ITO, Hisar V. Smt. Usha Rani, Hisar

ITA 931/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65896 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 27-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 13-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SHUMANA SEN
• Keywords: Capital asset; Income from undisclosed sources; Additional evidence; Corroborative evidences
• Section: 54F; 68; 54; 139

Judgement Text

ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.931/DEL/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, VS USHA RANI, WARD 4, C/ O M/S GOYAL FOOTWEAR, HISAR. AGGARWAIN MARKET, HISAR. (PAN: AANPR2520B) (APPELLANT) (RESPONDENT) APPELLANT BY: MRS. SHUMANA SEN, SR.DR RESPONDENT BY : SHRI GAUTAM JAIN O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX(A) ROHTAK DATED 09.01.20 09 FOR AY 2005-06. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.2,23,602/- MADE ON ACCOUNT OF ALLEGED INVESTMENT IN CONSTRUCTION OF HOUSE ESPECIALLY WHEN THE ASSESSING OFFICER HAS RIGHTLY VERIFIED THE COST OF CONSTRUCTI ON MADE IN VARIOUS YEARS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDI TION OF RS.12,53,500/- MADE ON ACCOUNT OF CAPITAL GAIN PARTICULARLY WHEN THE ASSESSEE FAILED TO PRODUCE AN Y ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 2 SUPPORTING EVIDENCE REGARDING CONSTRUCTION OF HOUSE NO. 634, SECTOR-14P, HISAR AND DEPOSIT OF CAPITAL GAIN RAISED ON SALE OF OLD HOUSE. 3. BRIEFLY STATED, THE FACTS OF THE CASE GIVING RIS E TO THIS APPEAL ARE THAT THE ASSESSEES RETURN WAS PROCESSED U/S 143(1) OF T HE INCOME TAX ACT (FOR SHORT THE ACT) AND SUBSEQUENTLY PICKED UP FOR SCRUT INY IN VIEW OF BOARDS INSTRUCTIONS AS THE ASSESSEE RAISED SECURED AND UNS ECURED LOANS EXCEEDING RS. 10 LAKH. AFTER AFFORDING DUE OPPORTUNITY OF HE ARING TO THE ASSESSEE, THE ASSESSMENT WAS COMPLETED TO THE TOTAL TAXABLE INCOM E OF RS.16,15,000. THE ASSESSING OFFICER MADE CERTAIN ADDITIONS PERTAINING TO EXCESS INDEXED COST OF CONSTRUCTION BY DISALLOWING CLAIM OF EXEMPTION U /S 54F OF THE ACT, BY MAKING ADDITION U/S 46A(3) OF THE ACT RELATED TO TH E CREDITORS. THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME T AX(A), HISAR, WHICH WAS PARTLY ALLOWED ON THE GROUND OF INVESTMENT IN C ONSTRUCTION OF HOUSE OUT OF INCOME FROM UNDISCLOSED SOURCES AND MAKING OF AD DITION AS CAPITAL GAIN TO THE TAXABLE INCOME OF THE ASSESSEE. HOWEVER, TH E COMMISSIONER OF INCOME TAX(A), ROHTAK, PARTLY DISALLOWED THE APPEAL PERTAINING TO ADDITION MADE U/S 68 OF THE ACT BY UPHOLDING THE ADDITION MA DE BY THE ASSESSING OFFICER. NOW, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 3 GROUND NO.3 4. APROPOS GROUND NO.3, LD. DR SUBMITTED THAT THE C OMMISSIONER OF INCOME TAX(A) ERRED IN LAW AND FACT IN ACCEPTING TH E ADDITIONAL EVIDENCE UNDER RULE 46A(3) OF THE INCOME TAX RULES, 1962. T HE DR FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) AL SO ERRED IN ALLOWING EXEMPTION U/S 54 OF THE ACT AMOUNTING TO RS.12,53,5 00 NEGATED BY THE ASSESSING OFFICER IGNORING THE FACT THAT THE ASSESS EE DID NOT SUBMIT ANY RELEVANT EVIDENCE BEFORE THE ASSESSING OFFICER DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE THE FACT THAT THE AS SESSING OFFICER AFFORDED REASONABLE OPPORTUNITY OF HEARING. HE ALSO SUBMITT ED THAT THE COMMISSIONER OF INCOME TAX(A) ADMITTED THE INFORMATION AS ADDITI ONAL EVIDENCE IN TERMS OF RULE 46A(3) OF THE ACT EVEN WHEN THE ASSESSEE HA S NOT REQUESTED FOR ADMISSION OF ADDITIONAL EVIDENCE. 5. REPLYING TO THE ABOVE CONTENTIONS, THE ASSESSEE S REPRESENTATIVE SUBMITTED THAT THE POWERS OF COMMISSIONER OF INCOME TAX(A) ARE COTERMINOUS WITH THAT OF THE ASSESSING OFFICER AND HE CAN DO WHAT THE ITO/ASSESSING OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED TO DO. HE PLACED HIS RELIANCE ON THE JUDGEMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF C.I.T. VS KANPUR COAL SYNDICAT E (1964) 53 ITR 225 ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 4 (SC) AND IN THE CASE OF JUTE CORPORATION OF INDIA L TD. VS C.I.T. (1991) 187 ITR 688(SC). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS, C ITATIONS AND FACTS AND CIRCUMSTANCES OF THE CASE RELEVANT TO THIS GROUND. IN THE IMPUGNED ORDER, THE COMMISSIONER OF INCOME TAX(A) CONSIDERED THE POINT OF ADMISSIBILITY OF ADDITIONAL EVIDENCE IN PARA 5.1 AS UNDER:- 5.1 THE ASSESSING OFFICER HAS POINTED OUT THAT TH E INFORMATION AS TO THE INVESTMENT MADE IN PLOT NO. 6 34 HUDA HISAR AND IN CONSTRUCTION THEREON WAS NOT PUT UP BEFORE HIM. HE HAS FURTHER POINTED OUT THAT THE INFORMATION AS TO THE SELLING OF PLOT NO. 939 BY TH E APPELLANT WAS RECEIVED BY HIM FROM HUDA AS PER A LE TTER DATED 27.12.2005 AND THE INFORMATION AS TO THE PURC HASING OF THE PLOT NO. 634 WAS ALSO RECEIVED VIDE THAT LET TER. THE ASSESSING OFFICER HAS DRAWN ATTENTION TO THE FACT T HAT SINCE THIS INFORMATION WAS NOT SUPPLIED BY THE APPELLANT BEFORE HIM, THIS IS ADDITIONAL EVIDENCE WHICH SHOULD NOT B E ADMITTED. THE VERSION OF THE ASSESSING OFFICER HAS BEEN CONS IDERED. ALTHOUGH THE INFORMATION IS ADDITIONAL EVIDENCE, AN D THE APPELLANT HAS NOT REQUESTED FOR ADMISSION OF THE SA ME, YET IN TERMS OF RULE 46A(3) THE ADDITIONAL EVIDENCE IS ADMITTED FOR DECIDING THE ISSUE INVOLVED; HOWEVER, AS REGARD THE INVESTMENT IN PURCHASE AND CONSTRUCTION OF THE RESI DENTIAL BUILDING THEREON, THE ASSESSING OFFICER MAY TAKE APPROPRIATE ACTION BECAUSE IT FALLS IN THE A.Y.2007 -08. 7. IN VIEW OF ABOVE DISCUSSION MADE BY THE LD. COMM ISSIONER OF INCOME TAX(A), WE OBSERVE THAT HE HAS CONSIDERED AND DISCU SSED THE VERSION OF THE ASSESSING OFFICER PERTAINING TO ADDITIONAL EVIDENCE , THEREFORE, IN VIEW OF ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 5 ABOVE DISCUSSION, WE ARE UNABLE TO SUPPORT THE CONT ENTION OF THE REVENUE THAT THE COMMISSIONER OF INCOME TAX(A) DID NOT FOLLOW TH E PROCEDURE LAID DOWN IN RULE 46A OF THE RULES. AS FAR AS CONSIDERATION OF ADDITIONAL EVIDENCE IS CONCERNED, THE COMMISSIONER OF INCOME TAX(A) ENJOYS THE POWERS PROVIDED BY THE STATUTE IN THIS REGARD. THE COMMISSIONER OF INCOME TAX(A) RIGHTLY RELIED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF KANPUR COAL SYNDICATE (SUPRA) AND JUTE CORPORATION OF INDIA (SU PRA). GROUND NO.1 8. APROPOS GROUND NO.1, THE LD. DR SUBMITTED THAT T HE ASSESSING OFFICER AFTER DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES OF THE CASE AND CAREFUL PERUSAL OF THE CAPITAL ACCOUNT AND OTHER DOCUMENTS SUBMITTED BY THE ASSESSEE, RIGHTLY HELD THAT THE ASSESSEE EXCESSIVEL Y CLAIMED THE INDEXED COST OF CONSTRUCTION AT RS.2,23,602/- AND THE AO RIGHTLY DISALLOWED THE SAME. HE FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME T AX(A) ERRED IN OBSERVING THAT THE ACTION OF THE ASSESSING OFFICER WAS WRONG AND HE DELETED THE ADDITION ON ERRONEOUS GROUNDS. 9. THE ASSESSEES REPRESENTATIVE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) RIGHTLY EXERCISED HIS JURISDICTION BE CAUSE THE ASSESSING OFFICER DID NOT HAVE JURISDICTION TO DISTURB THE MA TTERS ALREADY CONCLUDED FOR ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 6 AY 2000-01 (FINANCIAL YEAR 1999-2000) AS PER PROVIS O (B) TO SECTION 142(1)(III) OF THE ACT. 10. AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS, FACTS AND CIRCUMSTANCES OF THE CASE, WE OBSERVE THAT IT IS NO T IN DISPUTE THAT AS PER PARA 2 OF ASSESSMENT ORDER, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE AND TO EXPLAIN THE SOURCE OF I NVESTMENT MADE IN CONSTRUCTION OF HOUSE DURING AY 1996-97 TO 2000-01. THE ASSESSEE FURNISHED THE COPIES OF THE CAPITAL ACCOUNTS RELATE D TO THE ABOVE. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN THE AY 2 000-01, AT THE OPENING THE ASSESSEE HAD A CREDIT BALANCE OF RS.2,89,185/-, WHICH WAS A DEBIT BALANCE OF RS.2,06,250 AT THE END OF THE YEAR I.E. ON 31.3. 2000 WHICH IS NOT FEASIBLE AND ACCEPTABLE AND THE ASSESSING OFFICER MADE THE D ISPUTED ADDITION WITH THE CONCLUSION THAT THE ASSESSEE EXCESSIVELY CLAIME D THE INDEXED COST OF CONSTRUCTION. 11. IN THE IMPUGNED ORDER, THE LD. COMMISSIONER OF INCOME TAX(A) MENTIONED PROVISO (B) TO SECTION 142(1)(III) OF THE ACT WHICH READS AS UNDER:- ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 7 142(1)(III) PROVIDED THAT- (A) THE PREVIOUS APPROVAL OF THE (J OINT COMMISSIONER) SHALL BE OBTAINED BEFORE REQUIRING TH E ASSESSEE TO FURNISH A STATEMENT OF ALL ASSETS AND L IABILITIES NOT INCLUDED IN THE ACCOUNTS; (B) THE ASSESSING OFFICER SHALL NOT REQUIRE THE PRODUCT ION OF ANY ACCOUNTS RELATING TO A PERIOD MORE THAN THREE Y EARS PRIOR TO THE PREVIOUS YEAR. 12. IN VIEW OF ABOVE, WE HAVE NO HESITATION TO HOLD THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE ACCOUNTS PERTAINING TO THE EXPENDITURE MADE BY THE ASSESSEE RELATED TO A PERIO D MORE THAN THREE YEARS PRIOR TO THE PREVIOUS YEAR THAT, I.E. FY 1999-00. T HEREFORE, THE LD. COMMISSIONER OF INCOME TAX(A) RIGHTLY HELD THAT IN VIEW OF ABOVE PROVISO (B), THE ACTION OF THE ASSESSING OFFICER WAS WRONG AND HE RIGHTLY DELETED THE ADDITION. AS PER FOREGOING DISCUSSION, WE HAVE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER IN THIS REGARD. ACCORDINGLY, GR OUND NO.1 IS DISMISSED. GROUND NO.2 13. APROPOS GROUND NO.2, THE LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) DELETED THE ADDITION MADE BY THE ASSE SSING OFFICER AMOUNTING TO RS.12,53,500 ON ACCOUNT OF CAPITAL GAI N. HE FURTHER SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE ANY SUPPORTING EVIDENCE REGARDING CONSTRUCTION OF HOUSE NO. 634, SECTOR 14P, HISAR AN D DEPOSITS OF CAPITAL GAINS RAISED ON THE SALE OF OLD HOUSE. HE ALSO SUB MITTED THAT THE ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 8 COMMISSIONER OF INCOME TAX(A) IGNORED THE FACT THAT ON THE OTHER HAND, THE ASSESSEE IS SELLING AND PURCHASING VARIOUS PROPERTI ES WITHOUT OFFERING FINANCIAL DETAILS OF THE TRANSACTION TO THE REVENUE DEPARTMENT. 14. THE ASSESSEES REPRESENTATIVE REPLIED THAT THE LD. COMMISSIONER OF INCOME TAX(A) DID NOT DECIDE THE ISSUE RELATED TO T HIS GROUND AND HE DIRECTED THE ASSESSING OFFICER TO TAKE APPROPRIATE ACTION IN AY 2007-08. HE FURTHER SUBMITTED THAT IN VIEW OF ABOVE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX(A), THIS ISSUE NEEDS NO ADJUDICATION AND DESERVES TO BE DISMISSED. 15. AFTER CAREFUL CONSIDERATION AND PERUSAL OF RECO RD, SPECIALLY PARA NO. 5.1 OF THE IMPUGNED ORDER (AS REPRODUCED HEREINABOV E), WE OBSERVE THAT THE LD. COMMISSIONER OF INCOME TAX(A) DIRECTED THE ASSE SSING OFFICER THAT THE ISSUE OF INVESTMENT IN PURCHASE AND CONSTRUCTION OF RESIDENTIAL BUILDING THEREON AT PLOT NO. 634, HUDA, HISAR WILL BE CONSID ERED BY THE ASSESSING OFFICER IN AY 2007-08. 16. AS PER COPIES OF THE SALE DEEDS AVAILABLE ON PA PER BOOK, IT SHOWS THAT ON 9.3.2005, THE ASSESSEE PURCHASED A PLOT NO. 939 MEASURING 500 SQ YARD FROM SHRI PAWAN KUMAR FOR A CONSIDERATION OF RS.11, 50,000 AND THE SAME WAS SOLD TO SMT. KANTA RANI FOR RS.18,50,000 ON 30. 3.2007 ON WHICH THE ASSESSEE DECLARED PROFIT OF RS.5,96,500 AS PER CAPI TAL ACCOUNT FOR THE YEAR ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 9 ENDING ON 31.3.2007 AVAILABLE ON PAGE 9 OF THE PAPE R BOOK FILED BY THE ASSESSEE. 17. THE ASSESSEE ALSO PURCHASED A PLOT NO.634 MEASU RING 250 SQ YARD FROM SHRI SATYAPRAKASH GOYAL ON 23.12.2005 FOR RS.6 ,25,000. IT IS ALSO OBSERVED THAT AS PER OCCUPATION CERTIFICATE DATED 1 6.1.2007 ISSUED BY HUDA, IT SHOWS THAT THE ASSESSEE WAS GRANTED PERMIS SION FOR OCCUPATION OF THE BUILDING CONSTRUCTED ON PLOT NO. 634, SECTOR- 1 4P, HISAR WHICH CONSISTS OF GROUND FLOOR, FIRST FLOOR AND TOILET AND MUMTY A T 2 ND FLOOR ON 16.1.2007. 18. AS PER STATEMENT OF TOTAL INCOME (PAGE 2 OF PAP ER BOOK) FOR AY 2005-06 FILED BY THE ASSESSEE, IT SHOWS THAT THE AS SESSEE HAS SOLD RESIDENTIAL HOUSE FOR RS.30,00,000 AND THE ASSESSEE HAS CLAIMED EXEMPTION OF RS.12,53,500 RELATED TO PURCHASE OF PLOT NO. 939 ON 9.3.2005 WHICH WAS ADMITTEDLY SOLD ON 30.3.2007 AND PROFIT THEREON WAS CARRIED TO CAPITAL ACCOUNT BY THE ASSESSEE. AS PER SECTION 54 AND 54F (1), THE ACT PROVIDES FOR A DEDUCTION IN CASES WHERE AN ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRA NSFER OF A CAPITAL ASSET TAKES PLACE, PURCHASED, OR HAS WITHIN A PERIOD OF T HREE YEARS AFTER THAT DATE, CONSTRUCTED A RESIDENTIAL HOUSE, THEN THE QUANTUM O F DEDUCTION IS ITSELF DEPENDENT UPON THE COST OF SUCH NEW ASSET (SEE CIRC ULAR NO. 667 F.NO.207/3/93 ITAT DATED 18.10.1993). ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 10 19. SUBMISSIONS OF THE ASSESSEE BEFORE THIS TRIBUNA L IN THIS REGARD READ AS UNDER:- 5. THE NEXT ISSUE IS THAT, THE LEARNED ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 54 OF THE ACT ON THE GROUND THAT, PLOT NO. 939, SECTOR 14P, HISSAR MEASU RING 500 SQ. YRDS. HAD BEEN SOLD ON 26.03.2007. IN THIS REGARD, HE HAS FAILED TO APPRECIATE THAT, ASSESSEE PRIOR TO THE SALE OF PLOT ON 26.03.2007, HAD ALREADY PURCHASED ANOTHER P LOT NO. 634, SECTOR 14P, HISSAR ON 23.12.2005 MEASURING 250 SQ. YRDS FOR A CONSIDERATION OF RS. 6,75,000/- AND, THE REAFTER INCURRING EXPENDITURE OF RS. 10,26,365/- HAD CONSTR UCTED THE RESIDENTIAL HOUSE. IT MAY BE SUBMITTED HERE THAT, A PPELLANT HAD PURCHASED A SMALLER PLOT AREA OF 250 SQ. YRDS A S THE APPELLANT DID NOT HAVE ENOUGH FUNDS TO CONSTRUCT A RESIDENTIAL HOUSE ON AN AREA OF 500 SQ. YRDS. HOWE VER, IT CANNOT BE DISPUTED THAT, ASSESSEE ALWAYS INTENDED T O CONSTRUCT RESIDENTIAL HOUSE AND, CLAIM DEDUCTION U/ S 54 OF THE ACT. IN FACT, IN ALMOST IDENTICAL CIRCUMSTANCES , CLAIM OF DEDUCTION U/S 54 OF THE ACT WAS ALLOWED BY HON 'BLE TRIBUNAL IN THE CASE OF REPORTED IN 85 TTJ 173 (JOD H), WHEN IT WAS HELD AS UNDER: 'THE CLEAR-CUT OF THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HAD INVESTED AN AMOUNT OF RS. 4,01,000. THE FACT THAT THE PURCHASE PRICE AND TAKING POSSESSION OF TH E FLAT AT LODHA TOWER, JODHPUR BY 30TH MARCH, 1996 WHEN THE P LOT AT JAIPUR WAS SOLD ON 4TH JAN., 1995 FOR RS. 5 LAKH S, IN VIEW OF THE AFORESAID DECISIONS, THIS AMOUNT OF RS. 4,01 ,000 INVESTED BY THE ASSESSEE IN THE PURCHASE OF FLAT IS TO BE HELD EXEMPT UNDER S. 54F. THE INTENTION OF THE ASSESSEE FROM THE VERY BEGINNING WAS TO PURCHASE A FLAT. WHEN DUE TO CERTAIN UNAVOIDABLE CIRCUMSTANCES, THE CONTRACT DID NOT MAT ERIALISE, IT CANNOT BE SAID THAT THERE WAS ANY HANKY PANKY ON THE PART OF THE ASSESSEE TO AVOID PAYMENT OF TAX. THE ASSESS EE ULTIMATELY PURCHASED A FLAT WITHIN TWO YEARS FROM T HE SALE OF PLOT. THE DEFAULT COMMITTED BY THE ASSESSEE WAS A T ECHNICAL DEFAULT THAT THE ASSESSEE DID NOT DEPOSIT THE AMOUN T MEANT FOR REINVESTMENT IN THE CAPITAL GAIN ACCOUNT SCHEME BEFORE ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 11 FILING RETURN UNDER S. 139 OF THE ACT. KEEPING IN V IEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISIONS RELIED BY THE LEARNED AUTHORISED REPRESEN TATIVE, WE ARE OF THE CONSIDERED OPINION THAT THE AMOUNT O F RS. 4,01,000 OUT OF RS. 5 LAKHS WHICH WERE ULTIMATELY I NVESTED WITHIN THE STIPULATED TIME IS TO BE EXEMPT FROM TAX ALTHOUGH THE ASSESSEE FAILED TO TECHNICALLY DEPOSIT THE SAME IN THE CAPITAL GAIN ACCOUNT. THE INTENTION OF THE ACT AS W ELL AS THE INTENTION OF THE ASSESSEE ARE TO BE CONSIDERED IN A RIGHT PERSPECTIVE. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE WANTED TO UTILISE THE AMOUNT FOR OTHER PUR POSE THAN TO PURCHASE A HOUSE WITHIN TWO YEARS TO THE EXTENT IT HAS BEEN UTILISED. AS A RESULT, WE DELETE THE ADDITION OF RS. 4,01,000 OUT OF RS. 5 LAKHS AS PER RULES AND SUSTAI N THE REMAINING AMOUNT. THUS THIS GROUND OF APPEAL IS PAR TLY ALLOWED.' IT IS SUBMITTED THAT, CONSTRUCTION OF THE AFORESAID RESIDENTIAL HOUSE STOOD COMPLETED ON 22.01.2007 I.E . WITHIN 3 YEARS OF THE TRANSFER OF THE OLD RESIDENTIAL HOUS E (22.02.2005) AND, AS SUCH THE APPELLANT IS ENTITLED TO CLAIM OF DEDUCTION U/S 54 OF THE ACT. 5.1 IT IS NEXT SUBMITTED THAT, THE PERUSAL OF THE SECTION 54 OF THE ACT WOULD SHOW THAT, WHERE AN INDIVIDUAL OR A HUF TRANSFERS A LONG TERM CAPITAL ASSET BEING A RESIDEN TIAL HOUSE THEN THE CAPITAL GAIN SO ARISING TO THE ASSES SEE SHALL NOT BE TAXABLE IF THE ASSESSEE HAS WITHIN A PERIOD OF THREE YEARS AFTER DATE OF TRANSFER HAS CONSTRUCTED A RESI DENTIAL HOUSE. IN OTHER WORDS, ONCE THE ASSESSEE HAS CONSTRUCTED A NEW RESIDENTIAL HOUSE WITHIN THE PERIOD OF THREE YE ARS AFTER DATE OF TRANSFER OF OLD RESIDENTIAL HOUSE THEN NO C APITAL GAIN IS CHARGEABLE TO TAX. IN THE INSTANT CASE, THE ASSE SSEE HAS UNDISPUTEDLY CONSTRUCTED A RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS FROM THE TRANSFER OF THE ORIGINAL AS SET AND THEREFORE, THE ASSESSEE IS ELIGIBLE TO DEDUCTION UN DER SECTION 54 OF THE ACT. 5.2 HOWEVER, THE AFORESAID CLAIM IS SUBJECT TO THE PROVISIONS CONTAINED IN SECTION 54 SUB SECTION (2) OF THE ACT ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 12 IN AS MUCH AS IF THE AMOUNT OF CAPITAL GAIN WHICH I S NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE O F A NEW ASSET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH , THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE OR WHICH IS NOT UTILIZED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING OF RETURN OF IN COME UNDER SECTION 139 OF THE ACT, IT SHALL BE DEPOSITED BY HI M BEFORE FURNISHING SUCH RETURN IN ANY BANK ACCOUNT IN ACCOR DANCE WITH THE SCHEME WHICH THE CENTRAL GOVERNMENT HAS PRESCRIBED BY NOTIFICATION IN THE OFFICIAL GAZETTE. IN OTHER WORDS, IN THE INSTANT CASE, SINCE THE PLOT FOR THE PURCHASE OF THE NEW ASSET HAD BEEN PURCHASED ON 23.12.2005 I.E. AFTER DUE DATE OF FILING OF RETURN OF INCOME, THE ASSESSE E ACCORDING TO SUB SECTION (2) OF SECTION 54 OF THE ACT WAS OBL IGED TO DEPOSIT THE ABOVE CAPITAL GAIN IN THE SPECIFIED BAN K ACCOUNT. HOWEVER, THIS WAS NOT SO DONE FOR THE REASON THAT T HE APPELLANT HAD ALREADY PURCHASED ANOTHER LAND FOR CONSTRUCTION OF RESIDENTIAL HOUSE PRIOR TO THE DUE DATE OF FILING OF THE RETURN. IT IS SUBMITTED THAT THEREAFT ER, THE ASSESSEE FOUND THAT, NO RESIDENTIAL HOUSE CAN BE CO NSTRUCTED ON THE ABOVE LAND FOR THE REASON THAT SHE DID NOT H AVE SUFFICIENT FUNDS TO MEET COSTS OF CONSTRUCTION AND ACCORDINGLY, IT COULD NOT BE HELD THAT THE APPELLAN T HAD VIOLATED THE CONDITIONS SPECIFIED IN SECTION 54(2) OF THE ACT. 5.3 WITHOUT PREJUDICE TO THE AFORESAID, IT IS SUBM ITTED THAT EVEN ASSUMING FOR THE SAKE OF AN ARGUMENT THAT , THERE IS INFRINGEMENT OF CONDITIONS PRESCRIBED IN SUB SECTIO N (2) OF SECTION 54 OF THE ACT THEN THE SAME CANNOT BE BASIS TO DENY THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT SINCE SAME IS A MACHINERY PROVISION FOR THE BENEFIT OF TH E REVENUE AND IT IS SUBMITTED THAT, MACHINERY PROVISION ARE T O BE LIBERALLY INTERPRETED MORE PARTICULARLY WHEN THEY A RE PART OF INCENTIVE GRANTING PROVISIONS. 20. IN VIEW OF ABOVE LAW POSITION AND FACTS OF THE CASE, IT IS CLEAR THAT DEDUCTION U/S 54F OF THE ACT IS NOT AVAILABLE FOR T HE PURCHASE OF PLOT UNTIL A ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 13 RESIDENTIAL HOUSE IS CONSTRUCTED OVER IT. THE INTE NTION OF THE ASSESSEE IS RELEVANT FOR THIS PURPOSE WHICH NEEDS PROPER EXAMIN ATION AT THE END OF ASSESSING OFFICER. AS WE HAVE ALREADY OBSERVED EAR LIER THAT THIS ISSUE HAS BEEN DIRECTED TO THE ASSESSING OFFICER BY THE COMMI SSIONER OF INCOME TAX(A) FOR CONSIDERATION IN AY 2007-08. SINCE THE R ESIDENTIAL HOUSE PROPERTY WAS SOLD DURING AY 2005-06 AND ASSESSEE IS ENTITLED FOR DEDUCTION OF CAPITAL GAIN FOR CONSTRUCTION OF RESIDENTIAL HOU SE UPTO NEXT THREE YEARS, I.E. AY 2008-09 (F.Y. 2007-08). THE ISSUE OF DEDUCTION FOR RESIDENTIAL HOUSE CONSTRUCTED ON PLOT NO. 634 SECTOR 14P HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X(A) HAD NO OPPORTUNITY TO CONSIDER THE SAME. AT THE SAME TIME, WE OBSERVE THAT THIS CLAIM OF THE ASSESSEE AS STATED IN PARAS 5 TO 5.3 O F THE SUBMISSIONS OF THE ASSESSEE BEFORE US REQUIRES DE NOVO ADJUDICATION AT THE END OF ASSESSING OFFICER. 21. ACCORDINGLY, THIS ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT HE WOULD DECIDE THE ISSUE AFTER AF FORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 22. IN VIEW OF ABOVE, THE FINDINGS OF COMMISSIONER OF INCOME TAX(A) ARE SET ASIDE. GROUND NO. 2 IS DECIDED AS INDICATED AB OVE. ITA NO.931/DEL/2009 ASSSTT. YEAR: 2005-06 14 23. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.11.2012. SD/- SD/- (SHAMIM YAHYA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 23RD NOVEMBER, 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. CIT 5. DR TRUE COPY BY ORDER ASSTT.REGISTRAR