Smt. Pratima C. Joshi, Pune V. Deputy Commissioner of Income-tax, Pune

MA 32/PUN/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8150 (ITAT-PUNE)
• Duration Of Justice: 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 54F; 6; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER M.A. NO.32/PUN/2020 (ARISING OUT OF ITA NO.510/PUN/2016) / ASSESSMENT YEAR : 2012-13 SMT. PRATIMA C. JOSHI, ARUNODAYA, 769/7, DECCAN GYMKHANA, PUNE 411 004 PAN : AAWPJ6836B VS. DCIT, CIRCLE-3, PUNE (APPLICANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : BY MEANS OF THE PRESENT MISCELLANEOUS APPLICATION, THE ASSESSEE REQUESTS MODIFICATION OF THE DIRECTION GIVEN BY THE TRIBUNAL IN PARA 10 AND CONCLUSION IN PARA 11 OF THE IMPU GNED ORDER BY WHICH THE MATTER HAS BEEN RESTORED FOR RE-EXAMIN ATION OF THE ELIGIBILITY OF EXEMPTION U/S.54F OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT). 2. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. TH E APPLICANT BY SHRI C.H. NANIWADEKAR RESPONDENT BY SHRI S.P. WALIMBE DATE OF HEARING 15-01-2021 DATE OF PRONOUNCEMENT 18-01-2021 M.A NO.32/PUN/2020 SMT. PRATIMA C. JOSHI 2 SHORT ISSUE BEFORE THE TRIBUNAL IN THE ORDER U/S 254(1) OF THE ACT WAS ABOUT THE AVAILABILITY OR OTHERWISE OF EXEMPTION U/S.54F O F THE ACT, WHICH WAS ALLOWED BY THE LD. CIT(A) AND THE DEPARTMENT PREFERRED APPEAL THERE AGAINST. IT HAS BEEN RECORDED IN PARA 2 OF THE IMPUGNED ORDER THAT THE ASSESSEE SOLD C ERTAIN PROPERTY AND INTER ALIA DEPOSITED BALANCE CAPITAL GAIN IN SPECIFIED CAPITAL GAIN ACCOUNT SCHEME, FOR WHICH EXEMPTION U/S.54F WAS CLAIMED. THEREAFTER, IT OBSERVED IN PARA 9 O F ITS ORDER THAT CONSTRUCTION OF RESIDENTIAL HOUSE WAS AN ESSENTIAL CONDITION FOR AVAILING EXEMPTION U/S.54F FOR WHICH NO COGENT MATERIAL WAS PLACED ON RECORD BY THE ASSESSEE FOR SHOWING THAT A RESIDENTIAL HOUSE WAS CONSTRUCTED ON THE SAID LAND WITHIN A PERIOD OF 3 YEARS FROM THE SALE OF THE ORIGINAL CAPITAL ASS ET. THAT IS HOW, THE TRIBUNAL RESTORED THE MATTER TO THE AO DIRECTING THE ASSESSEE TO: FURNISH DOCUMENTARY EVIDENCE TO SHOW THAT THE RESIDENTIAL HOUSE WAS CONSTRUCTED WITHIN THE PERIOD OF THREE YEARS FROM THE DATE OF SALE OF CAPITAL ASSE T (DATE OF SALE OF LAST PLOT). IF THE ASSESSEE IS ABLE TO PROVE CO NSTRUCTION OF HOUSE WITHIN THE SPECIFIED TIME LIMIT, THE BENEFIT OF EXEMPTION U/S.54F BE ALLOWED. IT IS SEEN THAT THE YEAR U NDER CONSIDERATION IS THE YEAR IN WHICH THE ASSESSEE TRANSFERRED THE M.A NO.32/PUN/2020 SMT. PRATIMA C. JOSHI 3 ORIGINAL ASSET AND DEPOSITED THE REMAINING CAPITAL GAIN IN THE SPECIFIED CAPITAL GAIN ACCOUNT SCHEME. SECTION 54F(4) IS RELEVANT IN THIS REGARD, WHICH READS AS UND ER : (4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS N OT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASS ET MADE WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF T HE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FU RNISHING 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 LATER THAN THE DUE 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 SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN 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 ASSESSE E FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT 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 CONST RUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTIO N (1), THEN, ( I ) THE AMOUNT BY WHICH ( A ) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRAN SFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ) OF SUB-SECTION (1), EXCEEDS ( B ) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED H AD THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PU RCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPE CIFIED 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 U NUTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. EXPLANATION. [ OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993. ] M.A NO.32/PUN/2020 SMT. PRATIMA C. JOSHI 4 3. ON GOING THROUGH THE MANDATE OF SUB-SECTION (4) OF SECTION 54F, IT IS CLEAR THAT THE ASSESSEE BECOMES ENTITLED TO EXEMPTION U/S.54F ON DEPOSITING THE AMOUNT IN THE DESIGNATED CAPITAL GAIN ACCOUNT SCHEME BEFORE THE STIPULATED PERIOD. THE PROVISO STATES THAT IF THE AMOUNT DEPOSITED IS NOT UTILIZED FOR PURCHASE OR CONSTRUCTION OF ASSET WITHIN THE SPECIFIED PERIOD , THEN AMOUNT OF EXEMPTION ALLOWED EARLIER SHALL BE CHARGED U/S.45 AS `INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSE T EXPIRES. THUS, THE MANDATE OF SECTION 54F(4) IS TO ALLOW EXEMPTION ON THE ASSESSEE DEPOSITING THE AMOUNT IN THE DESIGNATED CAPITAL GAIN ACCOUNT SCHEME. IT IS FOR THE AO TO TH EN EXAMINE THE ISSUE AT THE END OF THE THIRD YEAR FROM THE DATE OF SALE, IF THE ASSESSEE HAS CONSTRUCTED A NEW HOUSE, WHICH OTHERWISE FULFILLS THE REQUISITE CONDITIONS. IF THE ASSESSEE DO ES NOT PASS SUCH EXAMINATION OF THE AO, THEN THE AMOUNT OF EXEMPTION ALLOWED EARLIER SHALL IS WITHDRAWN OR TO PUT IT SIMPL Y BECOMES CHARGEABLE TO TAX U/S.45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS EXPIRES. 4. INSTANTLY, WE ARE CONCERNED WITH THE INITIAL YEAR WHEN THE ASSESSEE DEPOSITED THE AMOUNT IN CAPITAL GAIN ACCOUNT SCHEME. M.A NO.32/PUN/2020 SMT. PRATIMA C. JOSHI 5 A CATEGORICAL FINDING HAS BEEN RECORDED IN PARA 2 OF THE ORDER THAT THE ASSESSEE DID DEPOSIT CAPITAL GAIN IN SPECIFIED CAPITAL GAIN ACCOUNT SCHEME. IN THAT VIEW OF THE MATTER, THE ASSE SSEE BECOMES ENTITLED TO EXEMPTION U/S.54F OF THE ACT FOR THE YEAR UNDER CONSIDERATION. HOWEVER, IT IS FOR THE AO TO EXAMINE AS TO WHETHER THE ASSESSEE HAS CONSTRUCTED THE HOUSE WITHIN PERIOD OF THREE YEARS OR NOT. IN CASE THE HOUSE IS NOT SO CONSTRUC TED OR THE OTHER RELEVANT CONDITIONS ARE NOT SATISFIED, THEN THE AO BECOM ES FREE TO CHARGE THE AMOUNT OF EXEMPTION EARLIER ALLOWED AS INCOME U/S.45 OF THE THIRD YEAR. WE, THEREFORE, MODIFY P ARAS NOS. 10 AND 11 AS UNDER : 10. WE HAVE FOUND IT AS AN ADMITTED POSITION THAT THE ASSESSEE DEPOSITED BALANCE CAPITAL GAIN IN THE SPECIFIED CAPITAL GAIN ACCOUNT SCHEME. THIS MAKES THE ASSESSEE ENTITLED TO EXEMPTION U/S.54F IN RESPECT OF THE YEAR UNDER CONSIDERATION. HOWEVER, THE AO IS FREE TO EXAMINE AS TO WHETHER THE ASSESSEE CONSTRUCTED THE HOUSE WITHIN THE STIPULATED PERIOD OF THREE YEARS. IN CASE SUCH CONSTRUCTIO N IS NOT DONE OR THE OTHER RELEVANT CONDITIONS ARE NOT SATISFIED, THEN THE AO WILL BE AT LIBERTY TO INVOKE THE M.A NO.32/PUN/2020 SMT. PRATIMA C. JOSHI 6 PROVISO TO SECTION 54F AND MAKE SUITABLE ADDITION IN THE INCOME OF THE ASSESSEE AT THE END OF THIRD YEAR FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. INSOFAR AS THE YE AR UNDER CONSIDERATION IS CONCERNED, THE ASSESSEE IS ENTITLED TO EXEMPTION BECAUSE SHE HAS DEPOSITED THE AMOUNT IN THE DESIGNATED CAPITAL GAIN ACCOUNT SCHEME. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2021. SD/- SD/- (S.S.VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESI DENT PUNE; DATED : 18 TH JANUARY, 2021. M.A NO.32/PUN/2020 SMT. PRATIMA C. JOSHI 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-3, PUNE 4. THE PR. CIT-2, PUNE 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 15-01-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15-01-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *