SHRI SUSHIL KUMAR BAFNA, Ujjain V. The ITO 1(1), Ujjain

ITA 637/IND/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5686 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED SR DR
• Assessee Lawyers: N D PATWA S
• Keywords: Capital asset
• Section: 54F; 54; 139

Judgement Text

SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 1 OF 24 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE . . , . . , ' BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER V. SHRI SUSHIL KUMAR BAFNA 5, RAMCHANDRA SHETH KI GALI , UJJAIN INCOME TAX OFFICER 1(1) UJJAIN # / APPELLANT $%# / RESPONDENT . . ./ PAN: ABSPB 5426 E # & / APPELLANT BY SHRI ASHISH GOYAL AND SHRI N.D. PATWA, ADVOCATES, $%# & / RESPONDENT BY SHRI MOHD. JAVED, SR. DR & / DATE OF HEARING 16.03.2017 + & / DATE OF PRONOUNCEMENT 27.03.2017 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-UJJAIN; [IN SHORT THE CIT (A)] DATED 18.07.2014. THIS APPEAL PERTAINS TO ASSESSMENT YEAR 2010-11. THIS APPEAL HAS ARISEN FRO M THE ORDER PASSED UNDER SECTION 143 (3) OF INCOME TAX ACT, 196 1 (IN SHORT . . ./ I.T.A. NO. 637/IND/2014 / ASSESSMENT YEAR: 2010-11 SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 2 OF 24 THE ACT) BY THE INCOME TAX OFFICER 1 (1) UJJAIN D ATED 25.03.2013. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LEARNED CIT(A) ERRED IN HOLDING THE ACTION OF THE AO OF DISALLOWING THE CLAIM OF DEDUCTION MADE UNDER SECTION 54F AMOUNTING TO RS. 99,40,150/- AND IN MAKING ADDI TION OF THE SAID AMOUNT TO INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN. THAT ON THE FACTS AND CIRCUMSTANCES O F THE CASE, THE DISALLOWANCE/ADDITION MADE IS WRONG AND B AD IN LAW AND IT IS PRAYED THAT THE SAID DEDUCTION MAY VE RY KINDLY BE ALLOWED. 2.1 THAT THE LEARNED CIT(A) ERRED IN NOT DECIDING THE APPROPRIATE YEAR OF TAXABILITY OF THE LONG TERM CAP ITAL GAIN AS THE CONSTRUCTION PERIOD OF THREE YEARS ENVISAGED U/S. 54F ELAPSED ON 22.03.2013 MAKING THE LONG TERM CAPITAL GAIN TAXABLE IN A.Y. 20013-14 AND NOT IN A.Y. 2010-11. T HAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE YEAR O F TAXABILITY OF LONG TERM CAPITAL GAIN BEING WRONG, I T IS PRAYED THAT SUITABLE DIRECTIONS BE ISSUED TO THE AO TO TAX THE LONG TERM CAPITAL GAIN IN A.Y. 2013-14. 2.2. THAT THE LEARNED CIT(A) ERRED IN COMPLETELY IG NORING THE FACT THAT THE APPELLANT HAS SUO-MOTO OFFERED THE IM PUGNED CAPITAL GAIN U/S. 45 AS INCOME OF THE PREVIOUS YEAR 2012-13 RELEVANT TO A.Y. 2013-14 IN THE RETURN FILED UNDER SECTION 139(1) AS THE PRESCRIBED TIME LIMIT OF THREE YEARS EXPIRED IN F.Y. 2012-13. THE ACTION OF THE LD. CIT (A) OF CONF IRMING THE SAID ADDITION IN THE YEAR UNDER APPEAL HAS IN FACT RESULTED IN DOUBLE TAXATION OF THE SAME INCOME. SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 3 OF 24 3. WITHOUT PREJUDICE TO THE ABOVE, AND ONLY AS ALTE RNATE, IF AT ALL THE SAID ADDITION IS CONFIRMED IN A.Y. 2010-11, IT IS MOST HUMBLY PRAYED THAT SUITABLE DIRECTIONS BE GIVEN TO REDUCE THE INCOME OF A.Y. 2013-14 AND TO ADJUST THE RESULT ANT REFUND OF A.Y. 2013-14 AGAINST THE DEMAND OF A.Y. 2 010-11. 2. THOUGH THE ASSESSEE HAS TAKEN AS MANY AS 3 GROUNDS OF APPEAL BUT IN SUBSTANCE SAME RELATES TO CONFIRMING THE ADDITION OFFER 99,40,150 BY DENYING EXEMPTION UNDER SECTION 54F OF THE ACT IN A.Y. 2010-11 AND NOT TAXING THE L ONG TERM CAPITAL GAIN IN A.Y. 2013-14 AND IF IT BE TAXED IN A.Y. 2010- 11 THEN CORRESPONDING DEDUCTION BE DIRECTED FOR A.Y . 2013- 14. HENCE, THESE ARE BEING CONSIDERED TOGETHER AND BEING DISPOSED-OF BY COMMON MANNER . 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS INDIVIDUAL AND DERIVES INCOME FROM CATERING BUSINESS. THE ASSESSEE HAS FILED RETU RN OF INCOME ON 28.02.2011, DECLARING TOTAL INCOME OF RS. 3,92,3 30/-. THE ASSESSEE ALONG WITH HIS WIFE AND SON HAVE SOLD A P IECE OF LAND ADMEASURING 3.607 HECTARES SITUATED AT R.G. SURVEY NO. 1634, UJJAIN ON 22.03.2010 FOR A SALE CONSIDERATION OF RS .2,25,00,000 IN WHICH ASSESSEE`S SHARE OF CONSIDERATION WAS AT RS.1,12,50,000. THE ASSESSEE HAS CLAIMED COST OF IN DEXATION AT SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 4 OF 24 RS. 9,62,1010 AND AFTER DEDUCTING THE SAME, LONG T ERM CAPITAL GAINS WAS COMPUTED AT RS. 1,02,87,899/-. OUT OF THI S NET LONG TERM CAPITAL GAINS OF RS. 3,47,749/- WAS OFFERED TO TAX AND BALANCE OF RS. 99,40,150/- WAS CLAIMED AS EXEMPTION UNDER SECTION 54F OF THE ACT BEING PURCHASE OF THREE PLOT S OF LAND FOR RS. 87,90,150/- AND RS. 11,50,000/- WERE KEPT TOWAR DS CONSTRUCTION ON SAID PLOTS OF LAND. THE INVESTMENT OF RS. 87,88,135/- WAS MADE IN PURCHASE OF THREE PLOTS OF LAND BEING PLOT NO. 381 ON 15.03.2010 FOR RS. 28,89,910/- [PB3 1] PLOT NO. 382 ON 15.023.2010 FOR RS. 30,59,235/- [PB37] AND P LOT NO. 383 ON 15.03.2010 FOR RS. 28,38,990/- [ PB 47]. THE INV ESTMENT OF RS. 11,50,000/- WAS CLAIMED TOWARDS CONSTRUCTION OF RESIDENTIAL HOUSE ON THESE THREE PLOTS. THE ASSESSEE WAS ASKED TO FURNISH: - A) COPY OF MAP/PLAN APPROVED BY THE MUNICIPAL CORPO RATION, INDORE B) LETTER OF APPROVAL FROM TOWN AND COUNTRY PLANNING, INDORE, C) COMPLETE DETAILS OF EXPENSES ALONG WITH BILL/VOUCHERS WITH REGARD TO CONSTRUCTION CLAIMED AT RS. 11,50,00 0/- , D) DATE OF COMMENCEMENT OF CONSTRUCTION AND NAME OF ARCHITE CT / BUILDER ENGAGED TO THIS EFFECT. HOWEVER, THE ASSESS EE DID NOT REPLY TO SAID LETTER AND HAS EXPRESSED HIS INABILITY TO F URNISH DETAILS CALLED FOR. IN VIEW OF THESE CIRCUMSTANCES, THE AO ALONG WITH HIS SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 5 OF 24 INSPECTOR, SHRI SUBHASH MAHESHWARI , ADVOCATE, (THE LD. A.R. OF THE ASSESSEE), AND SHRI PAWAN BAFANA (SON OF THE AS SESSEE), INSPECTED THE SITE AT INDORE ON 19.11.2012 AND FOUN D THAT NO CONSTRUCTION WAS DONE TILL THE DATE OF INSPECTION I .E. 19.11.2012. IN RESPONSE TO SUMMON DTD. 19.11.2012, THE ASSESSEE HAS ATTENDED THE OFFICE OF THE AO, AND HIS STATEMENT WA S RECORDED WHEREIN HE HAS STATED THAT HE HAS PLANNED TO CONSTR UCT A HOUSE BUT DUE TO SOME REASONS THE CONSTRUCTION COULD NOT BE DONE. SINCE THE CONDITIONS LAID DOWN UNDER SECTION 54F WE RE NOT FULFILLED. THE AO, THEREFORE, ISSUED A SHOW CAUSE D TD. 20.12.2012 ASKING THE ASSESSEE TO SHOW-CAUSE AS TO WHY DEDUCTI ON CLAIMED AT RS. 99,40,150/- SHOULD NOT BE DISALLOWED AND ADD ED TO INCOME. THE ASSESSEE VIDE LETTER DATED 05.01.2013, REPLIED THAT TOWN AND COUNTRY PLANNING DEPARTMENT, INDORE IS NOT GIVING APPROVAL FOR CONSTRUCTION OF ONE BIG HOUSE ON THREE PLOTS. UNLESS AND UNTIL, THE TOWN AND COUNTRY PLANNING, INDORE, T HE MUNICIPAL CORPORATION APPROVE THE MAP, INDORE DID NOT PERMIT CONSTRUCTION OF HOUSE. FOR THESE REASONS, THE CONSTRUCTION ON TH REE PLOTS COULD NOT BE UNDERTAKEN. THE AO OBSERVED THAT THRE E YEARS TIME FROM SALE OF ORIGINAL ASSETS WAS EXPIRED ON 22.03.2 013. THEREFORE, THE AO AGAIN ALONG WITH SHRI SUBHASH MAHESHWARI ADV OCATE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 6 OF 24 (COUNSEL OF THE ASSESSEE), AND SHRI PAWAN BAFNA,(SO N OF THE ASSESSEE), INSPECTED THE SITE ON 24.03.2013 AND FOU ND THAT NO CONSTRUCTION WAS DONE WITHIN THREE YEARS AFTER THE DATE IN WHICH TRANSFER TOOK PLACE WHICH IS ALSO EVIDENT FROM PHOT OGRAPH ENCLOSED AS ANNEXURE 1 TO ASSESSMENT ORDER. THEREFO RE, THE AO HELD THAT CONDITIONS AS PER PROVISIONS OF SECTION 5 4F WERE NOT FULFILLED BY THE ASSESSEE. NEITHER HE HAD PURCHASED A RESIDENTIAL HOUSE, WITHIN A PERIOD OF ONE YEAR BEFORE THE DATE ON WHICH TRANSFER TOOK PLACE OR CONSTRUCTED A HOUSE WITHIN A PERIOD OF THREE YEARS AFTER THE DATE ON WHICH THE TRANSFER TO OK PLACE NOR DEPOSITED THE AMOUNT OF NET SALE CONSIDERATION IN A N ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN , AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GO VERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, FRAME AND, FOR THE PURPOSES OF SUB-SECTION (1) OF SECTION 54F. MERE PU RCHASE OF PLOT DOES NOT SUFFICE THE CONDITIONS LAID DOWN IN THE SE CTION 54F OF INCOME TAX ACT, 1961. IN THE LIGHT OF ABOVE FACTS, THE AO DISALLOWED THE LONG TERM CAPITAL GAINS OF RS. 99,40 ,150 AND ADDED TO THE INCOME OF THE ASSESSEE. 4. BEING, AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFOR E THE LD. CIT (A). THE LD. CIT (A) OBSERVED THAT THE ASSESSEE HAS SOLD THE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 7 OF 24 LAND ON 22.03.2010 AND AS PER THE REQUIREMENT OF LA W; HE HAS TO INVEST IN THE CONSTRUCTION OF HOUSE ON OR BEFORE 23 .03.2013. THE AO ALONG WITH SHRI SUBHASH MAHESHWARI, ADVOCATE (CO UNSEL FOR THE APPELLANT) AND SHRI PAWAN BAFNA (SON OF THE ASS ESSEE) INSPECTED THE SITE AND FOUND THAT NO CONSTRUCTION W AS DONE WITHIN A PERIOD OF 3 YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE. THE APPELLANT HAS ALSO NOT DEPOSITED TH E AMOUNT OF NET SALE CONSIDERATION IN AN ACCOUNT IN ANY SUCH BA NK OR INSTITUTION AS MAY BE SPECIFIED IN , AND UTILIZED I N ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, FRAME AND, FO R THE PURPOSES OF SUB-SECTION (1) OF SECTION 54F OF THE ACT. THE LD. CIT (A) ALSO SUPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF USHA GUPTA V. CIT [2006] 204 CTR (RAJ) 399, WHEREIN IT WAS HEL D THAT WHEN NO DOCUMENT WAS ANNEXED IN SUPPORT OF CLAIM OF DEDU CTION, MERE CLAIM OF DEDUCTION UNDER SECTION 54F COULD NOT BE A LLOWED. IT CANNOT BE THE INTENTION OF THE LEGISLATURE TO ACCEP T WHATEVER ASSESSEE SAYS WITHOUT PROPER EVIDENCE IN SUPPORT OF THAT CLAIM. ACCORDINGLY, THE ACTION OF THE AO WAS CONFIRMED. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS SOLD THE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 8 OF 24 PLOT OF LAND ON 22.03.2010 WITH CO-OWNERS FOR RS.2, 25,00,000 AGAINST WHICH AN AMOUNT OF RS. 1,46,00,000 WAS RECE IVED BY CHEQUE AND BALANCE RS. 79,00,000/- WAS RECEIVED IN CASH. THE ASSESSEE `S SHARE BEING 50% WAS AT RS. 1,12,50,000/ -. THE ASSESSEE HAS RECEIVED CHEQUE AMOUNT OF RS. 41,00,00 0/- I.E. [ 11,00,000 ON 19.8.2010+ 25,00,000 ON 8.9.2010+ 5,00 ,000 ON 17.2.2010] AND RS. 25,00,000/- ON 10.4.2010 AND BAL ANCE AMOUNT OF RS. 46,50,000 WAS RECEIVED IN CASH. THE A SSESSEE UTILIZED RS. 33,00,000/- FOR PURCHASE OF PLOT, WHIC H WERE RECEIVED BY SMT. PUKHRAJ BAFANA, WIFE OF ASSESSEE WHO HAD RE CEIVED THE SAME FROM THE PURCHASER OF LAND. THUS, THE AMOUNT O F RS. 74 LAKHS [RS. 41 LAKH +RS. 33 LAKHS ] WERE AVAILABLE W ITH THE ASSESSEE, BEFORE 17.03.2010 FOR THE PAYMENT OF PURC HASE PRICE OF THREE PLOT OF LANDS AND BALANCE AMOUNT WAS INVESTED OUT OF FUND AVAILABLE WITH HIM. THUS, INVESTMENT OF RS. 87,90,1 50/- WAS MADE IN PURCHASE OF NEW ASSETS BEFORE THE SALE OF O RIGINAL ASSET, WITH AN INTENTION TO CONSTRUCT A RESIDENTIAL HOUSE AND AN AMOUNT OF RS. 11.50 LAKH WAS CLAIMED ON ACCOUNT OF CONSTRU CTION OF PROPERTY. IT WAS EXPLAINED THAT THE SAID AMOUNT OF RS. 33 LAKHS WERE RETURNED BACK TO SMT. PUKHRAJ ON 22.03.2010 WH EN THE AMOUNT OF RS. 46.50 LAKH WAS RECEIVED IN CASH (PB8) THEREFORE, SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 9 OF 24 IT WAS CLAIMED THAT THE ASSESSEE HAS INVESTED 87.9 0 LAKH BEFORE SALE OF ORIGINAL ASSET. IN SUPPORT OF THE CLAIM THA T INVESTMENT CAN BE MADE OUT OF BORROWED MONEY IN ACQUISITION OF NEW ASSET, THE AR HAS RELIED IN THE CASE OF BOMBAY HOUSING CORPORA TION V. ACIT (2002) 76 TTJ (MUM) 25: 81 ITD 545(MUM) WHEREIN THE AO HAS HELD THAT SALE CONSIDERATION WAS NOT INVESTED IN SP ECIFIED ASSETS AND THE ASSESSEE HAD DIVERTED SALE CONSIDERATION OF RS. 3.55 CRORES TO VARIOUS PARTNERS AND INVESTMENT HAD BEEN MADE IN SPECIFIED ASSETS BY BORROWING AN AMOUNT OF RS. 1.42 CRORES. THE ITAT HELD THAT WHAT THE SECTION REQUIRES IS THAT IT IS NECESSARY FOR THE ASSESSEE ONLY TO INVEST AN AMOUNT, WHICH IS ARI THMETICALLY EQUAL TO THE NET CONSIDERATION IN THE SPECIFIED ASS ETS. IT CANNOT BE THE INTENTION OF THE SECTION THAT OTHER NORMAL TRAN SACTION OR ACTIVITIES OF AN ASSESSEE SHOULD BE CURTAILED OR TH AT THE SALE PRICE SHOULD BE IMMOBILIZED. THERE MAY BE VARIOUS REASONS LIKE THE BUYER DOES NOT DISCHARGE THE SALE CONSIDERATION, MO NEY IS BLOCKED SOMEWHERE ELSE ETC. THEREFORE, EVEN IF BORR OWED MONEY IS INVESTED IN NEW ASSET, EXEMPTION SHALL BE ALLOWED. 6. THE LD. A.R. HAS FURTHER RELIED IN THE CASE OF ACIT V. SUBHASH SEVARAM BHAVNANI [2012] 23 TAXMANN.COM 94 (AHMEDABAD TRIB) WHERE THE ASSESSEE HAS STARTED CO NSTRUCTION SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 10 OF 24 OF RESIDENTIAL HOUSE BEFORE THE DATE OF TRANSFER OF CAPITAL ASSET, HOWEVER, SAME WAS COMPLETED WITHIN PRESCRIBED TIME LIMIT OF THREE YEARS FROM THE DATE OF TRANSFER, ASSESSEE`S C LAIM FOR DEDUCTION UNDER SECTION 54 WAS TO BE ALLOWED. 7. THE LD. A.R. SUBMITTED THAT THE ASSESSEE COULD NOT ABLE TO CONSTRUCT THE RESIDENTIAL HOUSE WITHIN THE PRESCRIB ED TIME LIMIT OF THREE YEARS FROM THE DATE OF TRANSFER. SINCE THE AS SESSEE WANTED TO JOIN THREE PLOT OF LAND TOGETHER SO THAT A PALAT ABLE HOUSE COULD BE MADE FOR HIS FAMILY. THE TOTAL AREA OF THREE PLO TS OF LAND WAS 467.56 SQ. MTS. WHEREAS AS PER GAZETTE NOTIFICATI ON OF MADHYA PRADESH GOVERNMENT DTD. 3.1.2012 IT WAS NOTIFIED TH AT THE MERGER OF PLOT OF LAND HAVING 500 SQ. MTS. COULD BE ALLOWE D. THEREFORE, THE ASSESSEE HAS FILED A MERGER APPLICATION ON 16.0 1.2012 (PB- 53 TO 61) BUT THE PERMISSION FOR MERGER OF PLOT IN ONE WAS DENIED TO VIDE LETTER DATED 23.01.2012. THE ASSESSEE HAS T AKEN THE STEPS FOR MERGER OF PLOT OF LAND, WHICH INCLUDED THE APPL ICATION MADE ON 16.01.2012 WITH TOWN AND COUNTRY PLANNING DEPART MENT (PB61) IN PURSUANCE TO GAZETTE NOTIFICATION DTD. 03 .01.2012 AND FINALLY RECEIVED A LETTER DTD. 07.02.2014 FROM TOWN AND COUNTRY PLANNING DEPARTMENT AGREEING FOR MERGER (PB72). UNT IL THIS TIME, THE PRESCRIBED TIME LIMIT WAS ALREADY EXPIRED ON 23 .03.2103 AND SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 11 OF 24 THEREFORE, THE ASSESSEE HAS THOUGHT IT PROPER TO PA Y TAXES WHILE FILING RETURN OF INCOME FOR A.Y. 2013-14. THUS, UND ER UNAVOIDABLE CIRCUMSTANCES, THE CONSTRUCTION COULD NOT TAKE PLA CE. THE LD. A.R. SUBMITTED THAT IN SUCH CIRCUMSTANCES LONG-TERM CAPITAL GAINS IN RESPECT OF RS. 87.90 LAKH COULD NOT BE DIS ALLOWED. IN SUPPORT OF THIS PROPOSITION, THE LD. A.R. RELIED IN THE CASE OF SMT. V. A. THARABAI [2012] 19 TAXMANN.COM 276 (CHENNAI) / [2012] 14 ITR (T) 15 (CHENNAI)/ 50 SOT 537 (CHENNAI) WHERE TH E ASSESSEE HAS EARNED LONG TERM CAPITAL GAINS FROM SALE OF PRO PERTY ON 8.6.2008 ON WHICH NET CAPITAL GAINS OF RS. 32,77,45 0/- . THE ASSESSEE HAS PURCHASED LAND FOR RS. 38.88 LAKH TILL SEPTEMBER 2006. HOWEVER, DUE TO PETITION FILED FOR INJUNCTION BY THE OWNERS OF LAND, THE CIVIL COURT ORDERED STATUS QUO, WHICH WAS PREVENTED THE ASSESSEE FOR FURTHER CONSTRUCTION OF THE RESIDE NTIAL HOUSE. THE MATTER WENT UP TO APEX COURT, WHICH WAS DISMISS ED ON 13.9.2011 AND ON 19.09.2011; ALL PROCEEDINGS BEFORE THE CIVIL COURT WERE DISMISSED AS WITHDRAWN. HENCE, THE TRIBU NAL HELD THAT EXEMPTION U/S. 54F COULD NOT BE DENIED WHERE T HE ASSESSEE HAS INVESTED SALE CONSIDERATION FOR PURCHASING LAND . 8. THE LD. A.R. SUBMITTED THAT CBDT CIRCULAR NO. 667 D TD. 18.10.1993 , QUOTED BY THE LD. CIT (A) ALSO LAID DO WN THAT THE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 12 OF 24 COST OF CONSTRUCTION SHALL ALSO INCLUDE COST OF LAN D FOR DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 54/54F PROVIDED THAT THE ACQUISITION OF PLOT AND ALSO THE CONSTRUCTION THEREON ARE COMPLETED WITHIN THE PERIOD SPECIFIED I N THESE SECTIONS. HOWEVER, IN THE CASE OF ASSESSEE, NO CONS TRUCTION HAS TAKEN PLACE DUE TO THE CIRCUMSTANCES BEYOND THE CON TROL OF THE ASSESSEE, AS THE APPROVAL OF MERGER WAS RECEIVED LA TE. 9. AS AN ALTERNATIVE GROUND OF APPEAL, THE LD. A.R. SU BMITTED THAT IF THE LONG-TERM CAPITAL GAIN IS TO BE TAXED I N THE A.Y. 2010- 11, THEN THE AO THEREFORE, BE DIRECTED TO REDUCE TH E LONG-TERM CAPITAL GAINS DECLARED BY THE ASSESSEE IN A.Y. 2013 -14. THE LD. A.R. FURTHER RELYING IN THE CASE OF HONBLE HIGH CO URT OF KERALA IN THE CASE OF MALAYALAM PLANTATION (INDIA) LTD. V. CI T (1990) 53 TAXMAN 541 (KER) /184 ITR 505 (KER) SUBMITTED THAT THE TRIBUNAL HAS GOT POWER TO DIRECT THE ITO TO ALLOW DEDUCTION ON ACCRUAL BASIS FOR ANOTHER YEAR EVEN WHICH IS NOT TH E SUBJECT MATTER OF APPEAL. THE LD. A.R. SUBMITTED THAT THE PROVISIONS OF STATUTE SHOULD BE HARMONIOUSLY INTERPRETED AS IN TH IS CASE, THE ASSESSEE HAS TAKEN VARIOUS STEPS FOR CONSTRUCTION, BUT MERGER OF PLOT OF LAND WAS UNDER DISPUTE HENCE, COULD NOT BE CONSTRUCTED. IN SUPPORT OF THIS PROPOSITION, THE LD. A.R. RELIED IN THE CASE OF SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 13 OF 24 SRI PRASAD NIMMAGADDA V. DCIT II [2013]32 TAXMANN. COM 5( HYDERABAD-TRIB) / [2013] 27 ITR (T) 63/ 56 SOT 473 (HYD) HELD WHERE AMOUNT OF CAPITAL GAINS CLAIMED AS EXEMPTED U NDER SECTION 54F IS NOT UTILIZED IN CONSTRUCTION OF RESI DENTIAL HOUSE WITHIN PERIOD OF 3 YEARS, IT WILL BE CHARGED TO CAP ITAL GAINS IN YEAR IN WHICH PERIOD OF 3 YEARS EXPIRES, HOWEVER, EXEMPT ION ALREADY GRANTED SHALL NOT BE DENIED. THE LD. A.R. FURTHER S UBMITTED THAT THE HARDSHIP SHOULD BE AVOIDED. THE LD. A.R. HAS CI TED A DECISION IN THE CASE OF CIT V. BHARTI C KOTHARI 254 ITR 22 ( CAL) TO CONTEND THAT IF THE INTERPRETATION SOUGHT BY THE DEPARTMENT IS ACCEPTED, THIS WILL LEAD TO HARDSHIP TO THE ASSESSEE FOR NO F AULT OF THE ASSESSEE. 10. THE LD. A.R. HAS PLACED RELIANCE IN THE CASE OF I TO V. K. C. GOPALAN [1999] 107 TAXMAN 591 (KER) WHERE THE ASSES SEE HAS SOLD A RESIDENTIAL HOUSE AND ACQUIRED NEW RESIDENTI AL HOUSE, AND CLAIMED DEDUCTION U/S. 54. AO HELD THAT SALE PRICE WAS NOT UTILIZED FOR CONSTRUCTION OF A HOUSE, BUT WAS DEPOS ITED IN PRIVATE BANKS. THE COURT HELD THAT THE ASSESSEE HAS TO CONS TRUCT OR PURCHASE A HOUSE PROPERTY. WORDINGS OF SECTION 54 I TSELF MAKE IT CLEAR THAT THE LAW DOES NOT INSIST THAT SALE CONSID ERATION SHOULD SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 14 OF 24 BE UTILIZED FOR THE PURCHASE OF PROPERTY. THE STATU TORY PROVISION IS CLEAR AND DOES NOT CALL FOR A DIFFERENT INTERPRETAT ION. 11. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS ALREADY PURCHASED PLOT OF LAND ON 15.03.2010 B EFORE THE SALE OF ORIGINAL ASSET ON 23.03.2010, HENCE, IT CANNOT B E SAID THAT SALE CONSIDERATION HAS BEEN UTILIZED TOWARDS PURCHASE AN D CONSTRUCTION OF RESIDENTIAL HOUSE. FURTHER, THE ASS ESSEE HAS NOT CONSTRUCTED THE RESIDENTIAL HOUSE WITHIN THE PRESCR IBED TIME LIMIT OF 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL AS SET. THE ASSESSEE HAS ALSO NOT UTILIZED THE BALANCE SALE CONSIDERATIO N OF RS. 11,50,000 IN CONSTRUCTION OF RESIDENTIAL HOUSE NOR HAS DEPOSITED THE SAME IN CAPITAL GAINS SCHEME ACCOUNT AS NOTIFIE D BY THE CENTRAL GOVERNMENT BEFORE THE EXPIRY OF DUE DATE OF FILING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. T HEREFORE, THE AO AND CIT (A) WERE RIGHT IN DISALLOWING THE EXEMPT ION UNDER SECTION 54F OF THE ACT. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTI ON 54F WAS DISALLOWED BY THE AO ON THE GROUND THAT WHEN HE INS PECTED THE PROPERTY IT WAS FOUND THAT THE ASSESSEE HAS NOT CON STRUCTED A SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 15 OF 24 RESIDENTIAL HOUSE ON PLOT OF LAND PURCHASED FOR ON 87.50 LAKH BEFORE THE EXPIRY OF 3 YEARS PRESCRIBED TIME LIMIT FROM DATE OF TRANSFER OF ORIGINAL ASSET. THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT OF RS. 11.50 LAKH IN C APITAL GAINS ACCOUNT AS REQUIRED UNDER SECTION 54F (4) OF THE AC T. IN ORDER TO APPRECIATE THE PROVISION OF SECTION IT WOULD BE REL EVANT TO PRODUCE THE PROVISION OF SECTION 54F WHICH READS AS UNDER: 54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HI NDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIA L HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGI NAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFOR E OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLA CE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AF TER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER 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 SECTION. (4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS NO T APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE O F THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON W HICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURPOSE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF I NCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNI SHING SUCH SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 16 OF 24 RETURN SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATE R THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE S PECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHI CH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CE GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT.; 13. WE FIND THAT SECTION 54F CONTAINS TWO EVENTUALITIES CLAIMING FOR THE BENEFIT, ONE, IS THE PURCHASE OF THE RESIDE NTIAL HOUSE AND THE SECOND IS CONSTRUCTION OF A RESIDENTIAL HOUSE. THE PROVISION OF SECTION PROVIDES THAT IT REQUIRE THE ASSESSEE TO PU RCHASE THE PROPERTY BEING A RESIDENTIAL HOUSE EITHER BEFORE ON E YEAR OF THE SALE OF THE LAND OR AFTER THREE YEARS FROM DATE OF TRANSFER OF ORIGINAL ASSET. IN THE CASE OF THE ASSESSEE, WE FIN D THAT THE ASSESSEE HAS PURCHASED THREE PLOT OF LANDS FOR RS. 87.90 LAKH BEFORE ONE YEAR FROM THE DATE OF TRANSFER, BUT HE H AS NOT CONSTRUCTED THE RESIDENTIAL HOUSE THEREON WITHIN TH E SPECIFIED PERIOD OF THREE YEARS FROM DATE OF TRANSFER, WHICH EXPIRED ON 23.03.2013. THEREFORE, THE CONDITIONS LAID DOWN IN SECTION 54F (1) ARE NOT SATISFIED. HENCE, EXEMPTION UNDER SECTI ON 54F IS NOT AVAILABLE TO THE ASSESSEE. WE FURTHER FIND THAT AN AMOUNT OF RS. 11.50 LAKH WAS KEPT TO BE UTILIZED FOR CONSTRUCTION OF RESIDENTIAL SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 17 OF 24 HOUSE, BUT THE SAME IS NEITHER UTILIZED NOR KEPT DE POSITED IN CAPITAL GAINS ACCOUNT SCHEME AS REQUIRED UNDER THE PROVISIONS OF SECTION 54F (4) OF THE ACT. THEREFORE, THIS AMOUNT IS TAXABLE IN A.Y. 2010-11 ONLY. THIS VIEW IS FORTIFIED FROM DECI SION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF HUMAYUN SULEMAN ME RCHANT V. CCIT [2016] 387 ITR 421) (BOM) 2016-TIOL-1949-HC-MUM - HELD AS UNDER: FAILURE TO DEPOSIT THE AMOUNT OF CONSIDERATION NOT UTILIZED TOWARDS THE PURCHASE OF NEW FLAT IN THE SPECIFIED B ANK ACCOUNT BEFORE THE DUE DATE OF FILING RETURN OF INC OME U/S 139(1) IS FATAL TO THE CLAIM FOR EXEMPTION. THE FAC T THAT THE ENTIRE AMOUNT HAS BEEN PAID TO THE DEVELOPER/BUILDE R BEFORE THE LAST DATE TO FILE THE ROI IS IRRELEVANT. THEREF ORE, THE CLAIM OF EXEMPTION U/S. 54F WAS PRIMA-FACIE NOT IN ACCORD ANCE WITH LAW. 14. IN VIEW OF THIS MATTER, WE ARE OF THE CONSIDERED VI EW THAT BY FAILING TO DEPOSIT THE AMOUNT OF RS. 11.50 IN CAPIT AL GAINS SCHEME ACCOUNT RENDERED THE ASSESSEE AS INELIGIBLE FOR THE CLAIM OF EXEMPTION UNDER SECTION 54F OF THE ACT. SIMILARLY, THE BALANCE AMOUNT HAS ALSO NOT BEEN UTILIZED TOWARDS CONSTRUCT ION OF RESIDENTIAL HOUSE; HENCE, THE AO WAS RIGHT IN DISAL LOWING THE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 18 OF 24 EXEMPTION OF RS. 11,50,000/- UNDER SECTION 54F(4) O F THE ACT. THUS, WE FIND THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION OF RS. 99,40,150/- ON THIS AMOUNT OF LONG-TERM CAPITAL GAI N U/S 54F OF THE ACT. 15. THE ALTERNATIVE GROUND NO. 2 OF THE ASSESSEE IS THA T SECTION 54F PROVIDES A PERIOD OF THREE YEARS FOR CONSTRUCTI ON OF A HOUSE AND IN CASE IF THE ASSESSEE IS NOT IN A POSITION T O PURCHASE A HOUSE, IN THE FIRST YEAR OF THE TRANSACTION, OR CONSTRUCT THE HOUSE, THEN THE AMOUNT OF CAPITAL GAIN CAN BE CHARG ED TO TAX IN THE THIRD YEAR, IN WHICH TIME LIMIT IS EXPIRED. IN THIS CASE A.Y. 2013-14 IN WHICH THE ASSESSEE HAS HIMSELF SHOWN THE LONG TERM CAPITAL GAINS IN THE RETURN OF INCOME FILED BY HIM. THE LD. CIT (A) HAS RIGHTLY REPELLED THIS PLEA. WE FIND THAT SECTIO N 54F READS AS UNDER :- '54F. CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL A SSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOU SE (1) SUBJECT TO THE PROVISIONS OF SUB-S. (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR AN HUF, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CA PITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS S ECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSE E HAS, SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 19 OF 24 WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, 16. THUS, THE REQUIREMENT OF SECTION IS THAT THE AS SESSEE IS REQUIRED TO APPROPRIATE THE AMOUNT OF NET CONS IDERATION TOWARDS PURCHASE OF NEW RESIDENTIAL HOUSE WITHI N ONE YEAR BEFORE THE DATE ON WHICH TRANSFER OF THE ORIGINAL A SSET TOOK PLACE, THEN THE ASSESSEE WAS SUPPOSED TO DEPOSIT TH AT AMOUNT IN SUCH BANK OR INSTITUTION AS THE CENTRAL GOVER NMENT PRESCRIBED IN THE OFFICIAL GAZETTE. THE LEARNED COUNSEL RELIED IN THE CASE OF SRI PRASAD NIMMAGADDA V. DCIT-II [2013] 32 TAXMANN.COM 5 ( HYDERABAD-TRIB) / [2013] 27 ITR (T ) 63/ 56 SOT 473(HYD) WHEN IT WAS HELD THAT WHERE AMOUNT OF CAPITAL GAINS CLAIMED AS EXEMPTED UNDER SECTION 54F IS NOT UTILIZED IN CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN PERIOD OF 3 YEARS , IT WILL BE CHARGED TO CAPITAL GAINS IN THE YEAR IN WHICH PE RIOD OF 3 YEARS EXPIRES, HOWEVER, EXEMPTION ALREADY GRANTED SHALL N OT BE DENIED. HOWEVER, IN THE CASE OF THE ASSESSEE, WE FIND THAT THE ENTIRE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 20 OF 24 AMOUNT OF CAPITAL GAINS HAS NOT BEEN USED TOWARDS P URCHASE OF PLOT OF LAND AND CONSTRUCTION THEREON. THE UNUTILIZ ED AMOUNT OF RS. 11.50 LAKH WAS NOT DEPOSITED IN BANK ACCOUNT B EFORE EXPIRY OF DUE DATE UNDER SECTION 139(1) AS REQUIRED UNDER SECTION 54F (4) OF THE ACT. FURTHER THE AMOUNT OF RS. 87.90 LAK HS ALSO USED FOR PURCHASE OF PLOT OF LAND AND NOT FOR CONSTRUCTI ON OF RESIDENTIAL HOUSE. THEREFORE, THE ASSESSEE CANNOT BE ALLOWED TO TAKE POSTPONE OF THE TAX LIABILITY FOR THREE YEARS WITHO UT SATISFYING ANY OF THE CONDITION LAID DOWN U/S 54F OF THE ACT. THE REFORE, THE CLAIM OF LONG-TERM CAPITAL GAIN IS TO BE SEEN AS WH OLE AND IN PIECEMEAL AMOUNT AS PART CAN BE TAXED IN ONE YEAR A ND BALANCE CAN BE TAXED IN ANOTHER YEAR. THEREFORE, SAID DECIS ION IS DISTINGUISHABLE ON FACTS. FURTHER, THE CBDT CIRCULA R NO. 667 DTD. 18.10.1993 WILL COME IN EFFECT ONLY, WHEN THE ASSES SEE MAKES CONSTRUCTION ON THE PLOT OF LAND SO PURCHASED. IN T HIS CASE, THE ASSESSEE HAS NOT BEEN ABLE TO CONSTRUCT THE RESIDEN TIAL HOUSE ON THE PLOT OF LAND PURCHASED. HENCE, THE ASSESSEE CAN NOT TAKE HELP OF CIRCULAR ALSO. 17. THE LEARNED COUNSEL HAS NOT BEEN ABLE TO SHOW THA T THE ASSESSEE HAD COMPLIED WITH THE SAID REQUIREMENT OF SUB-S. (4) OF S. 54F OF THE ACT. THE LEARNED COUNSEL RELIED IN TH E CASE OF IN THE SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 21 OF 24 CASE OF ITO V. K. C. GOPALAN [1999] 107 TAXMAN 591 (KER) IN WHICH THE ASSESSEE SOLD RESIDENTIAL HOUSE AND ACQUI RED NEW RESIDENTIAL HOUSE, AND CLAIMED DEDUCTION U/S. 54. A O HELD THAT SALE PRICE WAS NOT UTILIZED FOR CONSTRUCTION OF A H OUSE, BUT WAS DEPOSITED IN PRIVATE BANKS. THE COURT HELD THAT THE ASSESSEE HAS TO CONSTRUCT OR PURCHASE A HOUSE PROPERTY. WORDINGS OF SECTION 54 ITSELF MAKE IT CLEAR THAT THE LAW DOES NOT INSIS T THAT SALE CONSIDERATION SHOULD BE UTILIZED FOR THE PURCHASE O F PROPERTY. THE STATUTORY PROVISION IS CLEAR AND DOES NOT CALL FOR A DIFFERENT INTERPRETATION. HOWEVER, THIS DECISION IS NOT APPL ICABLE TO PRESENT CASE AS THIS DECISION WAS GIVEN IN THE CONT EXT FOR A.Y. 1984-85 WHEREIN PROVISION OF SECTION 54F (4) WERE I NTRODUCED WITH EFFECT FROM 01.04.1988, HENCE, SAID DECISION I S NOT APPLICABLE TO THE FACTS OF THE CASE. APART FROM IT , THE LEARNED CIT(A) HAD NOTED THAT INSPITE OF EXPIRY OF THREE YE ARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET, THE ASSESSEE HA S NOT CONSTRUCTED ANY HOUSE OVER THE PLOT IN QUESTION AND EVEN TODAY THE ASSESSEE HAD NOT BEEN ABLE TO SHOW US TH AT CONSTRUCTION OF RESIDENTIAL HOUSE ON THE PLOT WAS COMPLETED. IN VIEW OF THIS, ALTERNATIVE PLEA OF THE ASSESSEE IS NOT GOING TO HE LP THE ASSESSEE. WE ALSO FIND THAT THE ORIGINAL ASSET WAS SOLD ON 22 .3.2010 BUT SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 22 OF 24 THE ASSESSEE HAD NOT BEEN ABLE TO CONSTRUCT THE RES IDENTIAL HOUSE BEFORE 22.03.2013. THE LEARNED COUNSEL REFERRED DEC ISION IN THE CASE OF ACIT V. SUBHASH SEVARAM BHAVNANI [2012] 23 TAXMANN.COM 94 (AHMEDABAD TRIB) WHERE IN THE CASE OF ASSESSEE, CONSTRUCTION OF RESIDENTIAL HOUSE STARTED BEFORE THE DATE OF TRANSFER OF CAPITAL ASSET, HOWEVER, SAME WA S COMPLETED WITHIN PRESCRIBED TIME LIMIT OF THREE YEARS FROM TH E DATE OF TRANSFER, ASSESSEE`S CLAIM FOR DEDUCTION UNDER SECT ION 54 WAS TO BE ALLOWED. HOWEVER, THIS DECISION IS NOT APPLICABL E, AS THE ASSESSEE HAD ONLY PURCHASED THREE PLOT OF LAND ON W HICH CONSTRUCTION WAS NOT STARTED. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM OF EXEMPTION U/S. 54F OF THE ACT, HENCE, WE HOLD THAT THE LOWER AUTHORITIES ARE JUSTIFIED IN TAXING THE RESULTANT LONG-TERM CAPITAL GAIN IN A.Y. UNDER APPEAL. THUS, THE CUMULATIVE EFFECT OF THE DISCUSSION ABOVE IS THAT MERE PURCHASE OF RESIDENTIAL PLOT IS NOT SUFFICIENT COMP LIANCE OF PROVISIONS OF SECTION 54F. WHAT WAS EXPECTED FROM THE ASSESSEE WAS TO PROVE ON RECORD THAT THE AS SESSEE HAD PURCHASED OR CONSTRUCTED A HOUSE WITHIN THE PERIOD SPECIFIED UNDER SECTION 54F, WHICH THE ASSESSEE HAD FAILED TO PROVE ON RECORD. THE AO RIGHTLY REJECTED THE CLAIM OF THE AS SESSEE AND SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 23 OF 24 ORDER OF LEARNED CIT (A) IS ON THE CORRECT FOOTINGS , WHICH REQUIRES NO INTERFERENCE. THEREFORE, THE ABOVE GROUND OF APP EAL OF THE ASSESSEE ARE REJECTED. 18. WITH REGARD TO ALTERNATIVE GROUND NO. 3 OF APPEAL, WHEREIN IT HAS BEEN CLAIMED THAT IF LONG-TERM CAPITAL GAIN IS TAXED IN A.Y. 2010-11, THEN DIRECTION MAY BE GIVEN TO THE AO TO R EDUCE THE AMOUNT OF LONG-TERM CAPITAL GAINS SUO-MOTU OFFERED TO TAX IN A.Y. 2013-14 BY THE ASSESSEE. THE AR HAS RELIED IN THE C ASE OF HONBLE KERALA HIGH COURT IN THE MALAYALAM PLANTATION (INDI A) LTD. (SUPRA) WHERE IN IT WAS HELD THAT TRIBUNAL COULD IS SUE DIRECTION TO ALLOW SUCH DEDUCTION IN ANOTHER YEAR TO AVOID DOUBL E TAXATION. WE ALSO AWARE OF THE FACTS THAT THE ASSESSEE HAS OF FERED LONG-TERM CAPITAL GAIN IN A.Y. 2013-14 AND PAID TAXES THEREON . THIS MEANS THAT THE SAID AMOUNT OF LONG-TERM CAPITAL GAIN IS B EING TAXED TWICE, WHICH CANNOT BE INTENTION OF THE LEGISLATURE . THEREFORE, WE DIRECT THE AO TO VERIFY THE CLAIM WHETHER THE ASSES SEE HAS DISCLOSED THIS LONG-TERM CAPITAL GAIN AMOUNT IN A.Y . 2013-14, AND IF FOUND CORRECT, THE AO SHOULD REDUCE THEN THE SAID AMOUNT BE REDUCED FROM TAXABLE LONG-TERM CAPITAL GAIN OF A .Y. 2013-14, AND RESULTANT REFUND OF TAX IF ANY WOULD BE ADJUSTE D AGAINST THE DEMAND OF ASSESSMENT YEAR UNDER CONSIDERATION I.E. A.Y. 2010- SHRI SUSHIL KUMAR BAFNA, UJJAIN V. ITO-1(1) /I.T.A. NO. 637/IND/2014/A.Y.:10-11 PAGE 24 OF 24 11. THIS GROUND OF APPEAL IS THEREFORE, ALLOWED FRO M THIS LIMITED EXTENT. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 20. THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.03.201 7. SD/- SD/- ( . . ) (C.M. GARG) ( . . ) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 TH MARCH, 2017