ITO, Bangalore V. Smt. B.S. Shanthakumari, Bangalore

ITA 63/BANG/2013

• Counselvise Citation: 6321114 RSA 2013
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJN JT SHRI H V
• Keywords: Capital asset; Cost of acquisition
• Section: 54F; 131; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.63/BANG/2013 ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD 4(1), BANGALORE. VS. SMT. B.S. SHANTHAKUMARI, NO.187, 8 TH MAIN, BYRASANDRA, 1 ST BLOCK EAST, JAYANAGAR, BANGALORE 560 022. PAN: AMZPS 1706Q APPELLANT RESPONDENT APPELLANT BY : SHRI A. SUNDARARAJN, JT. CIT(DR) RESPONDENT BY : SHRI H.V. GOWTHAMA, C.A. DATE OF HEARING : 25.10.2013 DATE OF PRONOUNCEMENT : 13.11.2013 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER DATED 02.11.2002 OF THE CIT(APPEALS)-II, BANGALORE RELATI NG TO A.Y. 2009-10. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS FOLLOWS:- ITA NO.63/BANG/2013 PAGE 2 OF 11 1) THE ORDER OF LD. CIT(A) IS CLEARLY OPPOSED TO L AW AS FAR AS THE FINDINGS ARE PERVERSE, CONTRARY TO THE FACTS AN D CIRCUMSTANCE OF THE CASE AND HENCE NOT SUSTAINABLE. 2) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE ON ACCOUNT OF DENIAL OF RELIEF U/S 54F TO THE TUNE OF RS 46,66,562/- WITHOUT APPRECIATING AND GIVING A CONCRETE FINDING AGAINST THE ADMITTED FACT THAT THE ASSESSEE FAILED TO ADHERE TO THE CONDITIONS LAID DOWN UNDER SECTION 54F. 3) THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDE NCE TO SHOW THAT THERE WAS A CONSTRUCTION OF NEW HOUSE BUILDING . 4) THE LD. CIT(A) HAS FURTHER ERRED IN CONCLUDING THAT A SITE PURCHASE AND OBTAINING PLAN FOR CONSTRUCTION OF NEW HOUSE IS ENOUGH FOR THE ASSESSEE TO CLAIM RELIEF U/S 54F IGN ORING THE VERY INTENDED AND LEGISLATED PROVISIONS OF THE SAID SECT ION. 3. THE ASSESSEE IS AN INDIVIDUAL. DURING THE PREVI OUS YEAR, THE ASSESSEE SOLD PROPERTY BEARING NO.1355 IN THE LAYOU T FORMED BY MINISTRY OF COMMUNICATION EMPLOYEES CO-OPERATIVE HOUSING SOCIE TY LTD. AT DR. SHIVARAM KARANTH NAGAR, BANGALORE ON 06.10.2008. T HE CAPITAL GAIN ON SALE OF THE AFORESAID PROPERTY WAS INVESTED BY THE ASSESSEE IN PURCHASING ANOTHER HOUSE SITE ON 13.10.2008 AT SITE NO.108, NA GARABHAVI II STAGE, I BLOCK EXTENSION, BANGALORE MEASURING 2400 SQ.FT. T HE ASSESSEE CLAIMED DEDUCTION U/S.54F OF THE ACT ON THE CAPITAL GAIN ON SALE OF THE SHIVARAM KANT NAGAR PROPERTY. THE REVISED COMPUTATION OF CA PITAL GAINS FILED BY THE ASSESSEE AND CONSIDERED BY THE AO IN THE ORDER OF A SSESSMENT WAS FOLLOWS: ITA NO.63/BANG/2013 PAGE 3 OF 11 SALE OF PROPERTY RS. 50,00,000 LESS: INDEXED COST OF ACQUISITION 2,75,000 X 480 RS. 3,33,437 582 RS. 46,66,562 LESS: INVESTMENT ON THE PROPERTY RS. 48.68,665 CAPITAL GAIN/(LOSS) ON SALE OF PROPERTY 4. AS PER PROVISIONS OF SEC.54F, THE ASSESSEE SHOU LD CONSTRUCT THE RESIDENTIAL HOUSE WITHIN 3 YEARS FROM THE DATE OF S ALE OF THE PROPERTY OR INVEST IN A RESIDENTIAL HOUSE WITHIN 2 YEARS. THE P ROVISIONS OF SEC.54F IS REPRODUCED AS UNDER: 54F (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 FRO M THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERR ED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR [TWO YEARS] AFTER THE DATE WH ICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERI OD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENT IAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACC ORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, - A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN T HE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UND ER SECTION 45; B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NE T CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CA PITAL GAIN, THE SAME PROPORTION AS THE COST OF THE NEW AS SET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGE D UNDER SECTION 45: ITA NO.63/BANG/2013 PAGE 4 OF 11 PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY WHERE (A) THE ASSESSEE (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THA N THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET: OR (II) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE O F TRANSFER OF THE ORIGINAL ASSET; AND (III)CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN T HE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DAT E OF TRANSFER OF THE ORIGINAL ASSET. 5. TO VERIFY THE CLAIM OF THE ASSESSEE THAT SHE INV ESTED THE CAPITAL GAIN IN CONSTRUCTION OF A RESIDENTIAL HOUSE, THE AO ISSU ED SUMMONS, U/S 131 OF THE I.T. ACT, 1961, TO THE ASSESSEE ON 11.11.2011 P OSTING THE CASE ON 14.11,2011. IN RESPONSE TO THE SUMMONS, ASSESSEES HUSBAND SHRI N CHANDRAPPA, APPEARED ON BEHALF OF THE ASSESSEE. HIS STATEMENT WAS RECORDED ON 18.11.11. THE RELEVANT PORTION OF THE Q UESTION AND ANSWER IS REPRODUCED AS UNDER:- Q.NO.2 PLEASE FURNISH THE DETAILS OF INCOME OF Y OUR WIFE? ANS: MY WIFE WAS DERIVING INCOME FROM HOUSE PROPERT Y DURING THE P.Y 2008-09 TO THE EXTENT OF RS.2,16,000 /- AND INTEREST INCOME OF RS.60,250/-. DURING F.Y 2008 - 09, SHE SOLD ONE RESIDENTIAL VACANT SITE NO.1355 IN A LAYOUT FORMED BY THE MINISTRY OF COMMUNICATIONS EMPLOYEES HOUSING SOCIETY LTD., AT YELAHANKA HOBLI , BANGALORE NORTH TALUK, PRESENTLY NAMED AS DR. SHIVARAM KARANTH NAGAR, BANGALORE, MEASURING EAST T O WEST 60 FEET AND NORTH TO SOUTH 40 FEET FOR A CONSIDERATION OF RS.49/50 LACS AND THE REGISTERED V ALUE IS RS.28,80,000/- WHEREAS I HAVE TAKEN THE ACTUAL S ALE ITA NO.63/BANG/2013 PAGE 5 OF 11 CONSIDERATION FOR CALCULATION OF LTCG. THIS PROPERT Y WAS PURCHASED ON 31.07.2004 FOR A CONSIDERATION OF RS.2,52,000/- AND CLAIMED COST INFLATION INDEX OF RS.3,33,437/- AND CLAIMED EXEMPTION U/S 54F TO THE TUNE OF RS.46,66,562/- . THIS AMOUNT WAS INVESTED I N PURCHASE OF ANOTHER SITE AT NO.108, IN LAYOUT FORME D BY BANGALORE DEVELOPMENT AUTHORITY, SITUATED AT NAGARABHAVI 2 ND STAGE, 1ST BLOCK EXTENSION, BANGALORE, MEASURING EAST TO WEST: 60 FEET, NORTH TO SOUTH: 40 FEET. Q.NO.3. YOU HAVE GIVEN AN ANSWER TO Q.NO.2 THAT YO U HAVE INVESTED THE SALE CONSIDERATION FOR PURCHASE O F SITE AT NAGARABHAVI AND CLAIMED EXEMPTION U/S 54F. FOR CLAIMING EXEMPTION UNDER THIS SECTION, YOU SHOULD H AVE CONSTRUCTED A RESIDENTIAL HOUSE WITHIN A PERIOD OF 3 YEARS AFTER THE DATE OF TRANSFER OF THE PROPERTY. H AVE YOU CONSTRUCTED THE RESIDENTIAL HOUSE WITHIN 3 YEAR S WHICH EXPIRES ON 12.10.2011 ? ANS: I GOT THE CONSTRUCTION PLAN APPROVED BY THE BB MP ON 02.06.2010. BUT, DUE TO CERTAIN FINANCIAL CONSTR AINTS, I COULD NOT COMPLETE THE CONSTRUCTION WITHIN THE STIPULATED PERIOD. 6. ON THE BASIS OF THE STATEMENT OF THE HUSBAND OF THE ASSESSEE, THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS NOT SATISF IED THE CONDITIONS LAID DOWN IN SEC.54F OF THE ACT FOR CLAIMING DEDUCTION F ROM CHARGEABLE CAPITAL GAIN. THE AO ON THE BASIS OF ANSWER TO Q.NO.3 CAME TO THE CONCLUSION THAT THE ASSESSEE DID NOT COMPLETE CONSTRUCTION OF THE RESIDENTIAL HOUSE WITHIN A PERIOD OF 3 YEARS BY NOT CONSTRUCTING THE RESIDENTIAL HOUSE WITHIN THREE YEARS FROM THE DATE OF SALE OF THE PROPERTY. AS PER THE SALE DEED THE PROPERTY AT SHIVARAM KARANTH NAGAR, BANGALORE WAS S OLD BY THE ASSESSEE ON 06.10.2008. THE PERIOD OF 3 YEARS FROM THAT DATE EXPIRES ON 05.10.2011. ACCORDING TO THE AO, THE ASSESSEE HAS NOT CONSTRUCT ED THE RESIDENTIAL ITA NO.63/BANG/2013 PAGE 6 OF 11 HOUSE WITHIN THE PERIOD STIPULATED IN SEC.54F OF TH E ACT. HENCE, THE CLAIM MADE BY THE ASSESSEE U/S 54F WAS REJECTED AND THE E NTIRE CAPITAL GAINS OF RS.46,66,562/- WAS BROUGHT TO TAX BY THE AO UNDER T HE HEAD LONG TERM CAPITAL GAINS. 7. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILE D APPEAL BEFORE THE CIT(APPEALS). BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE PERIOD OF THREE YEARS FROM THE DATE OF SALE OF THE PROPERTY WITHIN WHICH CONSTRUCTION OF A RESIDENTIAL HOUSE SHOULD BE MADE BY THE ASSESSEE TO CLAIM DEDUCTION U/S. 54F OF THE ACT WOULD EXPIRE ON 05.10.2011. THE ASS ESSEE POINTED OUT THAT SHE GOT PLAN SANCTIONED FOR THE CONSTRUCTION OF THE HOUSE ON 02.06.2010. IT WAS ALSO POINTED OUT THAT BECAUSE OF FINANCIAL CONS TRAINTS, THE CONSTRUCTION STARTED BEFORE 05.10.2011, BUT COULD NOT BE COMPLET ED. THE EVIDENCE REGARDING THE PROGRESS OF CONSTRUCTION (IN THE FORM OF PHOTOGRAPHS) AT THE TIME WHEN THE PROCEEDINGS WERE PENDING BEFORE THE C IT(A) WERE ALSO FURNISHED. THE ASSESSEE POINTED OUT THAT TO CLAIM DEDUCTION U/S. 54F OF THE ACT, IT IS NOT A CONDITION THAT THE CONSTRUCTION OF THE HOUSE SHOULD HAVE BEEN COMPLETED WITHIN THE STIPULATED PERIOD OF THRE E YEARS AND THAT IF IT IS PROVED THAT THE CONSIDERATION RECEIVED ON TRANSFER OF THE ASSET GIVING RISE TO CAPITAL GAINS HAD BEEN INVESTED IN THE CONSTRUCTION OF RESIDENTIAL HOUSE, THE ASSESSEE IS ENTITLED TO BENEFIT OF SECTION 54F OF T HE ACT, THOUGH THE CONSTRUCTION IS NOT COMPLETE IN ALL RESPECTS. IN S UPPORT OF THE STAND TAKEN BY THE ASSESSEE, RELIANCE WAS PLACED ON THE DECISIO N OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SAMBANDAM UDAYKUMAR, ITA NO.63/BANG/2013 PAGE 7 OF 11 251 CTR 317 (KARN.) , WHEREIN THE HONBLE HIGH COURT HAD TAKEN THE FOLLOWING VIEW:- SECTION 54F OF THE ACT IS A BENEFICIAL PROVISION OF PROMOTING THE CONSTRUCTION OF RESIDENTIAL HOUSE. THEREFORE, THE S AID PROVISION HAS TO BE CONSTRUED LIBERALLY FOR ACHIEVING THE PURPOSE FO R WHICH IT WAS INCORPORATED IN THE STATUTE. THE INTENTION OF THE L EGISLATURE WAS TO ENCOURAGE INVESTMENTS IN THE ACQUISITION OF A RESID ENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT THE REQUIREMENT OF LAW. THE WORDS USED IN THE SECTION ARE 'PURCHASED' OR 'C ONSTRUCTED'. FOR SUCH PURPOSE, THE CAPITAL GAIN REALIZED SHOULD HAVE BEEN INVESTED IN A RESIDENTIAL HOUSE. THE CONDITION PRECEDENT FOR CLAI MING BENEFIT UNDER THE SAID PREVISION IS THE CAPITAL GAIN REALIZED FRO M SALE OF CAPITAL ASSET SHOULD HAVE BEEN PARTED BY THE ASSESSEE AND INVESTE D EITHER IN PURCHASING A RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE. IF AFTER MAKING THE ENTIRE PAYMENT, MERELY BECAUSE A R EGISTERED SALE DEED HAD NOT BEEN EXECUTED AND REGISTERED IN FAVOUR OF THE ASSESSEE BEFORE THE PERIOD STIPULATED, HE CANNOT BE DENIED T HE BENEFIT OF SECTION 54F OF THE ACT. SIMILARLY, IF HE HAS INVESTED THE M ONEY IN CONSTRUCTION OF A RESIDENTIAL HOUSE, MERELY BECAUSE THE CONSTRUC TION WAS NOT COMPLETE IN ALL RESPECTS AND IT WAS NOT IN A FIT CO NDITION TO BE OCCUPIED WITHIN THE PERIOD STIPULATED, THAT WOULD NOT DISENT ITLE THE ASSESSEE FROM CLAIMING THE BENEFIT UNDER SECTION 54F OF THE ACT. THE ESSENCE OF THE SAID PROVISION IS WHETHER THE ASSESSEE WHO RECEIVED CAPITAL GAINS HAS INVESTED IN A RESIDENTIAL HOUSE. ONCE IT IS DEMONST RATED THAT THE CONSIDERATION RECEIVED ON TRANSFER HAS BEEN INVESTE D EITHER IN PURCHASING A RESIDENTIAL HOUSE OR IN CONSTRUCTION O F A RESIDENTIAL HOUSE EVEN THOUGH THE TRANSACTIONS ARE NOT COMPLETE IN AL L RESPECTS AND AS REQUITED UNDER THE LAW, THAT WOULD NOT DISENTITLE T HE ASSESSEE FROM THE SAID BENEFIT. IN THE INSTANT CASE, THE MATERIAL ON RECORD DISCLOS ES THAT THE ASSESSEE HAD INVESTED RS. 2,16,61,670/- AS ON 31.10.2006 WIT HIN TWELVE MONTHS FROM THE DATE OF REALIZATION OF SALE PROCEEDS OF SH ARES. THE DEVELOPER ACKNOWLEDGING THE SAID AMOUNT HAS GIVEN PARTICULARS OF THE STAGE OF CONSTRUCTION. ACCORDING TO HIM, ONLY MINOR FITTINGS LIKE WINDOW SHUTTERS AND SOME ELECTRICAL WORK WERE REQUIRED TO BE MADE. IN FACT, THE REPORT OF THE INQUIRY CONDUCTED BY THE DEPARTMENT ALSO DIS CLOSES THE FLOORING WORK, ELECTRICAL WORK, FITTING OF DOOR AND WINDOW S HUTTERS WERE STILL PENDING. THE ASSESSEE HAS PRODUCED BEFORE THE AUTHO RITIES THE REGISTERED SALE DEED DATED 7.11.2009 SHOWING THE TR ANSFER OF THE PROPERTY IN HIS FAVOUR. THE SAID DOCUMENT DISCLOSES MARBLE TILES FLOORING HAS BEEN DONE, ELECTRICITY, WATER AND SANITARY CONN ECTIONS HAVE BEEN GIVEN, WOOD USED IS TEAK IN RESPECT OF DOORS AND WI NDOWS. THE ASSESSEE HAS BEEN PUT IN POSSESSION OF THE PROPERTY AND HE I S IN OCCUPATION. THEREFORE , THE ASSESSEE HAS INVESTED THE SALE CONSIDERATION I N ACQUIRING A RESIDENTIAL PREMISES AND HAS TAKEN POSSESSION OF THE RESIDENTIAL BUILDING AND IS LIVING IN THE SAID PREMISES. THE OB JECT OF ENACTING ITA NO.63/BANG/2013 PAGE 8 OF 11 SECTION 54 OF THE ACT I.E., TO ENCOURAGE INVESTMENT IN A RESIDENTIAL BUILDING IS COMPLETELY FULFILLED. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS JUSTIF IED IN EXTENDING THE BENEFIT OF SECTION 54F OF THE ACT TO THE ASSESSEE A ND THE SAID ORDER DOES NOT SUFFER FROM ANY INFIRMITY WHICH CALLS FOR INTERFERENCE. 8. THE CIT(APPEALS) AFTER CONSIDERING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT REFERRED TO ABOVE, OBSERVED AS FOLLOWS:- 3.5 IN THIS REGARD, THE HONBLE HIGH COURT OF KAR NATAKA HAS QUOTED WITH APPROVAL THE DECISION OF THE HONBLE HI GH COURT OF MADRAS IN THE CASE OF CIT V. SADARMAL KOTHARI (302 ITR 286) ON SIMILAR SET OF FACTS, WHICH HAS ALSO BEEN AFFIRMED BY THE HONBLE SUPREME COURT BY DISMISSING THE DEPARTMENTAL APPEAL AGAINST THE SAID JUDGEMENT AT THE STAGE OF PRELIMINARY HEARING IN CC.NOS.3Y53-3954/2009 DATED 6.4.2009. 3.6 THE FACTS IN THE APPELLANTS CASE UNDER CONSID ERATION ARE SUBSTANTIALLY THE SAME AS THOSE IN THE CASE OF CIT V. SRI SAMBANDAM UDAYKUMAR (SUPRA). THEREFORE, RESPECTFULL Y FOLLOWING THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE SAID CASE, I HOLD THAT, THOUGH THE RESIDENTIAL BUIL DING OF THE APPELLANT UNDER CONSTRUCTION IS NOT COMPLETE WITHIN THE STIPULATED PERIOD DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF T HE APPELLANT, SHE CANNOT BE DENIED THE BENEFIT ENVISAGED IN SECTI ON 54F OF THE ACT. THE AO IS, THEREFORE, DIRECTED TO ALLOW THE AP PELLANTS CLAIM FOR DEDUCTION OF RS.46,66,562/- U/S 54F OF THE ACT. 9. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 10. BEFORE US, THE LD. DR SUBMITTED THAT IN THE CA SE OF SAMBANDAM UDAYKUMAR (SUPRA) DECIDED BY THE HONBLE KARNATAKA HIGH COURT, THE CONSTRUCTION WAS ALMOST COMPLETE AND THEREFORE THE HONBLE HIGH COURT ITA NO.63/BANG/2013 PAGE 9 OF 11 GIVE A LIBERAL INTERPRETATION. IN THIS REGARD, OUR ATTENTION WAS DRAWN TO PARA 14 OF THE AFORESAID DECISION, WHERE FACTUALLY THE B UILDING WAS ALMOST COMPLETE. THE LD. DR SUBMITTED THAT AS FAR AS THE ASSESSEE IN THE PRESENT CASE IS CONCERNED, SHE HAD INVESTED ONLY A SUM OF R S.2.5 LAKHS IN DIGGING OUT A BOREWELL AND PURCHASE OF SAND AND CEMENT. TH E ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR CONSTRUCTION ON 12.05 .2011 AND THEREFORE IT CANNOT BE SAID THAT THERE WAS SUBSTANTIAL COMPLIANC E OF THE PROVISIONS OF SECTION 54F WARRANTING GRANT OF RELIEF TO THE ASSES SEE. BESIDES THE ABOVE, REFERENCE WAS MADE TO THE DECISION OF THE ITAT LUCK NOW BENCH IN THE CASE OF RITA GAUR V. DCIT, 90 ITD 24 (LUCK) , WHEREIN IT WAS HELD THAT DEDUCTION U/S. 54F CANNOT BE ALLOWED WHEN THE CAPIT AL GAIN IS INVESTED IN PURCHASE OF A RESIDENTIAL PLOT AND THAT CONSTRUCTIO N OF THE HOUSE WITHIN THE SPECIFIED PERIOD OVER THE PLOT PURCHASED HAS TO BE MADE TO GET DEDUCTION U/S. 54F OF THE ACT. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR. IN OUR VIEW, THE ORDER OF THE CIT(APPEALS) DOES NOT CALL FOR ANY INT ERFERENCE. IT IS CLEAR FROM THE ORDER OF THE CIT(A) THAT THE ASSESSEE HAD COMME NCED CONSTRUCTION OF THE BUILDING WITHIN A PERIOD OF THREE YEARS FROM TH E DATE ON WHICH THE PROPERTY ON THE TRANSFER OF WHICH CAPITAL GAIN AROS E. IN FACT EVEN AT THE STAGE OF PURCHASING THE PLOT OF LAND ON WHICH CONST RUCTION WAS PUT UP BY THE ASSESSEE, THE ENTIRE CAPITAL GAIN HAD BEEN INVE STED. THE INTENTION OF THE ASSESSEE WAS TO CONSTRUCT A RESIDENTIAL HOUSE A ND IN THIS REGARD, WE FIND THAT THE ASSESSEE HAD APPLIED FOR A SANCTION O F THE BUILDING PLAN AND ITA NO.63/BANG/2013 PAGE 10 OF 11 GOT SANCTION OF THE BUILDING PLAN AS EARLY AS ON 02 .06.2010. THE CONSTRUCTION, HOWEVER, COULD NOT BE COMPLETED BY TH E ASSESSEE, THOUGH CONSTRUCTION HAD BEEN STARTED. THE HONBLE KARNATA KA HIGH COURT, IN THE DECISION RENDERED IN THE CASE OF SAMBANDAM UDAYKUMAR (SUPRA), HAD TAKEN A VIEW THAT UNDER THE PROVISIONS OF SECTION 5 4F OF THE ACT, THE CONDITION PRECEDENT WAS THAT THE CAPITAL GAIN REALI ZED FROM SALE OF CAPITAL ASSET SHOULD HAVE BEEN PARTED BY THE ASSESSEE AND I NVESTED IN CONSTRUCTING A RESIDENTIAL HOUSE. IF THE MONEY IS INVESTED IN CONSTRUCTING THE RESIDENTIAL HOUSE, MERELY BECAUSE THE CONSTRUCT ION WAS NOT COMPLETE IN ALL RESPECTS AND WAS NOT IN A CONDITION TO BE OCCUP IED WITHIN THE STIPULATED PERIOD, THAT CANNOT BE A GROUND FOR REJECTING THE BENEFIT OF DEDUCTION U/S. 54F TO THE ASSESSEE. THE HONBLE COURT OBSERVED TH AT THE ESSENCE OF THE PROVISIONS OF SECTION 54F IS WHETHER THE ASSESSEE W HO RECEIVED THE CAPITAL GAIN HAS INVESTED IN THE HOUSE. ONCE IF IT IS DEMO NSTRATED THAT THE CONSIDERATION RECEIVED ON TRANSFER HAS BEEN INVESTE D IN CONSTRUCTION OF THE RESIDENTIAL HOUSE, THEN THOUGH THE CONSTRUCTION IS NOT COMPLETE IN ALL RESPECTS AND AS REQUIRED UNDER LAW, THE ASSESSEE SH OULD BE GIVEN THE BENEFIT OF SECTION 54F. A READING OF THE AFORESAID DECISION OF THE HONBLE KARNATAKA HIGH COURT WOULD SHOW THAT THERE IS NO PA RTICULAR STAGE OF COMPLETION OF CONSTRUCTION THAT IS CONTEMPLATED. I T IS NOT IN DISPUTE THAT THE ASSESSEE LATER COMPLETED THE CONSTRUCTION AND HAS O CCUPIED THE RESIDENTIAL HOUSE. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW T HAT NO FAULT CAN BE FOUND WITH THE ORDER OF THE CIT(APPEALS) ALLOWING B ENEFIT OF DEDUCTION U/S. ITA NO.63/BANG/2013 PAGE 11 OF 11 54F OF THE ACT TO THE ASSESSEE. WE THEREFORE CONFI RM THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 12. THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED SO ME ALTERNATIVE CONTENTIONS BEFORE US WITH REGARD TO THE YEAR IN WH ICH THE CAPITAL GAIN OUGHT TO HAVE BEEN BROUGHT TO TAX. ACCORDING TO HI M THE CAPITAL GAIN CANNOT BE BROUGHT TO TAX IN AY 09-10 BECAUSE OF THE PROVISIONS OF SEC.54F OF THE ACT AND THAT ONLY IN THE YEAR OF DEFAULT OF COMPLIANCE WITH CONDITIONS U/S.54F OF THE ACT, CAPITAL GAIN CAN BE BROUGHT TO TAX. WE HAVE NOT GONE INTO THOSE CONTENTIONS IN VIEW OF OUR CONCLUSIONS A S ABOVE. 13. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF NOVEMBER, 2013. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 13 TH NOVEMBER, 2013. /D S/ COPY TO: 1. APPELLANT 2. RES PONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/SR.PVT. SECRETARY, ITAT, BANGALORE.