTION 54F IS NOT LEGALLY TENABLE . 5 . 4.2 IN SUPPORT OF ITS CONTENTION, THE APPELLANT REFER RED TO THE DECISION OF SUPREME COURT IN THE CASE OF T.N. ARAVINDA REDDY (12 0 ITR 46), BOARD CIRCULAR NO.667 DATED 18.10.1993, DE CISION OF SPECIAL BENCH OF ITAT, DELHI IN THE CASE OF TWENTY FIRST CENTURY STEE L S LTD. (94 ITD 258), THE DECISION OF SUPREME COURT IN THE C ASE OF GWALIOR RAYON SILK MFG. CO. LTD. (196 ITR 149). THE RELEVAN CE AND APPLICABILITY OF THESE AUTHORITIES TO THE FACTS OF THE PRESENT CASE ARE NOW EXAMINED. 5.4.3 IN THE CASE OF T.N. ARAVINDA REDDY, FOUR BROTH ERS, MEMBERS OF HINDU COPARCENARY, PARTITIONED THEIR FAMILY PROPERT IES, LEAVING A COMMON HOUSE IN THE OCCUPATION OF THEIR MOTHER. THE ASSESSEE (THE ELDEST BROTHER) SOLD HIS OWN HOUSE ATTRACTING CHARGE TO CAPITAL GAINS TAX. HE, HOWEVER, ACQUIRED THE' COMMON HOUSE FROM HI S THREE BROTHERS WHO EXECUTED THREE SEPARATE RELEASE DEEDS FOR A CONSIDERATION OF RS. 30,000 EACH, ADJUSTED TOWARDS THE EXTRA SHARE AGREED TO BE GIVEN. THE QUESTION RAISED BY REVENUE W AS WHETHER SAID RELEASE DEEDS IN FAVOUR OF ASSESSEE WOULD CONSTITUTE 'PURC HASE' OF A HOUSE PROPERTY BY HIM MAKING HIM ELIGIBLE FOR RELIEF WITHIN THE AMBIT OF SECTION 54(1). IN THAT BACKGROUND, THE APEX COURT HELD THAT THERE IS NO REASON TO DIVORCE THE ORDINARY MEANING OF THE WOR D 'PURCHASE' AS BUYING FOR A PRICE OR EQUIVALENT OF PRICE BY PAYMEN T IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR OTHER MONETARY CONSIDERATION FROM ITS LEGAL MEANING IN SECTION 54(1). UNDOUBTEDLY EACH RELEASE IN THIS CASE IS A TRANSFER OF THE RELEASOR'S SHARE FOR CONSIDE RATION TO THE RELEASEE. THE TRANSFEREE PURCHASES THE SHARE OF EACH BRO THER AT A PRICE OF RS. 30,000 EACH. THUS, IT WOULD BE EVIDENTLY CALLED A 'PURCHASE' BY THE ASSESSEE WHO WOULD, ACCORDINGLY, BE EN TITLED TO RELIEF UNDER SECTION 54(1). AS ALREADY MENTIONED HERE INABOVE, FIRSTLY, IN THE PRESENT CASE, THE PROPERTY STANDS IN THE NAME OF THE APPELLANT HUF HIMSELF AND THEREFORE, THE CLAIM OF THE APPELLAN T THAT THERE WAS TRANSFER OF LAND BY RELEASE IN FAVOUR OF THE SAME HUF BY THE COPARCENERS DOES NOT STAND TO REASON. EVEN OTHERWISE, NO EVIDENCE WHATSOEVER WAS PRODUCED BY THE APPELLANT TO SHOW THAT THE APPELLANT RECEIVED THE LAND BY WAY OF RELEASE FROM OTHER COPAR CENERS. SECONDLY, EVEN PRESUMING THERE WAS A RELEASE AS CLAIMED BY THE A PPELLANT; RELEASE WAS NOT FOR A CONSIDERATION AS THE APPELLANT HA S NOT PAID ANY PRICE TO THE OTHER COPARCENERS FOR RELEASE OF THEIR SH ARE IN FAVOUR OF THE APPELLANT. THEREFORE, THE DECISION OF THE SUPREM E COURT IN CASE OF T N ARAVINDA REDDY (SUPRA) DOES NOT ADVANCE THE CASE O F THE APPELLANT. 5 . 4 . 4 THE BOARD CIRCULAR NO. 667 DATED 18.10.1993, WHIC H IS RELIED UPON BY THE APPELLANT, READS AS UNDER: 1. SECTIONS 54 AND 54F PROVIDE FOR A DEDUCTION IN CASES WHERE AN ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER OF A CAPITAL ASSET T AKES PLACE, PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE 16 ITA NO.619/PUN/2012 CONSTRUCTED A RESIDENTIAL HOUSE. THE QUANTUM OF DED UCTION IS ITSELF DEPENDENT UPON THE COST OF SUCH NEW ASSET. IT HAS B EEN REPRESENTED TO THE BOARD THAT THE COST OF CONSTRUCTION OF THE RESI DENTIAL HOUSE SHOULD BE TAKEN TO INCLUDE THE COST OF THE PLOT AS, IN A SITUATION OF PURCHASE OF ANY HOUSE PROPERTY, THE CONSIDERATION P AID GENERALLY INCLUDES THE CONSIDERATION FOR THE PLOT ALSO. 2. THE BOARD HAS EXAMINED THE ISSUE WHETHER, IN CAS ES WHERE THE RESIDENTIAL HOUSE IS CONSTRUCTED WITHIN THE SPECIFI ED PERIOD, THE COST OF SUCH RESIDENTIAL HOUSE CAN BE TAKEN TO INCLUDE THE COST OF THE PLOT ALSO. THE BOARD ARE OF THE VIEW THAT THE COST OF THE LAND IS AN INTEGRAL PART OF THE COST OF THE RESIDENTIAL HOUSE, WHETHER PURCHASE D OR BUILT. ACCORDINGLY, IF THE AMOUNT OF CAPITAL GAIN FOR THE PURPOSES OF SECTION 54, AND THE NET CONSIDERATION FOR THE PURPOSES OF SECTI ON 54F, IS APPROPRIATED TOWARDS PURCHASE OF A PLOT AND ALSO TO WARDS CONSTRUCTION OF A RESIDENTIAL HOUSE THEREON, THE AGGREGATE COST SHOULD BE CONSIDERED FOR DETERMINING THE QUANTUM OF DEDUCTION UNDER SECT ION 54/54F, PROVIDED THAT THE ACQUISITION OF PLOT AND ALSO THE AS PER THE ABOVE BOARD CIRCULAR, IF THE AMOUNT OF CA PITAL GAIN FOR THE PURPOSES OF SECTION 54, AND THE NET CONSIDERATION FOR T HE PURPOSES OF SECTION 54F, IS APPROPRIATED TOWARDS PURCHASE OF A PLOT AND ALSO TOWARDS CONSTRUCTION OF A RESIDENTIAL HOUSE THEREON, TH E AGGREGATE COST SHOULD BE CONSIDERED FOR DETERMINING THE QUANTUM OF D EDUCTION UNDER SECTION 54/54F, PROVIDED THAT THE ACQUISITION OF PLOT AND ALSO THE CONSTRUCTION THEREON, ARE COMPLETED WITHIN THE PERIO D SPECIFIED IN THESE SECTIONS. IN THE PRESENT CASE, THERE IS NO SUCH APPROPRIA TION TOWARDS COST OF THE PLOT AS NO CONSIDERATION WAS PAID FOR ALLEG ED RELEASE OF LAND AND THE APPELLANT HAS TAKEN ONLY ESTIMATED COST BASED O N THE CONSIDERATION RECEIVED FROM SALE OF OTHER PART OF THE LAND. IN SUCH CIRCUMSTANCES, IT IS NOT KNOWN AS TO HOW THE BOARD CIRC ULAR IS APPLICABLE TO THE FACTS OF THE CASE. 5.4.5 IN THE CASE OF TWENTY FIRST CENTURY STEELS LTD. ( 94 ITD 258), THE SPECIAL BENCH OF ITAT, DELHI IN THE CONTEXT OF PROVI SIONS OF SEC. 32AB HELD THAT THE TERMS 'UTILIZATION' OR 'PURCHASE' OF 'N EW MACHINERY' ARE NOT TO BE TAKEN IN STRICT LITERAL SENSE AND, THEREFORE, TH E BENEFIT OF DEDUCTION IS TO BE ALLOWED ALSO IN THOSE CASES WHERE THE ENTIRE MA CHINERY HAS NOT BEEN PURCHASED FROM MARKET, BUT THE SAME HAS BEEN FABR ICATED OR ASSEMBLED BY THE ASSESSEE. THE SPECIAL BENCH OBSERVED TH AT THE OBJECT IS TO ENCOURAGE INVESTMENT IN NEW MACHINERY AND PLANT . IF AN ASSESSEE PURCHASES THE PARTS OR COMPONENTS OF THE MACHINERY AND FABRICATES THE SAME AT ITS OWN PREMISES BY INCURRING EXPENDITURE AND LABOUR, ETC., AND, THUS, ASSEMBLE THE ENTIRE MACHINERY HIMSELF OR ITSELF, T HEN INVESTMENT IN THE PURCHASE OF COMPONENTS OF SUCH MACHINERY AND EXPEN DITURE IN THE COST OF LABOUR FOR FABRICATING SUCH MACHINERY, SHOULD BE TAKEN TO BE 'UTILIZATION OF THE AMOUNT FOR THE PURCHASE OF THE M ACHINERY'. IN SUCH CIRCUMSTANCES IT WAS HELD THAT THE TERM 'PURCHASE' CAN NOT MEAN PURCHASE FOR PRICE FROM THE MARKET ONLY. IN THE PRESE NT CASE, THE FACTS ARE TOTALLY DIFFERENT IN THE SENSE THAT NOTHING IS PLA CED ON RECORD TO SHOW THAT THE APPELLANT INCURRED ANY EXPENDITURE TOW ARDS SO-CALLED 'RELEASE' OF THE LAND BY OTHER COPARCENERS OR TOWARDS COST OF THE LAND. THEREFORE, THE SAID DECISION HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 17 ITA NO.619/PUN/2012 5.4.6 IN THE CASE OF GWALIOR RAYON SILK MFG. CO. LTD . (196 ITR 149), THE APEX COURT IN THE CONTEXT OF ADMISSIBILITY OF DEPRECI ATION ON ROADS TREATING THE SAME AS 'BUILDING' HELD THAT IT IS EQUALL Y SETTLED LAW THAT IF THE LANGUAGE IS PLAIN AND UNAMBIGUOUS ONE CAN ONLY L OOK FAIRLY AT THE LANGUAGE USED AND INTERPRET IT TO GIVE EFFECT TO THE LEGISLATIVE INTENTION. NEVERTHELESS TAX LAWS HAVE TO BE INTERPRETED REASONABLY AND IN CONSONANCE WITH JUSTICE ADOPTING PURPOSIVE APPROACH. T HE CONTEXTUAL MEANING HAS TO BE ASCERTAINED AND GIVEN EFFECT TO. A PROVISION FOR DEDUCTION, EXEMPTION OR RELIEF SHOULD BE CONSTRUED RE ASONABLY AND IN FAVOUR OF THE ASSESSEE. THE OBJECT BEING THAT IN COMPUT ATION OF THE NET INCOME, THE STATUTE PROVIDES DEDUCTIONS, EXEMPTIONS OR DEPRECIATION OF THE VALUE OF THE CAPITAL ASSETS FROM TAXABLE INCOME. T HE FACTS IN THE CASE OF THE PRESENT APPELLANT ARE TOTALLY DIFFERENT. IT M AY BE TRUE THAT A PROVISION FOR DEDUCTION, EXEMPTION OR RELIEF SHOULD B E CONSTRUED REASONABLY AND IN FAVOR OF THE ASSESSEE. WHEN THE ADMISSIB ILITY OF DEDUCTION UNDER SEC 54F IS SUBJECT TO CERTAIN CONDITIONS INCLUDING UTIL I ZATION OF SALE PROCEEDS TOWARDS PURCHASE OR CONSTRUCTIO N OF A NEW HOUSE, IT CANNOT BE SAID THAT THE DEDUCTION SHOULD BE ALLOWED BY LIBERAL CONSTRUCTION OR INTERPRETATION OF SUCH PROVISIONS EVEN WHEN BASIC CONDITIONS FOR DEDUCTION ARE NOT FULFILLED. IN THIS C ONNECTION, REFERENCE CAN BE MADE TO THE DECISION OF THE APEX COURT IN THE CASE OF PETRON ENGINEERING CONSTRUCTION (P) LTD. VS. CSDT REPORTED I N 175 ITR 523 WHEREIN IT IS OBSERVED AS UNDER:- ' ... . IT IS TRUE THAT AN EXEMPTION PROVISION SHOULD BE LIBERALL Y CONSTRUED BUT THIS DOES NOT MEAN THAT SUCH LIBERAL CONSTRUCTION SHOULD BE MADE DOING VIOLENCE TO THE PLAIN MEANING OF SUCH EXEMPTION PROVISION. LIBERAL CONSTRUCTION WILL BE MADE WHENEVER IT IS POSSIBLE TO BE MADE WITHOUT IMPAIRING THE LEGISLATI VE REQUIREMENT AND THE SPIRIT OF THE PROVISION. .. . THUS, NONE OF THE DECISIONS AND THE BOARD CIRCULAR REL IED UPON BY THE APPELLANT ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE 5.4.7 FOR THE FOREGOING REASONS, THE CLAIM OF THE APP ELLANT THAT THERE WAS TRANSFER OF LAND BY RELEASE IN FAVOR OF THE SAME HU F BY THE COPARCENERS IS NOT TENABLE ON THE FACTS OF THE CASE. EV EN PRESUMING THERE WAS A RELEASE AS CLAIMED BY THE APPELLANT; REL EASE WAS NOT FOR A CONSIDERATION AS THE APPELLANT HAS NOT PAID ANY PRICE TO THE OTHER COPARCENERS FOR RELEASE OF THEIR SHARE IN FAVOR OF THE APPELLANT AND THEREFORE THERE WAS NO APPROPRIATION OF SALE CONSIDER ATION TOWARDS COST OF THE LAND. ACCORDINGLY, THE ESTIMATED AND NOTI ONAL COST OF THE LAND WITHOUT ACTUAL APPROPRIATION OR UTILIZATION OF SALE PROCEEDS TOWARDS THE COST OF THE LAND CANNOT BE ALLOWED AS DEDU CTION UNDER SEC. 54F FROM THE CAPITAL GAINS ON SALE OF THE IMPUGNED PR OPERTY. 18. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVER T THE ABOVE OBSERVATION OF THE LD.CIT(A) NOR COULD BRING ANY MA TERIAL BEFORE US TO TAKE A DIFFERENT VIEW THAN THE VIEW TAKEN BY THE LD.CIT(A). THE TWO DECISIONS RELIED ON BY THE LD. COUNSEL FO R THE 18 ITA NO.619/PUN/2012 ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACT S OF THE PRESENT CASE. WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A ) IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE RELEASE OF LA ND BY THE MEMBERS OF THE HUF IN FAVOUR OF HUF FOR UTILIZATION IN CONSTRUCTION OF RESIDENTIAL PROPERTY BE INCLUDED IN THE E XEMPTION CLAIMED U/S.54F OF THE ACT. THE FIRST GROUND RAISED BY TH E ASSESSEE IS ACCORDINGLY DISMISSED. 19. SO FAR AS THE ISSUE RELATING TO INVESTMENT OF RS.3 LAKHS TOWARDS CONSTRUCTION OF RESIDENTIAL PROPERTY IS CONCERNED WE FIND THE LD.CIT(A) AFTER ELABORATELY DISCUSSING THE ISSUE HAS GIV EN CLEAR CUT FINDING THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS T OWARDS THE CONSTRUCTION EXPENDITURE OF RS.3 LAKHS SUCH AS THE N ATURE OF CONSTRUCTION, PERMISSION FROM THE COMPETENT AUTHORITY FOR CONSTRUCTION, DATE OF UTILIZATION OF FUNDS FOR CONSTRUCTION, B ILLS AND VOUCHERS FOR VARIOUS ITEMS OF EXPENSES FOR CONSTRUCTION AND ABOVE ALL WHETHER THE NEW BUILDING WAS COMPLETED WITHIN THE SPECIFIE D PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER, COMPLETION CER TIFICATE FROM COMPETENT AUTHORITY AND THE NEXUS BETWEEN THE CONSIDERATION RECEIVED AND THE INVESTMENT IN THE CONSTRU CTION OF HOUSE PROPERTY. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE BEFORE US TO COUNTER THE ABOVE FAC TUAL FINDINGS GIVEN BY THE LD.CIT(A). SINCE THE ASSESSEE FAILED TO SUBSTANTIATE WITH EVIDENCE REGARDING THE INVESTMENT OF RS .3 LAKHS IN CONSTRUCTION OF THE HOUSE PROPERTY, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) REJECTING THE CLAIM OF THE ASSESSEE THAT AN AMOUNT OF RS.3 LAKHS WAS UTILIZED TOWARD S CONSTRUCTION OF THE HOUSE PROPERTY. THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE TO SET ASIDE THE ISSUE TO THE FILE OF THE 19 ITA NO.619/PUN/2012 ASSESSING OFFICER ALSO DOES NOT HAVE ANY MERIT IN ABSENCE OF ANY MATERIAL BEFORE US. GROUND OF APPEAL NO.2 BY THE ASSESS EE IS ACCORDINGLY DISMISSED. 20. SO FAR AS THE THIRD GROUND IS CONCERNED, I.E. ESTIMATING THE COST OF ACQUISITION @ RS.100/- PER SQ.MTR AS ON 01-04-1981 FOR THE PURPOSE OF INDEXATION AS AGAINST RS.200/- PER SQ.MTR CLAIME D BY THE ASSESSEE WE FIND THE LD.CIT(A) WHILE DECIDING THE ISSUE H AS DWELT UPON THE ISSUE AT PARA 6 OF THE ORDER WHICH READS AS UNDER: 6. THE NEXT GROUND OF THE APPEAL RELATES TO NOT AL LOWING THE CLAIM OF INDEXED COST OF ACQUISITION WHILE COMPUTING THE LO NG TERM CAPITAL GAINS IN THE ASSESSMENT ORDER. AS PER THE DETAILS PLACED O N RECORD, THE COST OF THE LAND AS ON 01/04/1981 WAS TAKEN ON ESTIMAT E BASIS @ 150 PER SQ. MTR., IN THE INDIVIDUAL RETURN FILED WHEREAS IN THE HUF RETURN THE SAME WAS TAKEN AT RS. 200/- PER SQ. MTR. ON THE GROUND THAT THE COST OF THE LAND HAD DOUBLED DUE TO CONVERSION OF PAR T OF THE AGRICULTURAL LAND INTO N.A. PLOT. IN FACT, WHILE TA KING THE COST OF ACQUISITION OF THE LAND SOLD, THE ASSESSEE HAS DOUBLED THE EXTENT OF THE LAND SOLD FROM 1580 SQ. MTRS. TO 3240 SQ. MTRS. ON THE G ROUND THAT IN THE YEAR 1998, THE TOWN PLANNING DEPARTMENT HAS GRAN TED N.A. PERMISSION TO THE EXTENT OF 21 GUNTHAS ONLY OUT OF THE TOTAL AGRICULTURAL LAND OF 45 GUNTHAS AND THEN ADOPTED FMV AS ON 01 . 04.1981 AT RS. 100/- PER SQ. MT. . BY TAKING THE EXTENT OF LAND SOLD AT 3240 SQ. MT. INSTEAD OF 1580 SQ. MT., THE FMV AS ON 01/ 04/1981 OF THE LAND SOLD OF 1580 SQ. MT. GOT DOUBLED TO RS.200 PER SQ. MTR. AS AGAINST OF RS.100 PER SQ. MTR. ESTIMATED BY THE VALUER. THE ASSE SSING OFFICER HAS NOT ALLOWED ANY COST OF ACQUISITION WHILE COMPUTIN G THE CAPITAL GAINS IN THE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSE E KEEPS ON CHANGING THE COST OF ACQUISITION WHILE COMPUTING T HE CAPITAL GAINS. BUT UNDER THE PROVISIONS OF SEC.55(2)(B), COST OF ACQUI SITION IN RELATION TO ANY CAPITAL ASSET, WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE THE 1 ST DAY OF APRIL, 1981 MEANS THE COST OF ACQUISITION OF THE ASSET TO THE ASSESSEE OR THE FAIR MARKET VALUE OF THE ASSET ON THE 1 ST DAY OF APRIL, 1981 AT THE OPTION ' OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE HAS OPTED FOR THE MARKET VALUE OF TH E PROPERTY AS ON 01/04/1981 AS IT WAS ACQUIRED PRIOR TO 01/04/1981 . THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN NOT ALLOWING ANY C OST OF ACQU I SITION WH IL E COMPUTING THE CAPITAL GAINS IN THE ASSESSMENT ORDER O N THE SOLE GROUND THAT THE ASSESSEE KEEPS ON CHANGING THE COST OF AC QUISITION. NOW THE QUESTION IS, WHETHER THE FMV AS ON 01/04/1981SH OULD BE TAKEN AT RS.150/- ' PER SQ. MTR . AS CLAIMED BY THE ASSESSEE IN HIS INDIVIDUAL RETURN OR AT RS. 100/- AS PER VALUATION RE PORT OR AT TWICE THE VALUE AT RS.200/- PER SQ. MTR. (BY TAKING THE EX TENT OF LAND TWICE THE EXTENT OF LAND ACTUA L LY SOLD, WHICH IN EFFECT AMOUNTS TAKING THE FMV OF THE LAND SOLD AT RS. 200 PER SQ. MT.) AS CLAIMED NOW. THE ONLY REASON STATED BY THE ASSESSEE FOR ADOPTING FMV AT RS . 200/- PER SQ . MT. IS THAT THE CONVERSION TO NA WAS GIVEN ONLY TO 50% OF THE TOTAL 20 ITA NO.619/PUN/2012 AGRICULTURAL LAND IN THE YEAR 1998 BY TOWN PLANNING AUTHORITY AND THEREFORE, THE VALUE SHOULD BE TAKEN AT RS . 200/- PER SQ. MTR. AS ON 01/04/1981 . THIS CLAIM OF THE ASSESSEE THAT THE FMV AS ON 01/04/1981 SHOULD BE TAKEN RS.200/- PER SQ. MT. CANNOT BE ACCEPTED AS WHAT IS RELEVANT TO BE CONSIDERED IS THE FMV OF THE PROPERTY AS ON 01/04/1981 AND NOT IN THE YEAR 1998 WHEN THE CONVER SION WAS GRANTED BY THE TOWN PLANNING COMMISSION. THE CONVERSIO N IN THE SUBSEQUENT YEAR I .E. I N THE . YEAR 1998 DOES NOT ENHANCE THE FAIR MARKET VALUE IN THE YEAR 1981 AND WHAT IS TO BE RECK ONED IS THE FMV OF THE LAND AS ON 01/04/1981 WHICH THE VALUE R HAS ESTIMATED @ RS.100/- PER SQ. MTR . THEREFORE, THE NEW CLAIM OF THE , ASSESSEE THAT THE COST OF ACQUISITION IS RS.200/- PER SQ. MT. AS ON 01/04/ 1981 IS ONLY AN AFTERTHOUGHT AFTER THE ISSUE OF NOTICE U/S.148 TO THE ASSESSEE. THE COST OF ACQU I S I TION AS ON 01 . 04.1981 AS ESTIMATED AT RS.100/- IN THE VALUER'S REPORT ALSO APPEARS TO BE REASONABLE GIVEN THE FACT THAT THE LAND SOLD IN APR I L 2000 FETCHED RS.1455/- PER SQ. MTR. ACCORDING L Y, THE FMV OF THE PROPERTY AS ON 01/04/1981 IS TAKEN AT RS . 100/- PER SQ. MTR. AND THE CAPITAL GAINS ON TRANSFER OF THE PROPERT Y IS WORKED OUT AS UNDER: - NET SALE CONSIDERATION AS PER ASST. ORDER RS.22,43,270 LESS : COST OF ACQUISITION AS ON 01-04-1981 IS RS.1,58,000/- @ RS.100 PER SQ.MT INDEXED COST OF ACQUISITION = RS.1,58,000 X 406/100 RS.6,41,480/- ------------------- LONG TERM CAPITAL GAINS RS.16,01,790/- LESS : DEDUCTION U/S.54F(4) ON ACCOUNT OF AMOUNT DEPOSITED IN CAPITAL GAIN A/C SCHEME 16,01,790 X 10,19,490 ------------------------------- 22,43,270 RS.7,27,959/- -------------------- TAXABLE LONG TERM CAPITAL GAINS RS.8,73,831/- -------------------- ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ASSESS THE LONG TERM CAPITAL GAINS AT RS.8,73,831/- AS AGAINST RS.12,23,780/- DETERM INED BY HIM IN THE ASSESSMENT ORDER. THE ASSESSEE GETS CONSEQUENTIAL RELIEF OF RS.3,49,949/- (RS.12,23,780 - 8,73,831). GROUND OF APPEAL NO.3 IS P ARTLY ALLOWED. 21. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVER T THE FINDINGS GIVEN BY THE CIT(A) ON THIS ISSUE. SINCE THE ORDER OF THE CIT(A) IS BASED ON THE REPORT OF ASSESSEES OWN VALUER W HO HAS DETERMINED THE VALUE AT RS.100/- PER SQ.MTR AS ON 01-04 -1981, THEREFORE, IN VIEW OF THE REASONED ORDER GIVEN BY THE CIT (A) ON THIS 21 ITA NO.619/PUN/2012 ISSUE WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSE D. ALL THE 3 GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 22. GROUND OF APPEAL NO.4 RELATES TO LEVY OF INTEREST U/S .234A, 234B AND 234C. 23. AFTER HEARING BOTH THE SIDES, WE ARE OF THE CONSIDERE D OPINION THAT LEVY OF INTEREST UNDER THE ABOVE PROVISIONS A RE MANDATORY AND CONSEQUENTIAL IN NATURE. ACCORDINGLY, THIS GROUND BY THE ASSESSEE IS DISMISSED. 24. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01-02-2017. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 01 ST FEBRUARY, 2017. LRH'K ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) - THE CIT(A)-III, PUNE 4. % S / THE CIT-III, PUNE 5. ( ++, , , , IQ.KS / DR, ITAT, A PUNE; 6. 0 / GUARD FILE. / BY ORDER , // TRUE COPY // //TRUE COPY// 56 /ASSISTANT REGISTRAR , , / ITAT, PUNE