Shri Shrawankumar G. Jain, Vadodara V. The Income Tax Officer, Ward-2(5), Baroda

ITA 695/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3915 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Depreciation; Search and seizure; Cost of acquisition; Benefit of exemption
• Section: 54F; 32; 54; 139

Judgement Text

, CKH CKHCKH CKH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA ] YS[KK LNL; ,OA EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW; EK/KQFERK JKW;] U;KF;D ] U;KF;D ] U;KF;D ] U;KF;D LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.695/AHD/2016 ( / ASSESSMENT YEAR :2011-12) SHRI SHRAWANKUMAR G. JAIN, 76, ROYAL ACER, B/H. BILLABONG INTL. SCHOOL, VADODARA. / VS. ITO, WARD 2(5), BARODA. ./ ./ PAN/GIR NO. : ABMPJ 2945 C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANISH SHAH, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. / DATE OF HEARING 11/07/2018 !'# / DATE OF PRONOUNCEMENT 03/10/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)5, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/5-162 /2014-15 DATED 01.12.2015 ARISING IN THE MATTER OF ASSESSMENT ORDE R PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 28.02.2014 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12. ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- 1. THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF SHORT TERM CAPITAL GAIN OF RS.50.69 LACS ON ACCOUNT OF INCOME ON SALE OF FACTORY SHED. 2. THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF BUSINESS INCOME OF RS.0.67 LACS. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND ALTE R OR MODIFY ANY OF THE GROUNDS STATED HEREINABOVE EITHER BEFORE OR AT THE TIME OF HEARING. 3. GROUND NO.2 IS NOT PRESSED BY THE ASSESSEE. THER EFORE, SAME IS DISMISSED AS NOT PRESSED. 4. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT LD CI T(A) ERRED IN HOLDING THE GAIN OF RS. 50.69 EARNED ON SALE OF FAC TORY SHED AS SHORT TERM CAPITAL GAIN. 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND RUNNING ITS PROPRIETOR SHIP BUSINESS UNDER THE NAME AND STYLE OF MAKARANA MARBLES. THE ASSESSEE HAS SHOWN HIS INCOME UNDER THE HEAD SALARY, OTHER SOURCES AND CAPITAL GAIN. THE ASSESSE E HAS DISCONTINUED HIS BUSINESS FROM THE YEAR UNDER CONSIDERATION. ACCORDI NGLY, THE ASSESSEE HAS SOLD ITS FACTORY SHED LOCATED AT 988/2 GIDC EST ATE MAKARPURA FOR RS. 53,75,000/- ON 13-04-2010. THE ASSESSEE HAS CLAIMED DEPRECIATION ON SUCH FACTORY SHED. ACCORDINGLY, THE INCOME EARNED T HEREON FOR RS. 49,21,367/- WAS SHOWN AS SHORT TERM CAPITAL GAIN U /S 50 OF THE ACT. ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 3 - 5.1 HOWEVER, THE ASSESSEE IN ITS RETURN OF INCOME H AS CLAIMED EXEMPTION U/S 54F OF THE ACT AGAINST THE SHORT TERM CAPITAL GAIN AS DISCUSSED ABOVE. 5.2 AS PER THE AO, THE EXEMPTION IS AVAILABLE TO TH E ASSESSEE U/S 54F OF THE ACT, IF IT IS LONG TERM CAPITAL ASSETS. THE IMPUGNED FACTORY SHED WAS SUBJECT TO DEPRECIATION U/S 32 OF THE ACT THERE FORE, THE GAIN EARNED ON THE SALE OF SUCH FACTORY SHED WAS LIABLE TO BE TAXE D U/S 50 OF THE ACT BEING SHORT TERM CAPITAL GAIN. ACCORDINGLY, THE ASS ESSEE WAS CALLED UPON TO EXPLAIN THE EXEMPTION CLAIMED U/S 54F OF THE ACT . THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED THAT THE IMPUGNED FACTOR Y SHED IS A LONG TERM CAPITAL ASSETS AS PER THE PROVISION OF SECTION 2(42 A) OF THE ACT. BUT BY VIRTUE OF THE PROVISION SECTION 50 OF THE ACT, THE GAIN EARNED ON SUCH ASSETS WAS BEING SHORT TERM CAPITAL GAIN. ACTUALLY, THE PERIOD OF HOLDING OF FACTORY SHED WAS EXCEEDING MORE THAN 36 MONTHS T HEREFORE, THE PROFIT EARNED ON THE SALE OF SUCH FACTORY SHADE WAS ELIGIB LE FOR EXEMPTION U/S 54F OF THE ACT. 5.3 HOWEVER, THE AO DISREGARDED THE CONTENTION OF T HE ASSESSEE BY OBSERVING THAT THE EXEMPTION U/S 54F OF THE ACT IS AVAILABLE ONLY IN THE CASE OF LONG TERM CAPITAL GAIN. ONCE, THE GAIN HAS BEEN HELD AS SHORT TERM BY VIRTUE OF THE PROVISION OF SECTION 50 OF THE ACT THE SAME CANNOT BE SUBJECT TO EXEMPTION UNDER SECTION 54F OF THE ACT. THE AO ALSO OBSERVED ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 4 - THE OBJECT FOR ENACTING THE PROVISION OF SECTION 50 OF THE ACT WAS TO AVOID THE MULTIPLE BENEFITS CLAIMED BY THE ASSESSEE . THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. 5.4 BESIDES ABOVE, THE AO WITHOUT PREJUDICE TO THE FACTS MENTIONED ABOVE ALSO OBSERVED THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF SECTION 54F(4) OF THE ACT AS HE FAILED TO DEPOSIT T HE AMOUNT OF NET SALE CONSIDERATION IN THE CAPITAL GAIN ACCOUNT SCHEME. T HEREFORE, THE ASSESSEE CANNOT BE ALLOWED EXEMPTION U/S 54F OF THE ACT. ACC ORDINGLY, THE AO DISALLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE FO R RS. 50,69,260/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CI T(A). THE ASSESSEE BEFORE US LD CIT(A) SUBMITTED THAT THE PRO VISION OF SECTION 50 OF THE ACT PROVIDES THE MANNER OF CALCULATING THE C APITAL GAIN IN RESPECT OF DEPRECIABLE ASSETS. THE PROVISION OF SECTION 50 OF THE ACT DOES NOT DENY THE BENEFIT AS PROVIDED U/S 54F OF THE ACT. BO TH THE SECTIONS I.E. 54F AND 50 OF THE ACT ARE INDEPENDENT TO EACH OTHER AND THEREFORE NO REFERENCE CAN BE MADE TO ANY OF THE SECTION WHILE A PPLYING THE PROVISION OF EITHER SECTION IN THE GIVEN FACTS AND CIRCUMSTAN CES. 6.1 IT IS UNDISPUTED FACT THAT THE FACTORY SHED IS A DEPRECIABLE ASSETS AND ITS PERIOD OF HOLDING EXCEEDS MORE THAN 3 YEARS . THEREFORE, THE SAME ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 5 - IS LONG TERM CAPITAL ASSETS WITHIN THE MEANING OF S ECTION 2(42A) OF THE ACT. 6.2 IT IS A FACT ON RECORD THE ASSESSEE HAS NOT DEP OSITED THE AMOUNT OF NET CONSIDERATION RECEIVED BY HIM ON THE SALE OF FA CTORY SHED IN CAPITAL GAIN SCHEME WITHIN THE TIME SPECIFIED U/S 139(1) OF THE ACT. BUT THE ASSESSEE HAS UTILIZED THE MONEY IN THE CONSTRUCTION OF RESIDENTIAL HOUSE WITHIN THE TIME AS SPECIFIED U/S 139(4) OF THE ACT. THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEPOSIT THE AMOUNT IN CAPITAL GAI N ACCOUNT. THE ASSESSEE IN RESPECT OF HIS CLAIM RELIED ON THE JUDGMENT OF G AUHATI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN REPORTED IN 157 TAXMAN 398. 6.3 HOWEVER, THE LD CIT(A) DISREGARDED THE CONTENTI ONS OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSER VING AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND C IRCUMSTANCES OF THE CASE, THE OBSERVATIONS OF THE ASSESSING OFFICER , ASSESSEE'S SUBMISSIONS, MATERIAL AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS ON THE SUBJECT. THE ISSUE IN THIS CA SE IS WHETHER THE CAPITAL GAINS ARISING OUT OF TRANSFER OF A DEPRECIA BLE ASSET WHICH WAS USED FOR THE PURPOSES OF THE BUSINESS OF THE ASSESS EE, IS STCG OR LTCG AND IF IT IS STCG, WHETHER THE PROVISIONS OF SECTIO N 54F WILL BE APPLICABLE TO THE GAINS ARISING FROM SUCH TRANSFER. THERE IS NO DISPUTE THAT THE ASSESSEE HAD SOLD A FACTORY SHED DURING TH E YEAR, WHICH WAS USED BY THE ASSESSEE FOR THE PURPOSES OF HIS BUSINE SS AND ON WHICH HE HAD REGULARLY CLAIMED DEPRECIATION. SINCE THE CONSI DERATION RECEIVED ON TRANSFER OF THIS ASSET EXCEEDED THE WRITTEN DOWN VA LUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, TH E EXCESS OR THE GAIN RESULTING FROM SUCH TRANSFER WAS TO BE TREATED AS S HORT TERM CAPITAL GAIN IN TERMS OF THE PROVISIONS OF SECTION 50 OF TH E INCOME-TAX ACT, WHICH READS AS UNDER; ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 6 - '[SPECIAL PROVISION FOR COMPUTATION OF CAPITAL GAIN S IN CASE OF DEPRECIABLE ASSETS. 50. NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (4 2A) OF SECTION 2, WHERE THE CAPITAL ASSET IS AN ASSET FORM ING PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HA S BEEN ALLOWED UNDER THIS ACT OR UNDER THE INDIAN INCOME-T AX ACT, 1922 (11 OF 1922), THE PROVISIONS OF SECTIONS 48 AN D 49 SHALL BE SUBJECT TO THE FOLLOWING MODIFICATIONS : (1) WHERE THE FULL VALUE OF THE CONSIDERATION RECEI VED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ASSET T OGETHER WITH THE FULL VALUE OF SUCH CONSIDERATION RECEIVED OR AC CRUING AS A RESULT OF THE TRANSFER OF ANY OTHER CAPITAL ASSET F ALLING WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR, E XCEEDS THE AGGREGATE OF THE FOLLOWING AMOUNTS, NAMELY: (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER OR TRANSFERS; (II) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR; AND (III) THE ACTUAL COST OF ANY ASSET FALLING WITHIN T HE BLOCK OF ASSETS ACQUIRED DURING THE PREVIOUS YEAR, SUCH EXCESS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS; (2) WHERE ANY BLOCK OF ASSETS CEASES TO EXIST AS SU CH, FOR THE REASON THAT ALL THE ASSETS IN THAT BLOCK ARE TRANSF ERRED DURING THE PREVIOUS YEAR, THE COST OF ACQUISITION OF THE B LOCK OF ASSETS SHALL BE THE WRITTEN DOWN VALUE OF THE BLOCK OF ASS ETS AT THE BEGINNING OF THE PREVIOUS YEAR, AS INCREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSETS, A CQUIRED BY THE ASSESSES DURING THE PREVIOUS YEAR AND THE INCOME RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER OR TRANSFERS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRA NSFER OF SHORT-TERM CAPITAL ASSETS.1' (EMPHASIS SUPPLIED) ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 7 - IN VIEW OF THE UNAMBIGUOUS AND CLEAR PROVISIONS OF SECTION 50 OF THE ACT, THERE IS NO DOUBT THAT THE GAINS FROM THE TRAN SFER OF THE FACTORY SHED ARE TO BE TREATED AS STCG. 5.4 NOW, COMING TO THE ISSUE OF ALLOWABILITY OF EXE MPTION U/S 54F ON THIS STCG, ARISING AS A RESULT OF TRANSFER OF THE F ACTORY SHED, IN VIEW OF EXPRESS PROVISIONS OF SECTION 54F(1), IT IS CLEAR T HAT THE BENEFITS OF THE BENEVOLENT PROVISIONS OF SECTION 54F ARE ONLY AVAIL ABLE TO LTCG AND NOT TO STCG, DESPITE ASSERTIONS TO OTHERWISE BY THE ASSESSEE. THE RELEVANT PORTIONS OF-SECTION 54F ARE EXTRACTED BELO W FOR READY REFERENCE- ' 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET,.,.........' THE PROVISIONS OF SECTION 54F(1) CLEARLY INDICATE T HAT THE BENEFITS ARE ONLY AVAILABLE TO THE CASES WHERE THE CAPITAL GAIN ARISES FROM TRANSFER OF LONG TERM CAPITAL ASSET LEADING TO LTCG. BY VIRT UE OF THE PROVISIONS OF SECTION 50 OF THE ACT, THE GAINS ON T RANSFER OF FACTORY SHED IN THIS PARTICULAR CASE IS TREATED AS STCG AND THER EFORE, THE TRANSFERRED ASSET BECOMES SHORT TERM CAPITAL ASSET. IT IS A SET TLED PRINCIPLE OF LAW THAT THE SPECIFIC PROVISIONS ALWAYS OVER-RIDE GENER AL PROVISIONS. THE PROVISIONS OF SECTION 50 ARE SPECIFIC PROVISIONS TO DEAL WITH TRANSFER OF AN ASSET FORMING PART OF THE BLOCK OF ASSETS, ON WH ICH THE BENEFIT OF DEPRECIATION HAS ALREADY BEEN ALLOWED TO THE ASSESS EE. THE PROVISIONS OF SECTION 50 OVER-RIDE THE PROVISIONS OF SECTION 2 (42A) OF THE ACT, WHICH DEFINES A 'SHORT TERM CAPITAL ASSET' AND BY V IRTUE OF THESE PROVISIONS, EVEN AN ASSET WHICH IS HELD FOR MORE TH AN THIRTY SIX MONTHS AND WAS OTHERWISE ELIGIBLE TO BE TERMED AS LONG TER M CAPITAL ASSET, IS TREATED AS SHORT, TERM CAPITAL ASSET, IF THE SAME F ORMED PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION WAS ALLO WED AS PER THE PROVISIONS OF THE ACT. THIS IS EXACTLY WHAT HAS HAP PENED IN THE CASE OF THE ASSESSEE. THE TRANSFERRED ASSETS (FACTORY SHED) FORMED PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION WA S REGULARLY ALLOWED AS PER THE PROVISIONS OF THE ACT AND BY VIRTUE OF S ECTION 50 OF THE ACT, THE SAME WAS TO BE TREATED AS SHORT TERM CAPITAL AS SET, EVEN THOUGH THE ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 8 - SAME WAS HELD FOR MORE THAN THIRTY SIX MONTHS. SINC E THE TRANSFERRED ASSET WAS SHORT TERM CAPITAL ASSET, THE BENEFITS OF SECTION 54F, WHICH ARE AVAILABLE ONLY TO LTCG ARISING FROM THE TRANSFE R OF A LONG TERM CAPITAL ASSET, ARE NOT AVAILABLE TO THE ASSESSEE. T HE FACTS OF THE CASES CITED BY THE ASSESSEE IN THIS REGARD ARE DIFFERENT FROM THE CASE AT HAND, THEREFORE, THE SAME ARE NOT APPLICABLE TO THE PRESE NT CASE. IN VIEW OF THIS, HIS CLAIM OF EXEMPTION OF RS. 49,21,367/- U/S 54F OF THE ACT IS NOT SUSTAINABLE IN LAW. CONSEQUENTLY, THE ORDER OF THE ASSESSING OFFICER DENYING ASSESSEE'S CLAIM OF EXEMPTION OF RS. 49,21, 367/- U/S 54F TO THE ASSESSEE ON TRANSFER OF THE FACTORY SHED, IS UPHELD . THE ASSESSEE FAILS ON THIS GROUND OF APPEAL. 6.4 BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASSES SEE IS IN SECOND APPEAL BEFORE US. 7. THE LD AR BEFORE US SUBMITTED THAT THE CONDITION S SPECIFIED U/S 54 OF THE ACT FOR CLAIMING THE EXEMPTION IN RESPECT OF LONG TERM CAPITAL GAIN HAS BEEN DULY FULFILLED. THE PERIOD OF HOLDING FACT ORY SHED EXCEEDS MORE THAN 36 MONTHS. THEREFORE IT IS A LONG TERM CAPITAL ASSETS BY VIRTUE OF THE PROVISION OF SECTION 2(42A) OF THE ACT. THE LD. AR BEFORE US REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD CIT(A). THE L D AR IN SUPPORT OF HIS CLAIM RELIED ON THE JUDGMENT OF HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF DCIT VS. HIMALAYA MACHINERY PVT. LTD. R EPORTED IN 29 TAXMANN.COM 380. 7.1 THE LD AR ALSO SUBMITTED THAT THE AMOUNT OF NET CONSIDERATION WAS UTILIZED BEFORE THE DUE DATE OF INCOME TAX RETURN F ILING AS SPECIFIED U/S 139(4) OF THE ACT. THE LD AR IN SUPPORT OF HIS CLAI M RELIED ON THE ORDER OF ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 9 - THIS TRIBUNAL IN THE CASE OF ASHOK KAPASIAWALA VS. ITO IN ITA NO.2692/AHD/2014 VIDE ORDER DATED 10 TH SEPTEMBER 2015. 7.2 THE LD. AR ALSO SUBMITTED THAT THERE WAS ANOTHE R ASSETS BEING LAND WHICH WAS SOLD BY THE ASSESSEE DURING THE YEAR UNDE R CONSIDERATION AND THE ASSESSEE FAILED TO UTILIZE THE NET CONSIDERATIO N RECEIVED ON THE SALE OF SUCH ASSETS BEFORE THE DUE DATE OF FILING OF INCOME TAX RETURN AS SPECIFIED U/S 139(1) OF THE ACT. BUT THE SAME WAS UTILIZED BE FORE FILING THE INCOME TAX RETURN AS SPECIFIED U/S 139(4) OF THE ACT. BUT THE LD CIT(A) DID NOT MAKE ANY DISALLOWANCE IN RESPECT OF SUCH SALE OF LA ND. BUT THE LD CIT(A) HAS MADE THE DISALLOWANCE IN RESPECT OF SALE OF FA CTORY SHED THEREFORE IT IS CLEAR THAT THE LD CIT(A) HAS TAKEN CONTRARY DECI SION IN RESPECT OF SALE OF FACTORY SHED AND THE LAND. 8. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT IF EXEMPTION IS ALLOWED TO THE ASSESSEE U/S 54F OF THE ACT IN RESPE CT OF DEPRECIABLE ASSETS THEN IT WILL AMOUNT TO DOUBLE DEDUCTION TO THE ASSE SSEE. THE LEGISLATURE NEVER INTENDED TO EXTEND DOUBLE BENEFIT TO THE ASSE SSEE, FIRSTLY ON ACCOUNT OF DEPRECIATION SECONDLY, ON ACCOUNT OF EXEMPTION U /S 54F OF THE ACT. 8.1 THE LD. DR ALSO SUBMITTED THAT THE ASSESSEE FAI LED TO DEPOSIT THE NET CONSIDERATION IN THE CAPITAL GAIN ACCOUNT AS SP ECIFIED UNDER SECTION 54F OF THE ACT. THEREFORE, THE BENEFIT OF EXEMPTION U/S 54F OF THE ACT ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 10 - CANNOT BE EXTENDED TO THE ASSESSEE. THE LD. DR VEHE MENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO THE EXEMPTION CLAIMED BY THE ASSESSEE WITHIN THE PRESCRIBED TIME LIMIT U/S 54F OF THE ACT IN RESPECT OF DEPRECIABLE ASSETS. THE AO HAS MA DE THE DISALLOWANCE ON ACCOUNT OF TWO REASONS AS DISCUSSED BELOW: I. EXEMPTION IS IN SECTION 54F OF THE ACT IS AVAILA BLE ONLY ON SALE OF LONG TERM CAPITAL ASSETS. WHEREAS, IN THE INSTANT C ASE, THE ASSESSEE HAS SOLD DEPRECIABLE ASSETS WHICH IS TREATED AS SHO RT TERM CAPITAL GAIN BY VIRTUE OF THE PROVISION OF SECTION 50 OF TH E AC. II. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE I S ALSO NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT AS HE FAILED TO DEPOSIT THE NET CONSIDERATION RECEIVED BY HIM IN THE CAPITAL GA IN ACCOUNT SCHEME AS MANDATED U/S 54F OF THE ACT. 9.1 THE VIEW TAKEN BY THE AO WAS SUBSEQUENTLY CONFI RMED BY THE LD CIT(A). 9.2 IT IS UNDISPUTED FACT THAT THE PERIOD OF HOLDIN G OF FACTORY SHED WAS EXCEEDING MORE THAN 36 MONTHS AND ON THE SAME ASSET S THE DEPRECIATION WAS CLAIMED BY THE ASSESSEE. THUS, THE GAIN AROSE O N SALE OF SUCH DEPRECIABLE ASSETS WAS HELD AS SHORT TERM BY VIRTUE OF THE PROVISION OF SECTION 50 OF THE ACT. AT THIS JUNCTURE, WE FIND A RELEVANT TO REPRODUCE THE SECTION 2(42A) OF THE ACT, WHICH IS READS AS UN DER: ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 11 - (42A) ['SHORT-TERM CAPITAL ASSET' MEANS A CAPITAL ASSET HELD BY AN ASSESSEE FOR NOT MORE THAN [THIRTY-SIX] MONTHS IMMEDIATELY PRECEDING THE DATE OF ITS TRANSFER 9.3 SIMILARLY, WE FIND IMPORTANT AND RELEVANT TO RE PRODUCE THE PROVISION OF SECTION 54F OF THE ACT, WHICH READS AS UNDER: [ CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIV IDED FAMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-T ERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTIO N REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PER IOD OF ONE YEAR BEFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFE R TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YE ARS AFTER THAT DATE [CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA] (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, THAT IS TO SAY, (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CA PITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET C ONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE W HOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGE D UNDER SECTION 45 : XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXX [(4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE O F THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE T RANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE TH E DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139 , SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING M ADE IN ANY CASE NOT ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 12 - LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF T HE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION ( 1) OF SECTION 139 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY B E SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME 76 WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROO F OF SUCH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUN T, IF ANY, ALREADY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTR UCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL B E DEEMED TO BE THE COST OF THE NEW ASSET. 9.4 SIMILARLY, WE ALSO FIND TO REPRODUCE THE PROVIS ION OF SECTION 50 OF THE ACT, WHICH IS READS AS UNDER: 50. NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (42A) OF SECTION 2 , WHERE THE CAPITAL ASSET IS AN ASSET FORMING PART OF A BLOCK OF ASSETS 24 IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDE R THIS ACT OR UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), THE P ROVISIONS OF SECTIONS 48 AND 49 SHALL BE SUBJECT TO THE FOLLOWING MODIFICATIONS : (1) WHERE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ASSET TOGETHER WITH THE FULL VALUE OF SUCH CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF ANY OTHER CAPITAL ASSET FALLING WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR, EXCEEDS THE AGGREGATE OF THE FOLLOWI NG AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER OR TRANSFERS; (II) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT TH E BEGINNING OF THE PREVIOUS YEAR; AND (III) THE ACTUAL COST OF ANY ASSET FALLING WITHIN THE BLO CK OF ASSETS ACQUIRED DURING THE PREVIOUS YEAR, SUCH EXCESS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS; ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 13 - 9.5 FROM THE COMBINED READING OF THE ABOVE PROVISIO N, WE NOTE THAT ALL THE PROVISIONS OF THE SECTION AS DISCUSSED ABOVE AR E MUTUALLY EXCLUSIVE TO EACH OTHER. THERE IS NO MENTION UNDER SECTION 50 OF THE ACT REFERRING TO THE PROVISION OF SECTION 54F OF THE ACT AND VICE VERSA. THEREFORE, WE ARE OF THE VIEW THAT THE PROVISION OF ONE SECTION D OES NOT EXCLUDE THE PROVISION OF OTHER SECTION. THEREFORE, BOTH THE PRO VISION IN OUR CONSIDERED VIEW SHOULD BE APPLIED IN THE INSTANT CA SE INDEPENDENTLY. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE ACT B ECAUSE OF THE FACT THAT THE FACTORY SHED WAS LONG TERM CAPITAL ASSETS AND T HERE IS NOTHING MENTION UNDER THE PROVISION OF SECTION 54F OF THE ACT FOR D EPRECIABLE ASSETS. THUS, WE ARE OF THE VIEW THAT THE SALE OF FACTORY S HED IS SUBJECT TO SHORT TERM CAPITAL GAIN ON THE BASIS OF DEEMING PROVISION AS SPECIFIED U/S 50 OF THE ACT. THUS, INHERENTLY THE FACTORY SHED BEING LO NG TERM CAPITAL ASSETS IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. IN HO LDING SO, WE FIND SUPPORTS AND GUIDANCE FROM THE JUDGMENT OF JURISDIC TIONAL HIGH COURT IN THE CASE OF HIMALAYA MACHINERY PVT. LTD (SUPRA) WHEREIN IT WAS HELD AS UNDER: 12. IT WOULD THUS EMERGE THAT IN CASE NOT FALLING UNDE R SECTION 50 OF THE ACT FOR COMPUTATION OF CAPITAL GAINS IN CASE OF TRANSFER OF THE ASSET, MODE OF COMPUTATION AND THE COST OF ACQUISITION OF ASSET WOULD BE WORKED OUT BY APPLYING THE PROVISIONS AS CONTAINED IN SECTION 48 AND SECTION 49 RESPECTIVELY. HOWEVER, IN CASE OF TRANSF ER OF CAPITAL ASSET, FORMING PART OF BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED, MODE OF COMPUTATION AND COST OF ACQUI SITION SHALL BE AS PER MODIFICATIONS PROVIDED IN SECTION 50 OF THE ACT . THUS, SPECIAL PROVISION MADE FOR COMPUTATION OF CAPITAL ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED, IS CONFINED FOR THE PURPOSE OF SECTION 50 IN RELATION TO SECTION 48 AND SECTION 49 ONLY. ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 14 - 13. WITH THIS BACKGROUND, WE MAY TAKE NOTICE OF SECTIO N 54EC OF THE ACT. SECTION 54EC PERTAINS TO CAPITAL GAIN NOT TO BE CHA RGED ON INVESTMENT IN CERTAIN BONDS, RELEVANT PORTION OF WHICH ARE AS UND ER:- 54EC. (1) WHETHER THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET TO TRANSFERRED BEI NG HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUC H TRANSFER, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY - (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UND ER SECTION 45; (B) IF THE COST OF THE LONG- TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM TH E TRANSFER OF THE ORIGINAL ASSET, THOUGH MUCH OF A CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF ACQ UISITION OF THE LONG TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED UNDER SEC TION 45 : SECTION 54EC THUS PROVIDES FOR EXEMPTION FROM PAYME NT OF CAPITAL GAIN SUBJECT TO CONDITION MADE THEREIN BE SATISFIED. LD. COUNSEL FOR THE REVENUE WOULD REFER TO THE BEGINNING WORDS OF SUB-S ECTION (1) OF SECTION 54EC WHICH REFER TO CAPITAL GAIN ARISING FR OM THE TRANSFER OF A LONG-TERM CAPITAL ASSET AND WOULD CONTEND THAT BY V IRTUE OF SECTION 50 OF THE ACT, SUCH EXEMPTION WOULD NOT BE AVAILABLE I N THE CASES OF TRANSFER OF ASSETS ON WHICH DEPRECIATION HAS BEEN A LLOWED. 14 . WE ARE AFRAID THAT SUCH AN INTERPRETATION WOULD N OT BE WARRANTED. IT IS TRUE THAT UNDER SECTION 54EC OF THE ACT, EXEMPTI ON WOULD BE MADE AVAILABLE IN CASE OF TRANSFER OF LONG TERM CAPITAL ASSETS. HOWEVER, ONCE SUCH CONDITION IS FULFILLED, BY VIRTUE OF THE FACT THAT ASSET WAS SUCH ON WHICH THE DEPRECIATION WAS ALLOWED AND THEREFORE, C OMPUTATION WOULD BE DONE AS PROVIDED U/S. 50 OF THE ACT BY APPLYING MODIFICATIONS IN SECTION 48 AND SECTION 49 WOULD NOT CHANGE THE NATU RE OF CAPITAL ASSET OR AVAILABILITY OF EXEMPTION SPECIFIED UNDER SECTIO N 54EC OF THE ACT. ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 15 - 9.6 FROM THE ABOVE JUDGMENT, WE NOTE THAT IT WAS PA SSED WITH THE REFERENCE TO THE PROVISION OF SECTION 54EC OF THE A CT WHEREAS THE ISSUE IN THE INSTANT CASE RELATES TO THE PROVISION OF SEC TION 54F OF THE ACT. BUT IN OUR CONSIDERED THE PRINCIPLES LAID DOWN IN THE A BOVE CASE CAN BE APPLIED TO THE FACTS ON HAND. THEREFORE, RESPECTFUL LY FOLLOWING THE SAME, WE HOLD THAT THE CAPITAL GAIN INCOME EARNED BY THE ASSESSEE ON THE SALE OF DEPRECIABLE ASSETS BEING FACTORY SHED IS ELIGIBLE F OR EXEMPTION U/S 54F OF THE ACT AS IT IS LONG TERM CAPITAL ASSETS AS PER TH E PROVISION OF SECTION 2(42A) OF THE ACT. THUS, WE HAVE NO HESITATION IN DELETING THE ADDITION MADE BY THE AO BY DISALLOWING THE EXEMPTION AVAILAB LE TO THE ASSESSEE. SIMILARLY, WE ALSO NOTE THAT THERE IS NO DISPUTE TH E NET CONSIDERATION WAS UTILIZED BY THE ASSESSEE BEFORE FILING THE INCOME T AX RETURN WITHIN THE DUE DATE AS SPECIFIED UNDER SECTION 139(4) OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW THE ASSESSEE IS ELIGIBLE FOR EXEMPT ION UNDER SECTION 54F OF THE ACT, THOUGH HE FAILED TO DEPOSIT THE NET CON SIDERATION IN THE CAPITAL GAIN ACCOUNT SCHEME WITHIN THE TIME SPECIFIED UNDER SECTION 139(1) OF THE ACT. IN THIS CONNECTION, WE PLACED OUR RELIANC E ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF ASHOK KAPASIAWALA (SUPRA) WHEREIN, IT WAS HELD AS UNDER: 6.1. A COMBINED READING OF SECTION 54F(1) AND 54F(4) OF THE ACT, IT IS EVIDENT THAT THE ASSESSEE WOULD BE ENTITLED FOR EXE MPTION/DEDUCTION U/S.54F OF THE ACT IN THE EVENT HE PURCHASES NEW AS SET WITHIN ONE YEAR FROM THE DATE OF TRANSFER OF ORIGINAL ASSET OR THE AMOUNT IS UTILIZED BEFORE THE DATE OF FURNISHING THE RETURN U/S.139 OF THE ACT. IN A CASE IT IS ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 16 - NOT UTILIZED FOR THE PURPOSE OF AFORESAID AND THE P ERIOD AFOREMENTIONED SECTION 54F(4) MANDATES THE ASSESSEE TO DEPOSIT SUCH AMOUNT BEFORE DUE DATE OF FILING OF RETURN U/S.139( 1) OF THE ACT. THEREFORE, THERE IS NO AMBIGUITY IN THE PROVISION S O FAR DEPOSIT OF THE UNUTILIZED AMOUNT IS CONCERNED, IT HAS TO BE DEPOSI TED IN A SPECIFIED CAPITAL GAIN ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN U/D.193(1) OF THE ACT. THE QUESTION WHICH IS REQUIRED TO BE EXAMI NED WHETHER THE ASSESSEE HAS UTILIZED THE AMOUNT BEFORE THE TIME LI MIT PRESCRIBED FOR SUCH PURPOSE OR IF NOT WHETHER THE AMOUNT WAS DEPOS ITED IN THE MANNER PRESCRIBED U/S.54F(4). IN THE PRESENT CASE, THE UND ISPUTED FACTS ARE THAT THE ORIGINAL ASSET WAS TRANSFERRED ON AND THE NEW A SSET WAS PURCHASED ON 05/10/2009. THE ASSESSEE HAD NOT FILED INCOME-TA X RETURN U/S.139(1) SO THAT MATTER U/S.139 OF THE ACT. IT WAS ONLY IN R ESPONSE TO NOTICE U/S.148 OF THE ACT DATED 27/03/2012 THE ASSESSEE FI LED RETURN ON 30/04/2012. THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT WAS UTILIZED BEFORE DUE DATE OF FILING OF RETURN. AS PE R ASSESSEE, THE PERIOD AS PRESCRIBED UNDER SECTION 54F(4) FOR DEPOSIT IN THE CAPITAL GAIN ACCOUNT SHOULD BE RECKONED FROM THE DUE DATE OF FILING OF R ETURN U/S.139(4) OF THE ACT. IN SUPPORT OF THIS CONTENTION, LD.COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH C OURT RENDERED IN THE CASE OF CIT VS. JAGTAR SINGH CHAWLA AND JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . K. RAMACHANDRA RAO . THE HON'BLE HIGH COURT OF PUNJAB & HARYANA HELD A S UNDER:- 'IN THE CASE OF FATHIMA BAI VS. ITO, ITA NO .435 OF 2004 IT WAS HELD THAT THE EXTENDED DUE DATE U/S. 139(4) WOULD BE 31. 3.1990. THE ASSESSEE DID NOT FILE THE RETURN WITHIN THE EXTENDED DUE DAT E. HOWEVER, THE ASSESSEE HAD UTILIZED THE ENTIRE CAPITAL GAINS BY P URCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIOD OF SECTION 54 (2) I.E., BEFORE THE EXTENDED DUE DATE FOR RETURN U/S 139. THE ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RETURN U/S 139(4). BUT, HOWEVER, UTILIZED THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE E XTENDED DUE DATE U/S 139(4). THE CONTENTIOR OF THE REVENUE THAT THE DEPO SIT IN THE SCHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE A ND NOT THE EXTENDED DUE DATE WAS HELD TO BE AN UNTENABLE CONTENTION. IN THE PRESENT CASE, THE ASSESSEE HAD PROVED THE PAYMENT OF SUBSTANTIAL AMOUNT OF SALE CONSIDERATION FOR PURCHASE OF A RESIDENTIAL PROPERT Y ON OR BEFORE 31.3.2008, THAT WAS WITHIN EXTENDED PERIOD OF LIMIT ATION OF FILING OF ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 17 - RETURN. ONLY A SUM OF RS.24 LACS WAS PAID OUT OF TO TAL SALE CONSIDERATION ON 23.4.2008, THOUGH POSSESSION WAS DELIVERED TO TH E ASSESSEE ON EXECUTION OF THE POWER OF ATTORNEY ON 30.3.2008. SI NCE THE ASSESSEE, HAS ACQUIRED A RESIDENTIAL HOUSE BEFORE THE END OF THE NEXT FY IN WHICH SALE HAD TAKEN PLACE, THEREFORE, THE ASSESSEE IS NOT LIA BLE TO PAY ANY CAPITAL GAIN. SUCH WAS THE VIEW TAKER BY THE ITAT. IN VIEW OF THE ABOVE, NO MERIT WAS FOUND IN THE APPEAL.' 6.2. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE O F CIT VS. K.RAMACHANDRA RAO (SUPRA) ANSWERED THE QUESTION IN FAVOUR OF ASSESSEE I.E. WHEN THE ASSESSEE HAD INVESTED THE EN TIRE SALE CONSIDERATION IN CONSTRUCTION OF A RESIDENTIAL HOUS E WITHIN THE THREE YEARS FROM THE DATE OF TRANSFER. COULD HE BE DENIED EXEMPTION UNDER SECTION 54 F ON THE GROUND THAT HE DID NOT DEPOSIT THE SAID AMOUNT IN CAPITAL GAIN ACCOUNT SCHEME BEFORE THE DUE DATE PRE SCRIBED U/S.139(1) OF THE ACT. THE HON'BLE HIGH COURT OF KARNATAKA HIG H COURT HELD AS UNDER:- 'AS IT CLEAR FROM SUB-SECTION (4) IN THE EVENT OF T HE ASSESSEE NOT INVESTING THE CAPITAL GAINS EITHER IN PURCHASING TH E RESIDENTIAL HOUSE OR IN CONSTRUCTING A RESIDENTIAL HOUSE WITHIN THE PERI OD STIPULATED IN SECTION 54F(1), IF THE ASSESSEE WANTS THE BENEFIT O F SECTION 54F, THEN HE SHOULD DEPOSIT THE SAID CAPITAL GAINS IN AN ACCOUNT WHICH IS DULY NOTIFIED BY THE CENTRAL GOVERNMENT. IN OTHER WORDS IF HE WANT OF CLAIM EXEMPTION FROM PAYMENT OF INCOME TAX BY RETAINING T HE CASH, THEN THE SAID AMOUNT IS TO BE INVESTED IN THE SAID ACCOUNT. IF THE INTENTION IS NOT TO RETAIN CASH BUT TO INVEST IN CONSTRUCTION OR ANY PURCHASE OF THE PROPERTY AND IF SUCH INVESTMENT IS MADE WITHIN THE PERIOD STIPULATED THEREIN, THEN SECTION 54F(4) IS NOT AT ALL ATTRACTE D AND THEREFORE THE CONTENTION THAT THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE BANK ACCOUNT AS STIPULATED AND THEREFORE, HE IS NOT ENTI TLED TO THE BENEFIT EVEN THOUGH HE HAS INVESTED THE MONEY IN CONSTRUCTION IS ALSO NOT CORRECT.' 6.3. IN THE PRESENT CASE, THE ASSESSEE PURCHASED NE W ASSET ON 05/10/2009 AND HAD TRANSFERRED THE ORIGINAL ASSET O N 8/01/2008. AS PER SECTION 54F (1) OF THE ACT, THE EXEMPTION WOULD BE AVAILABLE I F THE ASSESSEE PURCHASED THE RESIDENTIAL HOUSE WITHIN TWO YEARS AFTER THE DATE WHEN TRANSFER TOOK PLACE. AS PER THE JUDGMENT OF HO N'BLE KARNATAKA HIGH COURT, THE PROVISIONS OF SECTION 54F(4) WOULD NOT BE ATTRACTED IN ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 18 - THE EVENT IF THE ASSESSEE HAS PURCHASED OR CONSTRUC TED THE RESIDENTIAL HOUSE WITHIN THE PERIOD PRESCRIBED UNDER SECTION 54 (1) OF THE ACT. IN THE CASE IN HAND, THERE IS NO DISPUTE WITH REGARD TO TH E FACT THAT THE ASSESSEE HAD PURCHASED WITHIN TWO YEARS [THE PERIOD PRESCRIB ED U/S.54(F(1)] A NEW ASSET ON 05/10/2009 FROM THE DATE OF TRANSFER O F THE ORIGINAL ASSET. THE REVENUE HAS NOT CITED OR PLACED ON RECORD ANY C ONTRARY JUDGMENT BY THE HON'BLE JURISDICTIONAL HIGH COURT OR HON'BLE SUPREME COURT. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DO WN BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS K.RAMACH ANDRA RAO (SUPRA), WE HEREBY SET ASIDE THE IMPUGNED ORDER AN D DIRECT THE AO TO RE-COMPUTE THE ASSESSED INCOME AFTER GRANTING TH E BENEFIT OF SECTION 54F OF THE ACT TO THE ASSESSEE. 9.7 THE FACTS OF THE ABOVE CASE ARE IDENTICAL TO TH E FACTS OF THE CASE IN HAND. THEREFORE, THE ISSUE IS SQUARELY COVERED IN F AVOUR OF ASSESSEE BY VIRTUE OF THE JUDGMENTS AS DISCUSSED ABOVE. THEREFO RE, WE HAVE NO HESITATION IN REVERSING THE ORDER OF LOWER AUTHORIT IES. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 03/10/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/10/2018 PRITI YADAV, SR.PS ITA NO.695/AHD/2016 SHRI SHRAWANKUMAR G. JAIN VS. ITO A.Y. 2011-12 - 19 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-5, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD