MADHU HASMUKH MEHTA, MUMBAI V. ACIT-19(2)(NOW ASSESSED BY CIT-30, MUMBAI, MUMBAI

ITA 845/MUM/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4844 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 14-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Capital Gains
• Section: 54; 139; 54F; 142(1); 143(2); 139(4); 54EC; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER AND ITA NO.845/MUM/2019 ASSESSMENT YEAR-2015-16 MADHU HASMUKH MEHTA, 101, MANOKAMNA BLDG. CHEMBUR EAST, MUMBAI-400071 / VS. ACIT - 19(2)(NOW ASSESSED BY CIT-30), 207, MATRU MANDIR, TARDEO ROAD, GRANT ROAD (WEST), MUMBAI-400007 PAN NO. AFTPM4284L ( / ASSESSEE) ( / REVENUE) / ASSESSEE BY SHRI PRATIK H. MEHTA / REVENUE BY SHRI S. K. MISHRA / DATE OF HEARING : 06/05/2019 / DATE OF ORDER: 13/05/2019 / O R D E R PER SHAMIM YAHYA (ACCOUNTANT MEMBER) THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST ORDER O F THE LD. CIT(A)-30, MUMBAI, DATED 18/12/2018 AND PERTAIN S TO ASSESSMENT YEAR 2015-16. THE GROUND OF APPEAL RAISE D BY THE ASSESSEE IS AS UNDER:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-30 ERRED IN CONFIRMING THE DISALLOWANCE O F EXEMPTION U/S. 54 OF THE INCOME TAX ACT IN RESPECT OF THE ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 2 LONG TERM CAPITAL GAIN ARISING TO THE APPELLANT UPO N SALE OF A RESIDENTIAL FLAT. II. THE ASSESSING OFFICER ERRED IN IMPLYING THE TRUE ME ANING OF A PROVISION OF LAW AND HAS TO BE DETERMINED ON THE BASIS OF WHAT IT PROVIDES BY ITS CLEAR LANGUAGE, WI TH DUE REGARDS TO THE SCHEME OF LAW. III. THE INTENTION OF THE ACT AS WELL AS THE INTENTION O F THE ASSESSEE IS TO BE CONSIDERED IN A RIGHT PERSPECTIVE . IV. FACTS AND CLAIM OF THE CASE CIT(A)-30 JUSTIFY REJEC TING 54EC EXEMPTION OF CLAIM TO THE EXTENT OF RS. 7,70,000.00 MERELY BECAUSE IT WAS KEPT IN AN APPELLANT'S SAVINGS BANK ACCOUNT INSTEAD OF SEPARATE CAPITAL GAIN SCHEME ACCOUNT. V. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRC UMSTANCES OF THE CASE THE AMOUNT OF RS. 7,70,000.00 WERE ULTI MATELY INVESTED WITHIN THE STIPULATED TIME IN PURCHASE OF NEW PROPERTY VI. KINDLY ACCEPT THE COMPILATION OF DECISION RELIED UP ON WHICH WAS NOT ALLOWED BY THE ASSESSING OFFICER AT THE TIM E OF HIS HEARING WHICH IS SELF EXPLANATORY. 2. THE BRIEF, FACTS OF THE CASE ARE AS UNDER:- THE ASSESSEE APPELLANT FLIED RETURN OF INCOME FOR T HE A.Y.2015-16 ON 31.08.2015 DECLARING TOTAL INCOME OF RS. 20,41,430/-. THE CASE WAS SELECTED FOR SCRUTINY UND ER CASS. NOTICES U/S 143(2) AND 142(1) ALONGWITH QUESTIONNAIRE WERE ISSUED AND SERVED ON THE ASSESSE E APPELLANT. THE LD. AO OBSERVED THAT THE ASSESSEE APPELLANT HAS SOLD PROPERTY DURING THE FY 2014-15 FOR RS.3,61,00,000/- AND PURCHASED A NEW PROPERTY WORTH RS.1,57,70,000/-, AGAINST WHICH THE ASSESSEE APPELLANT HAD PAID RS.1,50,00,000/- IN FY 2014-15 ANDRS.7,70,000/-, IN FY 2015-16. LONG TERM CAPITAL GAIN WAS COMPUTED AT RS. 18,10,270/- AND THE ASSESSEE APPELLANT CLAIMED ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 3 RS.7,70,000/- AS DEDUCTION U/S 54 OF THE I.T. ACT, 1961 FOR LONG TERM CAPITAL GAIN EARNED ON SALE OF IMMOVA BLE PROPERTY DURING FY 2014-15. THE LD. AO HELD THAT AS PER THE PROVISIONS OF SEC. 54, THE ASSESSEE APPELLANT DID NOT UTILISE THE CAPITAL GAIN S TOWARDS PURCHASE/CONSTRUCTION OF A HOUSE BEFORE THE DUE DATE OF FILING OF THE RETURN, THAT IS THE UNUTI LISED AMOUNT OF RS.7,70,000/- (CARRIED FORWARD FROM FY 20 14- 15) WAS REQUIRED TO BE DEPOSITED IN CAPITAL GAIN AC COUNT SCHEME OF ANY BANK. THE ASSESSEE APPELLANT KEPT THE UNUTILISED AMOUNT OF RS.7,70,000/- IN HER SAVINGS B ANK ACCOUNT INSTEAD OF DEPOSITING THE SAME IN A SPECIFI ED CAPITAL GAIN SCHEME ACCOUNT. THE LD. AO THEREFORE DISALLOWED THE DEDUCTION OF RS.7,70,000/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE APPELLANT FOR A.Y. 2015-16. 3. AGAINST ABOVE ORDER ASSESSEE APPEALED BEFORE THE LD. CIT(A). LD. CIT(A) NOTED THE SUBMISSIONS OF THE ASS ESSEE AS UNDER:- THAT THE ASSESSEE APPELLANT HAD PAID RS.1,50,00,000 /- (95.12%) BEFORE FILING OF THE IT RETURN AND BALANCE TOKEN OF RS.7,70,000/- (4.88%) WAS WITHHELD BY HER AS THE BUILDER HAD NOT GIVEN THE NECESSARY POSSESSION. THAT THE UNUSED AMOUNT OF RS. 7,70,000/- WAS PAID T O THE BUILDER WITHIN TWO MONTHS OF FILING THE RETURNS INSPITE OF THE DEVELOPER NOT GIVING THE POSSESSION, AS HER INTENTIONS WERE CLEAR. ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 4 THAT THE AMOUNT OF RS. 7,70,000/- WAS ULTIMATELY INVESTED WITHIN THE STIPULATED TIME FRAME AS MENTIO NED U/S 54EC OF INCOME TAX ACT IN PURCHASE OF NEW PROPERTY. THAT IT WAS NOT THE INTENTION OF THE ASSESSEE APPEL LANT TO UTILISE THE AMOUNT FOR ANY OTHER PURPOSE OTHER T HAN FOR THE PURCHASE OF THE HOUSE. 4. THEREAFTER, LD. CIT(A) DEALT WITH THE ASSESSEES CLAIM. HE PROCEEDED TO MAKE ENHANCEMENT AND HELD THAT IN VIEW OF HER ORDER OF ENHANCEMENT THE ASSESSEES PLEA FOR RELIEF ON ACCOUNT OF RS.7,70,000/- IS REDUNDANT. HOWEVER, FOR THE SAK E OF COMPLETENESS, LD. CIT(A) DEALT WITH THE ISSUE AND D ECIDED THE SAME AGAINST THE ASSESSEE. WE MAY GAINFULLY REFER T O THE CONCLUDING ADJUDICATION OF THE LD. CIT (A) AS UNDER :- 5.8 THE ASSESSEE APPELLANT HAS A ONE THIRD SHARE IN THE SAID PROPERTY, THAT IS ONE THIRD OF RS 2,65,00,000/-. IN VIEW OF THE DECISION OF THE JURISDICTIONAL HON'BLE HIGH COURT O F BOMBAY AND THE RATIO OF THE ORDER OF THE HON'BLE PUNJAB AND HA RYANA HIGH COURT, THE CLAIM OF EXEMPTION U/S 54 IS RESTRICTED TO ONE THIRD OF THE CONSIDERATION FOR PURCHASE OF PROPERTY OF RS 2, 65,00,000/, I.E. RS. 88,33,333/-, AS AGAINST RS 1,57,70,000/- CLAIME D BY ASSESSEE APPELLANT AND THE INCOME IS ENHANCED ACCORDINGLY. ( THE ASSESSEE APPELLANT HAS NOT FURNISHED ANY PROOF THAT THE SHAR E OF HER HUSBAND DEVOLVED UPON HER ALONE. ELSE, THE CLAIM OF THE ASSESSEE APPELLANT WOULD HAVE BEEN COMPUTED AT TWO-THIRDS.) 5.9 ACCORDINGLY, THE INCOME FROM LONG TERM CAPITAL GAINS IS COMPUTED AS UNDER:- INCOME FROM LONG TERM CAPITAL GAIN SALE AGREEMENT VALUE:- 3,61,00,000.00 LESS: LEGAL FEES PAID:- 45,000.00 LESS: INDEXATION AS ON 31.03.2015: 1,68,24,730.00 LESS: U/S 54 88,33,333.00 1,03,96,937.00 ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 5 AS PER WORKING 1,03,96,937.00 LESS: EXEMPTED U/S 54EC 16,50,000,000 84,46,937 .00 THE INCOME FROM LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE APPELLANT IS RS. 18,10,270/-. THE INCO ME FROM LONG TERM CAPITAL GAINS DETERMINED BY THE LD A O IS RS. 25,80,270/-. THIS IS ENHANCED PER THE COMPUTATI ON SUPRA TO RS 87,46,937/-. THE LONG TERM CAPITAL GAIN HAS BEEN RE-COMPUTED AND ENHANCED AS ABOVE. THEREFORE, THE CLAIM FOR REL IEF AGAINST THE DISALLOWANCE OF RS 7,70,00 0 BY THE ASS ESSEE APPELLANT, ON ACCOUNT OF UNUTILIZED BALANCE BEING P AID BY ASSESSEE APPELLANT AFTER FILING OF ROI, BECOMES REDUNDANT AND DOES NOT MERIT ADJUDICATION. HOWEVER, THE SAME IS ADJUDICATED FOR THE SAKE OF COMPLETENES S. APPELLANT FILED HER RETURN OF INCOME FOR AY 2015-16 DECLARING TOTAL INCOME OF RS.20,41,430/- ON 31.08.1 S AND CLAIMED DEDUCTION U/S.54 OF THE I.T. ACT FOR TH E LONG TERM CAPITAL GAIN EARNED ON SALE OF IMMOVABLE PROPERTY. THE UNUTILIZED BALANCE OF RS. 7,70,000/- (RS. 1 ,57,70,000 - RS. 1,50,00,000) OF FY 2014-15 WAS PAID BY THE APPELLANT TO THE BUILDER ONLY IN NOVEMBER/DECEMBER 2015 I.E. FY 2015-16 AND ALSO AFTER THE DATE OF FILING OF RETURN OF INCOME FOR A. Y. 2015-16, I.E. 31.08.2015. AS PER THE PROVISION OF SECTION 54(2) OF THE I.T. A CT, 1961, THE UNUTILIZED AMOUNT OF FY 2014-15 AMOUNTING TO RS. 7,70,000/- SHOULD HAVE BEEN DEPOSITED IN A BANK ACCOUNT OPENED UNDER CAPITAL GAIN ACCOUNT SCHEME. T HE PROVISION OF SECTION 54(2) OF THE I.T. ACT IS REPRO DUCED AS UNDER. 'THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT APPROP RIATED BY THE ASSESSEE APPELLANT TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 6 UTILIZED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE APPELLANT FOR FURNISHING THE RETURN OF INCOME UNDER SUBSECTION (1) OF SECTION 1391 IN AN ACCOUNT IN ANY SUCH HANK OR INSTITUTION AS MAY BE SPECIFIED IN AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSE OF SUB-SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILIZED BY THE ASSESSEE APPELLANT FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHA LL BE DEEMED TO BE THE COST OF THE NEW ASSET: ...' IT IS AN UNDISPUTED FACT THAT THE ASSESSEE APPELLAN T HAS NOT DEPOSITED THE UNUTILIZED AMOUNT OF RS. 7,70,000/- U NDER CAPITAL GAIN ACCOUNT SCHEME ON OR BEFORE THE DUE DA TE FOR FILING OF RETURN OF INCOME FOR A. Y. 2015-16 WHICH WAS 31. 07.2015 AND THUS IS NOT ENTITLED FOR CLAIM OF DEDUCTION OF RS. 7,70,000/- U/ S. 54 OF THE I.T. ACT, 1961. THE ASSESSEE APPELLANT SUBMITTED THAT IT WAS ONLY A TECHNICAL ERROR AND THE AMOUNT WAS UTILISED FOR PURCHASE OF P ROPERTY ONLY AND WAS PAID TO BUILDER WITHIN TWO MONTHS OF IT LYI NG IN THE SAVINGS BANK ACCOUNT. THE ASSESSEE APPELLANT RELIED ON THE DECISION OF THE HON'BLE ITAT, MUMBAI IN THE CASE OF KISHORE H GALAIYA ((2012) 24 TAXMANN.COM 11 (MUMBAI)). THE HO N'BLE ITAT, MUMBAI HELD THAT IN VIEW OF JUDGMENT OF PUNJA B AND HARYANA HIGH COURT IN CIT V. JAGRITI AGGARWAL [2011 ] 339 ITR 610, WHEREIN IT WAS HELD THAT SUB-SECTION (4) OF SE CTION 139 HAS TO BE READ ALONG WITH SUB-SECTION (1), EXTENDED PER IOD UNDER SECTION 139(4) HAS TO BE CONSIDERED FOR PURPOSE OF UTILIZATION OF AMOUNT OF CAPITAL GAIN AND ASSESSEE APPELLANT COULD NOT BE SAID TO HAVE DEFAULTED IN NOT DEPOSITING AMOUNT UND ER CAPITAL GAIN ACCOUNT SCHEME, AS IT HAD UTILIZED ENTIRE CAPI TAL GAIN BEFORE EXTENDED PERIOD UNDER SECTION 139 (4) I.E., 31-3-2008. THE ASSESSEE APPELLANT ALSO RELIED ON THE DECISION OF THE ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 7 HON'BLE ITAT, JODHPUR IN THE CASE OF JAGAN NATH SIN GH LODHA ([2005] 148 TAXMAN 1 (JODHPUR)(MAG.)). THE HON'BLE ITAT HELD THAT SINCE INTENTION OF ASSESSEE APPELLANT FROM VER Y BEGINNING WAS TO PURCHASE A FLAT AND IT WAS NOT A CASE OF DEP ARTMENT THAT ASSESSEE APPELLANT WANTED TO UTILISE AMOUNT FOR PUR POSE OTHCR THAN TO PURCHASE A HOUSE, AMOUNT WHICH WAS ULTIMATE LY INVESTED WITHIN STIPULATED TIME WAS TO BE EXEMPT FR OM TAX ALTHOUGH ASSESSEE APPELLANT FAILED TO TECHNICALLY D EPOSIT SAME IN CAPITAL GAINS ACCOUNT. THE JURISDICTIONAL HIGH COURT, WHICH IS THE HON'BLE HC OF BOMBAY HELD IN THE CASE OF HUMAYUN SULEMAN MERCHANT ((2016) 387 ITR 421 ((BOMBAY) THAT WHERE ASSESSEE A PPELLANT HAD FILED RETURN OF INCOME AND ENTIRE AMOUNT WHICH WAS SUBJECTED TO CAPITAL GAIN TAX HAD NOT BEEN UTILIZED FOR PURPOSE OF CONSTRUCTION OF NEW HOUSE, NOR WERE UNUTILIZED A MOUNTS DEPOSITED IN NOTIFIED BANK ACCOUNTS BEFORE FILING R ETURN OF INCOME, ASSESSING OFFICER RIGHTLY RESTRICTED EXEMPT ION UNDER SECTION 54F PROPORTIONATELY TO AMOUNT INVESTED. AMO UNT SUBJECT TO CAPITAL GAIN ON SALE OF CAPITAL ASSET FOR PURPOS E OF EXEMPTION HAS TO BE UTILIZED BEFORE DATE OF FILING OF RETURN OF INCOME AND MANDATE OF SECTION 54F(4) IS CLEAR THAT AMOUNT WHIC H HAS NOT BEEN UTILIZED IN CONSTRUCTION AND/OR PURCHASE OF PR OPERTY BEFORE FILING RETURN OF INCOME, MUST NECESSARILY BE DEPOSI TED IN AN ACCOUNT DULY NOTIFIED BY CENTRAL GOVERNMENT, SO AS TO BE EXEMPTED. WHERE ASSESSEE APPELLANT HAD FILED RETURN OF INCOME AND ENTIRE AMOUNT WHICH WAS SUBJECT TO CAPITAL GAIN TAX HAD NOT BEEN UTILIZED FOR PURPOSE OF CONSTRUCTION OF NE W HOUSE NOR WERE UNUTILIZED AMOUNTS DEPOSITED IN NOTIFIED BANK ACCOUNTS IN TERMS OF SECTION 54F(4) BEFORE FILING RETURN OF INC OME, ASSESSING OFFICER RIGHTLY COMPUTED DEDUCTION UNDER SECTION 54 F, RESTRICTING EXEMPTION UNDER SECTION 54F PROPORTIONA TELY TO AMOUNT INVESTED. ACCORDINGLY, FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, THE APPEAL OF THE ASSESSEE APPELLANT IS DISMISSED. IN VIEW OF THE DISCUSSION SUPRA, THE LONG TERM CAPI TAL GAINS OF THE ASSESSEE APPELLANT IS ENHANCE. 5. AGAINST ABOVE ORDER, ASSESSE HAS FILED APPEAL BE FORE US. ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 8 6. WE NOTE THAT NO GROUND HAS BEEN RAISED REGARDING THE ENHANCEMENT MADE BY THE LD. CIT(A). THE ASSESSEE IS ONLY AGGRIEVED THAT THAT ASSESSEE SHOULD BE GRANTED BENE FIT OF INVESTMENT OF RUPEES. 7,70,000/-, WHICH WAS NEITHER UTILISED FOR THE PURPOSE OF ACQUIRING THE NEW FLAT BEFORE FI LING THE DATE OF RETURN NOR THE SAME WAS KEPT IN SPECIFIED CAPITA L GAIN BANK ACCOUNT AS MANDATED IN THE ACT. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE PLEADED THAT A SSESSEE IS A SENIOR CITIZEN THAT SHE HAS ALWAYS PAID HER TAXES IN TIME. HE PLEADED THAT ASSESSEE HAD FULL INTENTION TO MAKE TH E PAYMENT FOR THE FLAT. THAT SHE WAS UNDER BONA-FIDE BELIEF T HAT DEPOSIT IN HER SAVING BANK ACCOUNT WOULD NOT BE INFRACTION OF SECTION 54F OF THE ACT. HE SUBMITTED THAT IMMEDIATELY WITHI N TWO MONTHS OF THE FILING OF RETURN THAT ASSESSEE HAS DU LY PAID THE SUM OF RS.7,70,000/- TO THE BUILDER, WHICH WAS EAR LIER WITHHELD FOR ENSURING DUE PERFORMANCE BY THE BUILDE R. LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE UPON CATENA OF CASE LAWS FOR THE PROPOSITION THAT SECTION 54F SHOULD BE LIBERALLY CONSTRUED. ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 9 8. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE RELI ED UPON THE ORDERS OF THE LD. CIT(A). LD. DR SUBMITTED THA T LD. CIT(A) HAS CORRECTLY DEALT WITH THE CONCERNED EXEMPTION PR OVISIONS CONTAINED IN SECTION 54 OF THE ACT. HE SUBMITTED THAT AS PER THE PROVISIONS OF THE ACT, ASSESSEE SHOULD HAVE DEP OSITED THE UNUTILIZED MONEY IN THE SPECIFIED CAPITAL GAIN ACCO UNT. LD. DR SUBMITTED THAT SINCE ASSESSEE HAS NOT FOLLOWED T HE MANDATE OF THE ACT THE DECISION OF HONBLE BOMBAY H IGH COURT RELIED BY THE LD. COMMISSIONER OF INCOME TAX IS COR RECTLY APPLICABLE ON THE FACTS OF THE CASE. LD. COUNSEL FU RTHER PLACED RELIANCE UPON THE DECISION OF THE HONBLE APEX COUR T CONSTITUTIONAL BENCH JUDGEMENT IN THE CASE OF COMMI SSIONER OF CUSTOM VS M/S DILIP KUMAR AND COMPANY IN CIVIL A PPEAL NO.3327 OF 2007, VIDE ORDER DATED 30/07/2018 FOR TH E PROPOSITION THAT EXEMPTION PROVISION/ NOTIFICATION HAVE TO BE STRICTLY CONSTRUED AND IF TWO VIEW ARE POSSIBLE ONE IN FAVOUR OF THE REVENUE SHOULD BE ADOPTED. HENCE LD. DR SUBMITT ED THAT ORDER OF THE LD. CIT(A) ON THIS ISSUE SHOULD BE UPH ELD. 9. IN REJOINDER IN THIS REGARD LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT EVEN AS PER THE DECISION OF THE AFORESAID CONSTITUTIONAL BENCH ASSESSEE IS ENTITLED TO THE ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 10 EXEMPTION. HE SUBMITTED THAT ASSESSEE HAS DULY FULF ILLED ALL THE CRITERIA. HE REFERRED TO THE CASE LAWS THAT SUB STANTIAL PAYMENT WILL BE SUFFICIENT FOR THE PURPOSE OF THE A CT. THE LD. COUNSEL FOR THE ASSESSEE PLEADED THAT THE PROVISION OF SECTION 54 SHOULD BE LIBERALLY CONSTRUED. 10. BEFORE PROCEEDING FURTHER, WE MAY GAINFULLY REF ER TO THE PROVISIONS OF SECTION 54 AS UNDER:- 54. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASS ET, BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPER TY' (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON W HICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YE ARS AFTER THAT DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIO US YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCO RDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, ( I ) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THA N THE COST OF THE RESIDENTIAL HOUSE SO PURCHASED OR CONSTRUCTED (HEREAFTER IN THI S SECTION REFERRED TO AS THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF TH E CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTIO N 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, AS THE CASE MAY BE, THE C OST SHALL BE NIL ; OR ( II ) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UN DER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET AN Y CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE OR CONSTRUCTION, AS THE CASE MAY BE, THE COST SHALL BE REDUCED BY THE AMOUNT OF THE CAPITAL GAIN. FOLLOWING PROVISOS SHALL BE INSERTED AFTER CLAUSE ( II ) OF SUB-SECTION (1) OF SECTION 54 BY THE FINANCE ACT, 2019, W.E.F. 1-4-202 0 : PROVIDED THAT WHERE THE AMOUNT OF THE CAPITAL GAIN DOES NOT EXCEED TWO CRORE RUPEES, THE ASSESSEE MAY, AT HIS OPTION, PURC HASE OR CONSTRUCT TWO RESIDENTIAL HOUSES IN INDIA, AND WHERE SUCH OPTION HAS BEEN EXERCISED, ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 11 ( A ) THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFEC T AS IF FOR THE WORDS 'ONE RESIDENTIAL HOUSE IN INDIA', THE WORDS 'TWO RE SIDENTIAL HOUSES IN INDIA' HAD BEEN SUBSTITUTED; ( B ) ANY REFERENCE IN THIS SUB-SECTION AND SUB-SECTION ( 2) TO 'NEW ASSET' SHALL BE CONSTRUED AS A REFERENCE TO THE TWO RESIDENTIAL HOUSES IN INDIA: PROVIDED FURTHER THAT WHERE DURING ANY ASSESSMENT YEAR, THE ASSESSEE HAS EXERCISED THE OPTION REFERRED TO IN THE FIRST PROVI SO, HE SHALL NOT BE SUBSEQUENTLY ENTITLED TO EXERCISE THE OPTION FOR TH E SAME OR ANY OTHER ASSESSMENT YEAR. (2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT APP ROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGIN AL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CO NSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF I NCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SU CH RETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE D UE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SU CH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION I N THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB -SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILISED BY THE ASSESSEE FO R THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMO UNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION O F THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, ( I ) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDE R SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. EXPLANATION .[ OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993. ] IN THIS CASE, THE ASSESSEE HAS CLAIMED INVESTMENT O F RS.1,57,70,000/-. THE SUM OF RS.1,50,00,000/- WAS U TILISED BEFORE THE FILING OF THE RETURN. TO THAT EXTENT AUT HORITIES BELOW HAVE GRANTED EXEMPTION U/S 54 OF THE ACT. A SUM OF RS.7,70,000/- WHICH WAS NOT INVESTED WAS KEPT IN AS SESSEE ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 12 SAVING BANK ACCOUNT INSTEAD OF SPECIFIED CAPITAL GA IN ACCOUNT AS PER THE PRESCRIPTION OF SECTION 54(2) OF THE ACT AS HIGHLIGHTED ABOVE. THE ASSESSEE CLAIMS THAT SAID A MOUNT WAS PAID WITHIN TWO MONTHS OF THE DATE OF FILING OF RET URN AND SINCE SUBSTANTIAL COMPLIANCE HAS BEEN DONE THE ASSE SSEE SHOULD GRANTED DEDUCTION FOR THE AFORESAID SUM OF RS.7,70,000/- ALSO, BY LIBERALLY CONSTRUING THE PRO VISIONS OF THE ACT IN THIS REGARD, WE FIND THAT IT IS UNDISPUT ED THAT ASSESSEE HAS NOT UTILISED A SUM OF RS.7,70,000/- FO R THE PURCHASE OF THE NEW FLAT BY THE TIME OF FILING OF R ETURN. IT IS ALSO UNDISPUTED THAT THE SAID AMOUNT WAS NOT DEPOSI TED IN A SPECIFIED CAPITAL GAIN ACCOUNT. AS PER THE MANDATE OF THE ACT, IN THIS VIEW OF THE MATER, IT IS CLEAR THAT, THERE IS A DEFAULT ON THE PART OF THE ASSESSEE IN COMPLYING WITH THE PROV ISIONS OF THE ACT. THE RELIANCE BY LD. CIT(A) ON HONBLE BOMB AY HIGH COURTS DECISION IS GERMANE. IN THESE CIRCUMSTANCES , THE RATIO OF THE DECISION OF THE CONSTITUTIONAL BENCH OF HON BLE APEX COURT IS SQUARELY APPLICABLE. HONBLE CONSTITUTIONA L BENCH OF THE APEX COURT WAS CONSIDERING THE QUESTION OF INTE RPRETING A TAX EXEMPTION PROVISION/NOTIFICATION WHEN THERE IS AN AMBIGUITY AS TO ITS APPLICABILITY WITH REFERENCE TO THE ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 13 ENTITLEMENT OF THE ASSESSEE OR THE RATE OF TAX TO B E OFFERED. THE HONBLE APEX COURT CONCLUDED AS UNDER:- 52. TO SUM UP, WE ANSWER THE REFERENCE HOLDING AS UNDER - (1) EXEMPTION NOTIFICATION SHOULD BE INTERPRETED STRICTLY; THE BURDEN OF PROVING APPLICABI LITY WOULD BE ON THE ASSESSEE TO SHOW THAT HIS CASE COMES WITHIN THE PARAMETERS OF THE EXEMPTION CLAUSE OR EXEMPTION NOTIFICATION. (2) WHEN THERE IS AMBIGUITY IN EXEMPTIO N NOTIFICATION WHICH IS SUBJECT TO STRICT INTERPRETATION, THE BENEFIT OF SUCH AMBIG UITY CANNOT BE CLAIMED BY THE SUBJECT/ASSESSEE AND IT MUST BE INTERPRETED IN FAVOUR OF THE REVENUE. (3) THE RATIO IN SUN EXPORT CASE (SUPRA) IS NOT COR RECT AND ALL THE DECISIONS WHICH TOOK SIMILAR VIEW AS IN SUN EXPORT CASE (SUPRA) STANDS OVER-RULED. 11. EXAMINING THE PRESENT ISSUE ON THE TOUCHSTONE OF ABOVE SAID CONSTITUTIONAL BENCH DECISION, WE FIND T HAT ADMITTEDLY THE ASSESSEE HAS NOT FOLLOWED THE PRESCR IPTION OF THE STATUTE DEALING WITH EXEMPTION PROVISION OF SEC TION 54 PROPERLY TO THE EXTENT OF INVESTMENT OF RS.7,70,000 /-. IT IS NOT THE CASE THAT THE ENTIRE CLAIM OF THE ASSESSEE IS B EING DENIED. EXEMPTION TO THE EXTENT OF THE PAYMENT OF RS.1.5 CR ORES BEFORE THE DATE OF FILING OF RETURN HAS BEEN DULY A LLOWED. IT IS ONLY TO THE EXTENT OF RS.7,70,000/-, THE UNUTILIZED PORTION IN THAT YEAR WHICH AS PER THE MANDATE OF THE ACT WAS R EQUIRED TO ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 14 BE DEPOSITED IN THE CAPITAL GAIN ACCOUNT THE CLAIM IS BEING DENIED. WE HAVE FULL SYMPATHY WITH THE ASSESSEES C LAIM. HOWEVER, THE HONBLE APEX COURT CONSTITUTIONAL BENC H DECISION IS APPLICABLE HERE. HENCE IN VIEW OF THE A FORESAID CASE LAWS, WE ARE UNABLE TO ACCEDE TO THE REQUEST OF THE LD. COUNSEL OF THE ASSESSEE. ACCORDINGLY, IN THE BACKGR OUND OF AFORESAID DISCUSSION AND PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDING LY, WE UPHOLD THE SAME. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STA ND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/05 /2019 SD/- S D/- (AMARJIT SINGH) (SHAMIM YAHYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13/05/2019 F{X~{T? P.S/. .. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. !'# / THE RESPONDENT. 3. $# $# % ( ) / THE CIT, MUMBAI. 4. $# $# % / CIT(A)- , MUMBAI, 5. ( )*# !+ , $# # +- , / DR, ITAT, MUMBAI ITA NO.845MUM/2019 MADHU HASMUKH MEHTA 15 6. *. / / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) $%&', / ITAT, MUMBAI