JAGDISH WADHWANI, Jaipur V. ITO, Jaipur

ITA 975/JPR/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3956 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA JCIT DHK
• Keywords: Bonafide belief; Cost of acquisition; Corroborative evidences
• Section: 54F; 133(6); 54; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 975/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. SHRI JAGDISH WADHWANI, 135, SINDHI COLONY, BANI PARK, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 3(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAFPW 5798 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDHARTH RANKA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.S. NEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29.10.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31/10/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4 TH AUGUST, 2016 OF LD. CIT (A)-1, JAIPUR FOR THE ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. LOWER AUTHORITIES GROSSLY ERRED IN COMPUTING LONG T ERM CAPITAL GAIN AT RS. 7,25,681/- INSTEAD OF RS. 6,18,178/- AS THE ASSESSEE APPELLANT. 1.1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. LOWER AUTHORITIES GROSSLY ERRED IN DISALLOWING THE INDEXED CONSTRUCTION COST INCURRED BY THE ASSESSEE APPELLAN T IN THE YEAR 2011-12 ON THE PROPERTY SOLD BY HIM. 1.2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. LOWER AUTHORITIES GROSSLY ERRED IN NOT GIVING THE B ENEFITS OF SEC. 54 OF THE INCOME-TAX ACT AT RS. 10,00,000/- TOWARD THE REINVESTMENT MADE BY THE ASSESSEE APPELLANT. 2 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. 1.2.1. THAT EVEN IF IT IS HELD THAT BENEFIT U/S 54 IS NOT AVAILABLE THEN TOO, IT IS NOT TAXABLE IN THE YEAR UNDER CONSIDERAT ION. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY OR AMEND ANY GROUND ON OR BEFORE THE DATE OF HEARING. GROUND NOS. 1 AND 1.1 ARE REGARDING DISALLOWING THE CLAIM OF INDEXED COST OF CONSTRUCTION/IMPROVEMENT. 2. THE ASSESSEE FILED HIS RETURN OF INCOME ON 3 RD JANUARY, 2012 DECLARING TOTAL INCOME OF RS. 2,02,300/-. THE ASSESSEE DECLARED IN COME FROM LONG TERM CAPITAL GAIN AND ALSO CLAIMED DEDUCTION UNDER SECTION 54 OF RS. 10,00,000/-. ON EXAMINATION OF RECORD, THE AO NOTED THAT WHILE COMP UTING THE LONG TERM CAPITAL GAIN, THE ASSESSEE HAS DEDUCTED INDEXED COST OF IMP ROVEMENT AT RS. 1,07,505/-. THE AO ASKED THE ASSESSEE TO FURNISH THE DOCUMENTAR Y EVIDENCE IN SUPPORT OF THE COST OF IMPROVEMENT/CONSTRUCTION IN THE PROPERTY IN QUESTION. SINCE THE ASSESSEE DID NOT FURNISH ANY SUPPORTING EVIDENCE, ACCORDINGL Y THE AO DISALLOWED THE CLAIM OF INDEXED COST OF IMPROVEMENT/CONSTRUCTION OF RS. 1,0 7,505/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A). HOWEVER, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, THE LD. CIT (A) HAS CONFI RMED THE DISALLOWANCE MADE BY THE AO. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE CLAIMED INDEXED COST OF IMPROVEMENT/CONSTRUCTION OF RS. 1,07,505/- AND GIVEN THE DETAILS BEFORE THE AO. HOWEVER, THE LD. A/R HAS FAI RLY CONCEDED THAT IN SUPPORT OF THE SAID CLAIM THE ASSESSEE COULD NOT FURNISH ANY D OCUMENTARY EVIDENCE. 3 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. 4. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE AO HAS ISSUED SHOW CAUSE NOTICE ON 02. 01.2014 ASKING THE ASSESSEE TO FURNISH THE DOCUMENTARY EVIDENCE TO PROVE THE QUANT UM OF EXPENDITURE ON IMPROVEMENT AT RS. 1,07,505/-. SINCE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE, ACCORDINGLY, THE AO HAS DENIED THE CLAIM IN PARA 5 AS UNDER :- 5. THE ASSESSEE WAS ASKED TO FURNISH HIS REPLY, I F ANY, ON THIS BY 10.01.2014. HOWEVER, TILL THE PASSING OF ASSESSMENT ORDER, ASSESSEE DID NOT FURNISH ANY SUPPORTING EVIDENCE WITH REGARD TO INDEXED COST OF CONSTRUCTION CLAIMED AT RS. 1,07,505/- NOR SAID ANY THING IN THIS REGARD. THEREFORE, IT HAS BEEN ESTABLISHED ON RECORD THAT T HE COST OF CONSTRUCTION AND INDEXED COST CLAIMED ACCORDINGLY H AS BEEN DONE WRONGLY. IN THESE CIRCUMSTANCES, THE LONG TERM CAP ITAL GAIN ON ASSESSEES SHARE OF SALE CONSIDERATION IS RE-WORKED OUT AS UNDER :- SALE CONSIDERATION RS. 35,00,000/- LESS : INDEXED COST OF ACQUISITION AS RS. 27,74, 319/- CLAIMED BY THE ASSESSEE _____________ LONG TERM CAPITAL GAIN RS. 7,25,681/- -------------------- THOUGH THE ASSESSEE CHALLENGED THE SAID ACTION OF T HE AO, HOWEVER, EVEN DURING THE PROCEEDINGS BEFORE THE LD. CIT (A), THE ASSESSEE DI D NOT FILE ANY DOCUMENTARY EVIDENCE AND CONSEQUENTLY THE ADDITION MADE BY THE AO WAS UPHELD BY THE LD. CIT (A). EVEN BEFORE US, THE ASSESSEE HAS NEITHER PRODU CED ANY SUPPORTING EVIDENCE NOR CLAIMED THAT THE ASSESSEE IS HAVING ANY SUPPORTING EVIDENCE. ACCORDINGLY, IN VIEW OF 4 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE AS SESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW, QUA THIS IS SUE. GROUND NOS. 1.2 AND 1.2.1 ARE REGARDING DISALLOWANC E OF DEDUCTION UNDER SECTION 54 OF THE IT ACT. 6. THE ASSESSEE CLAIMED TO HAVE BOOKED A FLAT AT MU MBAI WHICH WAS TO BE DEVELOPED BY M/S. ORNATE SPACES PVT. LTD. AND MADE A PAYMENT OF RS. 10,00,000/- TO THE BUILDER PRIOR TO THE SALE OF THE EXISTING PR OPERTY UNDER CONSIDERATION ON 29.09.2010. THE AO CONDUCTED THE ENQUIRY IN THIS R EGARD AND FOUND THAT THE SAID BUILDER HAS SUBMITTED THE PLANS TO THE GOVERNMENT A UTHORITIES FOR DEVELOPMENT OF THE LAND AT MUMBAI IN THE MONTH OF OCTOBER, 2013 AN D WAS EXPECTING THE APPROVAL IN MAY, 2014. ACCORDINGLY, THE AO DENIED THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT BY HOLDING THAT THE PAYMENT TO THE BUILDER M/S. ORNATE SPACES PVT. LTD. WAS MADE PRIOR TO THE DATE OF SALE OF PROPERTY. HOWEVER , THE ASSESSEE HAS FAILED TO ACQUIRE THE ALLOTMENT OF THE SAID FLAT WITHIN A PER IOD OF 2 YEARS FROM THE TRANSFER OF ORIGINAL ASSET OR TILL THE DATE OF THE ORDER AND, T HEREFORE, THE ASSESSEE FAILED TO PURCHASE OR CONSTRUCT THE NEW RESIDENTIAL HOUSE WIT HIN THE PRESCRIBED PERIOD UNDER SECTION 54 OF THE ACT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) AND REITERATED HIS CLAIM THAT ONCE THE ASSE SSEE HAS MADE THE INVESTMENT FOR PURCHASE OF NEW RESIDENTIAL HOUSE, THEN EVEN IF THE RE IS A DELAY ON THE PART OF THE BUILDER TO OBTAIN THE PLAN SANCTIONED FROM THE GOVE RNMENT AUTHORITIES AND CONSTRUCT THE PROJECT, THE CLAIM OF DEDUCTION UNDER SECTION 5 4 CANNOT BE DENIED. THE LD. CIT (A) WAS NOT IMPRESSED WITH THE EXPLANATION OF THE A SSESSEE AND HELD THAT CIRCULAR NO. 471 RELIED UPON BY THE ASSESSEE WAS IN RESPECT OF SELF FINANCING SCHEME OF 5 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. DDA. THE LD. CIT (A) HAS ALSO OBSERVED THAT AT THE TIME OF MAKING THE PAYMENT IN THE YEAR 2010 THE NECESSARY APPROVAL WAS NOT RECEIV ED BY THE BUILDER AND IT WAS ANTICIPATED TO BE RECEIVED BY MAY 2014, THEREFORE, THE ASSESSEE DID NOT ACQUIRE THE NEW RESIDENTIAL HOUSE WITHIN THE PERIOD OF LIMITATI ON PRESCRIBED UNDER SECTION 54 OF THE IT ACT. 7. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS INVESTED RS. 10,00,000/- AS A N ADVANCE FOR PURCHASE OF NEW RESIDENTIAL HOUSE BEING FLAT IN MUMBAI TO BE DEVELO PED BY M/S. ORNATE SPACES PVT. LTD. THEN THE CONDITIONS AS STIPULATED IN SECTION 5 4 OF THE ACT ARE SATISFIED. HE HAS FURTHER CONTENDED THAT IF THERE IS A DELAY ON THE P ART OF THE DEVELOPER TO DEVELOP THE PROPERTY AND HANDOVER THE FLAT TO THE ASSESSEE, THE SAME CANNOT BE A GROUND FOR DENIAL OF DEDUCTION UNDER SECTION 54 OF THE ACT. T HE LD. A/R HAS REFERRED TO THE PROVISIONS OF SECTION 54(2) OF THE ACT AND SUBMITTE D THAT ONCE THE ASSESSEE HAS MADE THE PAYMENT OF RS. 10,00,000/-, THEN EVEN IF T HE SAID FLAT WAS NOT ACQUIRED WITHIN THE PERIOD PRESCRIBED UNDER SECTION 54, THE ADDITION CANNOT BE MADE FOR THE YEAR UNDER CONSIDERATION BUT IT HAS TO BE MADE ONLY IN THE YEAR IN WHICH THE TIME PERIOD FOR ACQUIRING THE NEW RESIDENTIAL HOUSE EXPI RES. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISIONS :- BHAVNA CUCCRIA VS. ITO (2017) 82 TAXMANN.COM 306 (ITAT CHANDIGARH) R.S. SHARMA VS. ITO (2015) 55 TAXMANN.COM 187 (KARNATAKA HIGH COURT) RANJIT NARANG VS. CIT (2015) 317 ITR 322 (ALLAHABAD) CIT VS. SARDARMAL KOTHARI & OTHERS (2008) 302 ITR 286 (MADRAS 6 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. THE LD. A/R HAS SUBMITTED THAT THE DEDUCTION TO THE EXTENT OF THE AMOUNT UTILIZED FOR ACQUISITION OR CONSTRUCTION OF THE HOUSE IS TO BE G RANTED IN THE YEAR OF TRANSFER OF ASSET AND THE CONDITION OF COMPLETION OF THE CONSTR UCTION IS TO BE LOOKED INTO ONLY AFTER THE WINDOW PERIOD PROVIDED BY THE ACT OF 3 YE ARS EXPIRED. 8. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE CLAIMED TO HA VE INVESTED RS. 10,00,000/- FOR ACQUISITION OF NEW RESIDENTIAL HOUSE. HOWEVER, AT T HE TIME OF ADVANCING THE SAID AMOUNT IN THE YEAR 2010 EVEN THE PLAN WAS NOT IN EX ISTENCE AND THE BUILDER HAS SUBMITTED THE PLAN ONLY IN THE MONTH OF OCTOBER, 20 13 WHICH WAS EXPECTED TO BE APPROVED IN THE MONTH OF MAY, 2014. FURTHER, THE L D. D/R HAS SUBMITTED THAT THE PROVISO TO SECTION 54(2) IS ONLY FOR THE PURPOSE OF NOT UTILIZING THE AMOUNT DEPOSITED IN THE CAPITAL GAIN ACCOUNT SCHEME AND, THEREFORE, THE SAID PROVISO CANNOT BE EXTENDED FOR THE PURPOSE OF INVESTMENT WITHOUT DEPO SITING THE AMOUNT IN THE CAPITAL GAIN SCHEME ACCOUNT. SINCE THE TIME PERIOD OF 2/3 YEARS HAVE ALREADY EXPIRED AT THE TIME OF PASSING THE ASSESSMENT ORDER, THEREFORE , THERE WAS NO REASON FOR AWAITING FOR THE EXPIRY OF TIME PERIOD PROVIDED UND ER SECTION 54 AND THEN MAKING AN ADDITION IN THE SUBSEQUENT ASSESSMENT YEAR. THE LD . D/R HAS SUBMITTED THAT THE TIME PERIOD FOR MAKING THE INVESTMENT HAD EXPIRED B EFORE THE ASSESSMENT ORDER WAS PASSED BY THE AO. THEREFORE, IT WAS ALREADY BECAME FINAL THAT THE ASSESSEE HAS FAILED TO ACQUIRE OR PURCHASE A NEW RESIDENTIAL HOU SE WITHIN THE TIME PERIOD PRESCRIBED UNDER SECTION 54 OF THE ACT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS SOLD THE IMMOVABLE PROPER TY IN QUESTION ON 29 TH SEPTEMBER, 2010 AND CLAIMED THE DEDUCTION UNDER SEC TION 54 OF THE ACT ON ACCOUNT 7 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. OF AN ADVANCE OF RS. 10,00,000/- GIVEN TO M/S. ORNA TE SPACES PVT. LTD. FOR BOOKING OF A FLAT IN THE PROJECT HIGH RISE BUILDING TO BE D EVELOPED BY THE SAID DEVELOPER. THE AO HAS DENIED THE CLAIM OF THE ASSESSEE DUE TO THE REASON THAT THE ASSESSEE COULD NOT ACQUIRE OR PURCHASE THE ALLEGED RESIDENTI AL HOUSE BEING FLAT WITHIN THE TIME PERIOD AS PRESCRIBED UNDER SECTION 54 OF THE ACT. THE AO HAS CONDUCTED THE ENQUIRY AND FOUND THAT THE BUILDER PRESENTED THE PLANS FOR APPROVAL ONLY IN THE MONTH OF OCTOBER, 2013 AND CONSEQUENTLY THE PLANS WERE EXPEC TED TO BE APPROVED ONLY BY THE MONTH OF MAY, 2014 AS RESPONDED BY THE SAID BUI LDER TO THE NOTICE ISSUED THE AO. HENCE THE AO HELD THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE CONDITION OF ACQUIRING THE NEW RESIDENTIAL HOUSE WITHIN THE PERI OD OF LIMITATION PROVIDED UNDER SECTION 54 OF THE ACT. THERE IS NO QUARREL THAT IF THE ASSESSEE HAS MADE AN INVESTMENT FOR ACQUISITION OF THE NEW RESIDENTIAL H OUSE WITHIN THE PRESCRIBED PERIOD AS PER SECTION 54 OF THE ACT, THEN IF THERE IS A DE LAY IN THE ACTUAL POSSESSION TO BE HANDED OVER TO THE ASSESSEE AND THE SAID DELAY IS N OT ATTRIBUTABLE TO THE ASSESSEE THEN HAVING REGARD TO THE SATISFACTION OF THE SUBST ANTIAL AND PRIMARY CONDITION OF INVESTMENT THE DEDUCTION UNDER SECTION 54 CANNOT BE DISALLOWED. HOWEVER, IN THE CASE IN HAND, THE ASSESSEE HAS GIVEN AN ADVANCE OF RS. 10,00,000/- AND THAT TOO PRIOR TO THE SALE OF EXISTING IMMOVABLE PROPERTY. IT IS NOT THE CASE OF THE ASSESSEE THAT AT THE TIME OF MAKING THE INVESTMENT, THE ASSE SSEE HAD A BONAFIDE BELIEF THAT HE WOULD ACQUIRE THE SAID FLAT WITHIN THE PERIOD OF 2 YEARS OR 3 YEARS FROM THE DATE OF SALE OF THE EXISTING ASSET. RATHER, THE PROJECT IN WHICH THE ASSESSEE HAS BOOKED THE FLAT WAS NEITHER ON THE SITE NOR THE PLAN WAS I N EXISTENCE. THE BUILDER IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 133(6) HAS STATED THAT THE SITE PLAN OF THE SAID PROJECT WAS PRESENTED BEFORE THE GOVERNMEN T AUTHORITIES ONLY IN THE MONTH 8 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. OF OCTOBER, 2013 AND WAS EXPECTED TO BE APPROVED BY THE AUTHORITIES BY THE MONTH OF MAY, 2014. THE AO HAS REPRODUCED THE LETTER OF THE BUILDER IN THE ASSESSMENT ORDER. THE BUILDER HAS ALSO EXPRESSED THE POSSIBIL ITY OF REFUNDING OF THE AMOUNT DUE TO THE DELAY IN LAUNCHING OF THE PROJECT. IT IS CL EAR THAT NEITHER ON THE DATE OF PAYMENT OF ADVANCE NOR TILL THE EXPIRY OF TIME PERI OD PRESCRIBED U/S 54 THE ALLEGED ASSET BEING RESIDENTIAL HOUSE WAS IN EXISTENCE AND AT THE MOST THE ASSESSEE ACQUIRED A RIGHT TO PURCHASE A FLAT IN THE UPCOMING PROJECT TO BE DEVELOPED IN FUTURE. THEREFORE, IT IS CLEAR THAT THE SAID INVESTMENT MAD E BY THE ASSESSEE WAS NOT IN ACCORDANCE WITH THE SCHEME OF THE PROVISIONS OF SEC TION 54 OF THE ACT WHICH IS AN INCENTIVE PROVIDED FOR ACQUISITION OR CONSTRUCTION OF NEW RESIDENTIAL HOUSE FOR ASSESSEES OWN RESIDENTIAL NEEDS. IT APPEARS THAT THIS INVESTMENT WAS NOT MADE BY THE ASSESSEE FOR ACQUIRING THE RESIDENTIAL HOUSE FO R THE ASSESSEES OWN IMMEDIATE NEED AND, THEREFORE, THE DECISIONS RELIED UPON BY T HE ASSESSEE WOULD NOT HELP THE CASE OF THE ASSESSEE ONCE THE ASSESSEE HAS CLEARLY FAILED TO SATISFY THE SUBSTANTIAL AND PRIMARY CONDITION OF ACQUIRING THE RESIDENTIAL HOUSE WITHIN THE PRESCRIBED PERIOD UNDER SECTION 54 OF THE ACT. AS REGARDS CHARGING TH E CAPITAL GAIN IN SUBSEQUENT YEAR AS PER THE PROVISO TO SECTION 54(2) OF THE ACT, WHI CH READS AS UNDER :- PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1), THEN, (I) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDER S ECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FR OM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND (II) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH A MOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 9 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. THIS PROVISO REFERS TO THE SITUATION WHERE THE ASSE SSEE HAS MADE A DEPOSIT IN THE CAPITAL GAIN ACCOUNT SCHEME AS NOTIFIED BY THE GOVE RNMENT BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(1) AND FURTHER IF THE ASSESSEE NOT UTILIZED WHOLLY OR PARTLY THE SAID AMOUNT DEPOSITED IN THE CAPITAL GAIN ACCOUNT FOR PURCHASE OR CONSTRUCTION OF NEW ASSET WITHIN THE PE RIOD SPECIFIED UNDER SECTION 54(1) OF THE ACT, THEN THE AMOUNT NOT SO UTILIZED S HALL BE CHARGED TO CAPITAL GAIN TAX IN THE PREVIOUS YEAR IN WHICH THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. THEREFORE, ONCE THE ASSESS EE SATISFIES THE CONDITION OF DEPOSITING THE AMOUNT IN THE CAPITAL GAIN ACCOUNT S CHEME, ONLY THEN THE PROVISO TO SECTION 54(2) CAN BE PRESSED INTO SERVICE. IN CASE THE ASSESSEE HAS NOT DEPOSITED THE AMOUNT IN THE CAPITAL GAIN ACCOUNT SCHEME, THEN THE INVESTMENT IS REQUIRED TO BE MADE PRIOR TO THE DUE DATE OF FILING OF RETURN U NDER SECTION 139 OF THE ACT. HENCE WHEN THE NEW RESIDENTIAL HOUSE WAS NEITHER AC QUIRED OR CONSTRUCTED WITHIN THE TIME PERIOD PRESCRIBED UNDER SECTION 54(1) OF T HE ACT, THEN THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT AND SHIFTING OF THE ASSESSMENT YEAR FOR MAKING THE ADDITION ON THIS ACCOUNT WOULD NOT A CHIEVE ANY PURPOSE RATHER IT WILL DEFEAT THE PURPOSE OF PROVISIONS OF SECTION 54 OF T HE ACT. THE LD. CIT (A) HAS DECIDED THIS ISSUE AT PAGES 5-7 AS UNDER :- (III) I HAVE DULY CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE CIRCULAR SUBMITTED BY THE APPELLANT. IT MAY BE MENT IONED THAT NO WRITTEN SUBMISSIONS WERE SUBMITTED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS. IT MAY BE STATED THAT IN CIR CULAR NO. 471, IT HAS BEEN DECIDED BY THE CBDT THAT CASES OF ALLOTMENT OF FLATS UNDER THE SELF FINANCING SCHEME OF DDA SHALL BE TREATED AS CA SES OF CONSTRUCTION 10 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. FOR THE PURPOSE OF CAPITAL GAINS. THEREFORE, THE EX TENDED PERIOD OF THREE YEARS WAS MADE AVAILABLE TO THE ASSESSES TO C LAIM DEDUCTION U/S 54 OF THE ACT BY TREATING THE ALLOTMENT OF FLATS BY THE DDA UNDER SELF FINANCE SCHEME AT PAR WITH THE CONSTRUCTION OF FLAT . (IV) THE APPELLANT CLAIMED DEDUCTION U/S 54 OF THE ACT FOR ACQUIRING A FLAT AT MUMBAI AND CLAIMED TO MAKE PAYMENT IN THE YEAR 2010. HOWEVER, TILL 29 TH JANUARY, 2014, EVEN THE NECESSARY APPROVAL HAVE NO T BEEN RECEIVED BY M/S. ORNET SPACES PVT. LTD. AND IT WAS ANTICIPATED TO BE RECEIVED BY MAY, 2014. TILL THE DATE OF THIS ORD ER, NOTHING HAS BEEN BROUGHT ON RECORD BY THE APPELLANT THAT A FLAT DULY CONSTRUCTED HAS BEEN ALLOTTED TO IT OR POSSESSION OF THE SAME HAS B EEN GIVEN TO IT. IT MAY BE MENTIONED THAT AS PER PROVISIONS OF SECTION 54 OF THE ACT, THE APPELLANT HAS EITHER TO PURCHASE OR CONSTRUCT A RES IDENTIAL HOUSE PROPERTY WITHIN TWO OR THREE YEARS, AS THE CASE MAY BE, FROM THE DATE OF SALE OF THE SUBJECTED PROPERTY SOLD BY THE APPEL LANT ON 29.09.2010. HOWEVER, IN THE INSTANT CASE UNDER CONSIDERATION, T HE APPELLANT HAS NOT CONSTRUCTED ANY PROPERTY EVEN ALMOST AFTER SIX YEAR S OF SALE OF THE SUBJECTED PROPERTY ON 29.09.2010. IT MAY BE MENTION ED THAT IN A RECENT DECISION IN THE CASE OF YASHOVARDHAN SINHA V S. ITO (2016) 65 TAXMANN.COM 31 (PATNA TRIB.) IT HAS BEEN HELD THAT WHERE CONSTRUCTION OF NEW RESIDENTIAL FLAT WAS NOT COMPLETE BY END OF THREE YEARS FROM TRANSFER, ASSESSEE WOULD NOT BE ENTITLED FOR DEDUCT ION U/S 54 OF THE ACT. IN THE CASE OF RASIKLAL M. PAREEK VS. ACIT (2 012) 28 TAXMANN.COM 195 (MUM TRIB.) IT WAS HELD THAT ALLOTM ENT OF A FLAT BY A BUILDER COULD NOT BECOME BASIS FOR CLAIM OF DEDUCTI ON U/S 54F OF THE ACT. (V) THEREFORE, IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE AO WAS JUSTIFIED IN NOT ALLOWING DEDUCTION U/S 54 OF T HE ACT, HENCE, THE ACTION OF THE AO IS HEREBY UPHELD. 11 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR. THE FACTS RECORDED BY THE AUTHORITIES BELOW ARE NOT IN DISPUTE, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW, QUA THIS ISSUE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31/10/20 18. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 31/10/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI JAGDISH WADHWANI, JAIPUR. 2. THE RESPONDENT THE ITO WARD 3(2), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 975/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 12 ITA NO. 975/JP/2016 SHRI JAGDISH WADHWANI, JAIPUR.