ITO, Jaipur V. SHRI GURU DAYAL SINGH SANDHU, Jaipur

ITA 884/JPR/2012

• Counselvise Citation: 88423114 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHRMA
• Assessee Lawyers: JAV ED
• Keywords: Capital asset; Cost of acquisition; Difference of opinion
• Section: 54F; 12

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.884 & 885/JP/2012 (A.Y. 2008-09) ITO, WARD-2(3), VS. SHRI GURU DAYAL SINGH JAIPUR. SANDHU, 5/15, SFS, MANSAROVER, JAIPUR. PAN NO. ADEPS 0894 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANISH AGRAWAL & SHRI JAVED. DEPARTMENT BY : SHRI D.C. SHRMA - D.R. DATE OF HEARING : 24/01/2014. DATE OF PRONOUNCEMENT : 26/02/2014. O R D E R PER N.K. SAINI, A.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE ORDERS DATED 19/09/2012 AND 20/09/2012 OF LD. CIT ( A)-I, JAIPUR. THESE APPEALS ARE CO-RELATED AND WERE HEARD TOGETHER, SO, THESE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2 2. FIRST WE WILL DEAL WITH I.T.A.NO. 884/JP/2012. TH E ONLY GROUND RAISED IN THIS APPEAL READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE TAXABILITY LTCG IN A.Y. 2011-12 I.E. AFTER THE EXPIRY OF PERIOD OF THREE YEARS FROM DATE OF TR ANSFER OF ORIGINAL ASSET, DESPITE THE FACT THAT THE ASSESSEE HAS NOT DEPOSITE D ANY AMOUNT IN THE SPECIFIED SCHEME OR IN SPECIFIED NEW ASSET, I.E. RE SIDENTIAL HOUSE AS PROVIDED U/S 54F. 3 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME ON 30/07/2008 DECLARING TOTAL INCOME OF RS. 4,56,140/-. LATER ON, CASE WAS SELECTED FOR SCRUTINY. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT AN AIR INFORMATION WAS RECEIVED BY HIM THAT THE ASSESSEE HAD SOLD IMMOVABL E PROPERTY FOR RS. 70,00,000/- DURING THE PERIOD UNDER CONSIDERATI ON AND ALSO FOUND THAT THE ASSESSEE AFTER SELLING THIS PLOT, HAD PURCHASED ANOTHER PLOT AT GURGAON, HARYANA FOR RS. 90,00,000/- ON 27/08/2007. THE ASSESSING OFFICER CONDUCTED AN INVESTIGATION REGARDING SOURCE OF INVESTMENT IN THE NEW PLOT OF LAND. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH SOURCE OF INVESTMENT IN NEW PLOT. THE ASSESSEE FUR NISHED THE RELEVANT DETAILS WITH REGARD TO PHOTOCOPY OF SAVINGS BANK AC COUNT AND HAS TAKEN LOAN FROM HIS MOTHER AND HIS WIFE, THE RELEVANT PHO TOCOPIES OF THE PASS BOOKS HAD BEEN FURNISHED AND HOUSING LOAN CERTIFICA TE OF HDFC BANK FROM 3 WHERE THE ASSESSEE HAD TAKEN HOUSING LOAN TO THE TU NE OF RS. 5,00,000/- WAS ALSO FURNISHED. THE ASSESSING OFFICER FOUND TH AT THE SOURCE OF INVESTMENT IN PURCHASE OF A NEW LAND AT GURGAON WAS MORE THAN THE SALE CONSIDERATION OF RS. 70,00,000/- FOUND IT TO BE GEN UINE. HOWEVER, THE ASSESSING OFFICER DID NOT ALLOW THE BENEFIT UNDER S ECTION 54F OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) BY OBSERVING THAT THE ASSESSEE HAD NOT STARTED CONSTRUCTION ON NEW PL OT OF LAND WHICH HE HAD PURCHASED AT GURGAON. HE, THEREFORE, MADE AN A DDITION OF RS. 66,91,835/- TO THE RETURNED INCOME OF THE ASSES SEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND THE SUBMISSIONS MADE AS INCORPORATED IN PARA 4. 2 OF THE IMPUGNED ORDER WERE AS UNDER:- 'THE AO HAS NOT GIVEN ANY BASIS FOR ASSUMING THE RA TE OF RS.500/- PER SQ. YARD. MOREOVER THE INDEXED COST OF ACQUISITION RS.3,08,16 5/- AS WORKED OUT BY THE ASSESSING OFFICER DOES NOT MATCH WITH THE PARAM ETERS ASSUMED BY HIM. IN FACT IT WAS APPARENTLY AN ERRONEOUS CALCULATION AND THE AO HIMSELF HAS CORRECTED IT IN HIS SUBSEQUENT ORDER U/S 271(1)(C) DATED 28/06/2011 BY RE- COMPUTING THE INDEXED COST AT RS.14,42,880/- BASED ON THE PRICE OF RS.2800 PER SQ. MTR. OBTAINED FROM SUB-REGISTRAR-LIL, JAIPU R. HOWEVER, NO CORRESPONDING CORRECTION HAS BEEN DONE BY THE AO IN THE AMOUNT OF THE TAX DEMAND UPON THE RECALCULATION OF THE AMOUNT OF LTCG AT RS.55,57,120/- INSTEAD OF RS.66,91,835/- ASSESSED E ARLIER. 4 THE ASSESSEE HAD VERY MUCH MENTIONED AMOUNTS OF SAL E (RS.70 LACS) AND PURCHASE (RS.90 LACS) OF RESIDENTIAL PLOTS IN SCHED ULE AIR OF THE RETURN OF INCOME. IT WAS ON THE BASIS OF THESE FIGURES THAT THE AO HAD SOUGHT FURTHER INFORMATION VIDE ITEM NO. 9 OF THE LETTER DATED 16/ 04/2010 OF THE AO. IF INTENTION OF THE ASSESSEE WOULD HAVE BEEN TO MIS-LE AD OR EVADE TAXATION, HE WOULD NOT HAVE SHOWN THESE FIGURES IN THE RETURN AT ALL. EVEN OTHERWISE THE LAW U/S 54F PROVIDES THAT UPON F AILURE TO CONSTRUCT NEW HOUSE WITHIN THREE YEARS FROM THE DATE OF CAPITAL G AIN, THE CAPITAL GAIN WILL BE TAXED IN THE YEAR IN WHICH THE PERIOD OF THREE Y EARS EXPIRES. THE ASSESSEE HAD TAKEN EFFECTIVE STEPS TO CONSTRUCT THE NEW HOUSE BY PURCHASING NEW PLOT OF RESIDENTIAL LAND IN THE YEAR OF CAPITAL GAIN ITSELF, HE HAD FILED THE RETURN BASED ON THE INFORMATION AND F ACTS AS EXISTING ON THE DATE OF THE FILING IN RELATION TO THE PREVIOUS YEAR ENDED 31/03/2008 AND HE COULD NOT HAVE BEEN EXPECTED TO KNOW AND REPORT THE EVENTS WHICH WOULD TAKE PLACE IN FUTURE I.E. THE NEXT THREE YEARS. THERE IS A DISTINGUISHABLE AND CLEAR DIFFERENCE OF OPINION AS REGARDS THE POINT OF TAXATION OF THE CAPITAL GAIN IN QUESTION A ND ALSO THE MANNER OF ITS COMPUTATION BY THE AO. THE ISSUE RAISED BY THE AO HAS NO REVENUE IMPLICATI ONS AS FAR AS A.Y. 2008- 09 IS CONCERNED AND HENCE, PENALTY PROCEEDINGS U/S 271(L)(C) OF THE I.T. ACT, L96L ARE NOT AT ALL ATTRACTED IN THIS CASE. THUS ANY ACTION TO TAX THE LTCG IN THE ASSESSEE'S H AND COULD HAVE BEEN TAKEN ONLY AFTER COMPLETION OF THREE YEARS I.E. IN A.Y. 20LL-12 AND NOT A.Y. 2008-09 AS HAS BEEN DONE BY THE AO. HOWEVER, DISREG ARDING THE CONTENTIONS OF THE ASSESSEE, THE AO HAS SOUGHT TO T AX THE CAPITAL GAIN IN THE ORIGINAL ASSESSMENT YEAR I.E. 2008-09 ITSELF. THE ASSESSEE HAS SINCE DULY PAID THE TAX ON THE UNU TILIZED CAPITAL GAIN U/S 54F WHILE FILING HIS RETURN OF INCOME FOR THE A.Y. 2011 - I2 I.E. THE YEAR WHEN THE CAPITAL GAIN IS ACTUALLY LIABLE TO TAX AND HE W ILL END UP PAYING TAX ON THE SAME INCOME TWICE IF THE ASSESSED DEMAND ON LTCG FO R, A.Y. 2008-09 IS NOT DROPPED. 5 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE OBSERVED THAT THE PROVISIONS OF SECTION 54F OF THE ACT REQUIRES AN ASSESSEE TO HAVE INVESTED THE CAPITAL GAINS ARISING FROM THE TRANSFER OF ANY LONG TERM CAPITAL GAIN IN CONSTRUCTION OF A RES IDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER TO CLAIM EXEMPTION ON THE CAPITAL GAINS OF SUCH TRANSFER. HE FURTHER OBSERVED THAT THE PROVISO OF SECTION 54F SPECIFIES THAT IF THE AMOUNT IS NOT UTI LIZED WHOLLY AND PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET W ITHIN THE PERIOD OF TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 54F OF THE ACT, THEN THE AMOUNT SHALL BE CHARGED UNDER SECTION 45 OF THE ACT AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FR OM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES. LD. CIT(A) POINTED OUT THAT THE ASSESSEE SOLD THE PLOT OF LAND ON 26/07/2007 FOR A CONSIDERATION OF RS. 70,00,000/- AND WAS REQUIRED TO HAVE CONSTRUCTE D THE HOUSE BY THE PREVIOUS YEAR PERTINENT TO A.Y. 2011-12 OR LIABLE T O PAY TAX ON LONG TERM CAPITAL GAIN UNDER SECTION 45 OF THE ACT AS PER PRO VISO TO SECTION 54F OF THE ACT IN A.Y. 2011-12. LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE A.Y. 2011-12 AND HAD D ECLARED LONG TERM CAPITAL GAIN ON TRANSFER OF THIS PROPERTY UNDER SEC TION 45 OF THE ACT AND HAD PAID TAXES ON THE SAME. HE, THEREFORE, HELD TH AT THE EXEMPTION 6 CLAIMED BY THE ASSESSEE IN A.Y. 2008-09 UNDER SECTI ON 54F OF THE ACT COULD NOT HAVE BEEN DISALLOWED IN THAT YEAR, BUT AF TER EXPIRY OF THE TIME LIMIT GIVEN TO THE ASSESSEE FOR MAKING DUE INVESTME NT IN CONSTRUCTION OF A RESIDENTIAL PROPERTY. LD. CIT(A) ALSO OBSERVED THA T THE ASSESSEE HAD PAID TAXES IN A.Y. 2011-12 AS PER THE PROVISIONS OF SECT ION 45 OF THE ACT ON THE LONG TERM CAPITAL GAIN ON TRANSFER OF PROPERTY, SIN CE HE FAILED TO CONSTRUCT THE HOUSE, THEREFORE, THE DISALLOWANCE OF EXEMPTION UNDER SECTION 54F OF THE ACT IN A.Y. 2008-09 WAS TO BE DE LETED. NOW THE DEPARTMENT IS IN APPEAL. 6. LEARNED D.R. REITERATED THE OBSERVATIONS MADE BY T HE ASSESSING OFFICER AND STRONGLY SUPPORTED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 7 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND FURTHER SUBMITTED THAT THE ASSESSEE SOLD THE PLOT FOR A SUM OF RS. 70 ,00,000/- ON 26/07/2007 AND THE ENTIRE SALE PROCEEDS WERE INVEST ED IN ACQUISITION OF ANOTHER RESIDENTIAL PLOT AT GURGAON, HARYANA FOR A TOTAL SUM OF RS. 90,00,000/- VIDE SALE DEED DATED 27/08/2007 I.E . WITHIN ONE MONTH WHERE THE ASSESSEE WAS INTENDED TO CONSTRUCT A RESI DENTIAL HOUSE FOR HIS 7 OWN USE AND THEREFORE, CLAIMED EXEMPTION UNDER SECT ION 54F OF THE ACT. IT WAS STATED THAT SINCE THE ENTIRE SALE CONSIDERAT ION RECEIVED FROM THE SALE OF ORIGINAL CAPITAL ASSET I.E. PLOT OF LAND OT HER THAN THE RESIDENTIAL HOUSE WAS INVESTED WITHIN A MONTH IN THE ACQUISITIO N OF A PLOT OF LAND WITH THE SOLE INTENTION TO CONSTRUCTION A RESIDENTI AL HOUSE THEREUPON THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT AVAILABLE TO HIM. IT WAS FURTHER STATED THAT THE ENTIRE SALE CO NSIDERATION WAS USED IN THE ACQUISITION OF RESIDENTIAL PLOT OF LAND AND THE RE REMAINED NO BALANCE AVAILABLE WITH THE ASSESSEE OUT OF THE SALE CONSIDE RATION, THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO DEPOSIT ANY AMOUNT IN SPECIFIED SCHEME AS HAD BEEN PRESCRIBED IN SECTION 54F OF THE ACT. HOW EVER, DUE TO SOME FINANCIAL CONSTRAINTS AND PRE-OCCUPATION IN HIS OFF ICIAL ASSIGNMENTS, THE ASSESSEE COULD NOT BE ABLE TO CONSTRUCT RESIDENTIAL HOUSE WITHIN THE PRESCRIBED TIME LIMIT OF THREE YEARS ON THE PLOT OF LAND ACQUIRED BY HIM OUT OF THE SALE CONSIDERATION RECEIVED IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, AS SUCH THE AS SESSEE FINDING HIMSELF NO MORE ELIGIBLE FOR THE EXEMPTION AS PER THE PROVI SIONS OF SECTION 54F OF THE ACT VOLUNTARILY OFFERED SUCH INCOME FOR CAPITAL GAIN BY INCLUDING THE SAME IN THE TOTAL DECLARED RETURN OF INCOME FOR THE A.Y. 2011-12 I.E. ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE PERIOD OF 8 THREE YEARS AVAILABLE FOR CONSTRUCTION OF RESIDENTI AL HOUSE FROM THE DATE OF SALE EXPIRED AND PAID THE DUE TAX ACCORDINGLY. IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAD ALREADY OFFERED THE LONG TER M CAPITAL GAIN FOR TAXATION IN THE YEAR IN WHICH THE PERIOD OF THREE Y EARS EXPIRED THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE UTILIZ ED THE ENTIRE SALE PROCEEDS IN ACQUIRING RESIDENTIAL PLOT, ON WHICH TH E CONSTRUCTION WAS TO BE DONE WITHIN A SPECIFIED PERIOD, SO, NOTHING WAS LEFT WITH THE ASSESSEE TO BE DEPOSITED IN ANY SCHEME NOTIFIED BY THE CENTR AL GOVERNMENT. TO RESOLVE THE PRESENT CONTROVERSY, THE PROVISIONS CON TAINED IN SUB-SECTION (4) OF SECTION 54F OF THE ACT ARE RELEVANT WHICH RE AD AS UNDER:- (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY], THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL A SSET, NOT BEING A RESIDENTIAL HOUSE (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 WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HO USE (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 SE CTION, THAT IS TO SAY, 9 (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 GA IN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 4 5: [PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTIO N 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 OF TRANSFER OF THE ORIGI NAL ASSET; OR (III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND (B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER T HAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY.] EXPLANATION FOR THE PURPOSES OF THIS SECTION, [***] [***] NET CONSIDERATION, IN RELATION TO THE TRANS FER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACC RUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXP ENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. (2) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIOD OF [TWO YEARS] AFTER THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET, OR CONS TRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY, OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL 10 ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A), OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOU S YEAR IN WHICH SUCH RESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED. (3) WHERE THE NEW ASSET IS TRANSFERRED WITHIN A PER IOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE OR, AS THE CASE MAY BE, ITS CO NSTRUCTION, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASS ET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1) SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS RE LATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WHICH SUCH N EW ASSET IS TRANSFERRED.] [(4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS N OT APPROPRIATED 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 SUCH RE TURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLIC ABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SUCH BANK OR INST ITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SU CH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY , ALREADY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NE W ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE C OST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B-SECTION 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 BY WHICH (A) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRA NSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE CO ST OF THE NEW ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAU SE (B) OF SUB-SECTION (1), EXCEEDS 11 (B) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HAD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1 ) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TH E TRANSFER OF THE ORIGINAL ASSET EXPIRES ; AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UNUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 9 . FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT THE A SSESSEE IS REQUIRED TO DEPOSIT THE AMOUNT WHICH REMAINED UNUTILIZED IN SPECIFIED SCHEME. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE INVESTED THE ENTIRE SALE CONSIDERATION IN ACQUISITION OF A NEW RESIDENTIAL P LOT WITH THE SOLE INTENTION TO CONSTRUCT A HOUSE WITHIN A PERIOD OF T HREE YEARS FROM THE DATE OF SALE OF CAPITAL ASSET AND SINCE THE CONSTRU CTION COULD NOT BE DONE ON THE SAID PLOT WITHIN A SPECIFIED PERIOD OF THREE YEARS, THE ASSESSEE DECLARED THE LONG TERM CAPITAL GAIN IN HIS RETURN O F INCOME FOR THE A.Y. 2011-12 I.E. ASSESSMENT YEAR RELEVANT TO THE PREVIO US YEAR WHEN THE PERIOD OF THREE YEARS FROM THE DATE OF SALE EXPIRED . IN THE PRESENT CASE, THE SALE DEED WAS EXECUTED ON 26/07/2007, THEREFORE , THE THREE YEARS PERIOD AVAILABLE WITH THE ASSESSEE WAS UP TO 25/07/ 2010 AND AS THE ASSESSEE HAD ALREADY PAID TAX IN ACCORDANCE WITH TH E PROVISIONS OF SECTION 54F OF THE ACT IN THE A.Y. 2011-12, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BECA USE THE PROVISO (B)TO 12 SECTION 54F(4) OF THE ACT ITSELF PROVIDES THAT THE LONG TERM CAPITAL GAIN SHALL BE CHARGEABLE IN THE ASSESSMENT YEAR WHICH IS RELEVANT TO THE PREVIOUS YEAR IN WHICH THE PRESCRIBED TIME LIMIT OF THREE YEARS EXPIRED. IN THE PRESENT CASE, THE PRESCRIBED TIME LIMIT EXPI RED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2011-12 AND THE ASS ESSEE HAD ALREADY PAID THE TAX ON THE LONG TERM CAPITAL GAIN, THEREFO RE, DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS RIGHTLY DELETED BY THE LD. CIT(A). IN THAT VIEW OF THE MATTER, WE DO NOT FIND ANY MERIT IN THI S APPEAL OF THE DEPARTMENT. 10 . THE ANOTHER APPEAL BY THE DEPARTMENT IN I.T.A.NO. 885/JP/2012 RELATES TO THE DELETION OF PENALTY LEVIED BY THE AS SESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. THE SAID PENALTY WAS LEVIED BY THE ASSESSING OFFICER FOR THE REASON THAT AN AMOUNT OF RS. 66,91, 835/- WAS ADDED TO HIS RETURNED INCOME BECAUSE THE ASSESSEE COULD NOT CONS TRUCT A HOUSE ON THE PLOT OF LAND SO PURCHASED WITHIN A PERIOD OF THREE YEARS. SINCE IN THE FORMER OF THIS ORDER, WE HAVE CONFIRMED THE ORDER O F THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER, THEREFORE, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT LEVIABLE. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY INFIRMITY IN THE I MPUGNED ORDER OF LD. 13 CIT(A), WHO HAS DELETED THE PENALTY LEVIED BY THE A SSESSING OFFICER FOR THE REASON THAT THE ADDITION SO MADE BY MAKING DISA LLOWANCE WAS DELETED. ACCORDINGLY, THIS APPEAL OF THE DEPARTMEN T IS ALSO CONSIDERED AS DEVOID OF MERIT. 11 . IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 26 TH FEBRUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH FEBRUARY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JAIPUR.