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TMI Blog2011 (5) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Yadav, Judicial Member. This appeal has been filed by the assessee against the order of the CIT(A) on the following grounds: "1. In the facts and circumstances of the case and in law, the learned CIT(A) has erred in denying the deduction of Rs. 63,00,552.00 u/s 54F of the Act to the appellant from long term capital gains on transfer of land by the appellant to M/s. Magarpatta Township Development and Construction Ltd. The aforesaid deduction may please be granted to the appellant. 2. The learned CIT(A) has erred both on facts and in law in holding that the learned Assessing Officer has correctly and rightly worked out the long term capital gains on sale of land by the appellant to M/s. Magarpatta Township Development and Construction Ltd., at Rs. 77,24,527. The aforesaid decision of the learned CIT(A) being patently illegal, bad in law, arbitrary and devoid of merits the same may please be vacated and it may please be held that the long term capital gains on sale of land by the appellant to M/s. Magarpatta Township Development Construction Ltd., work out to Rs. 14,23,976 after allowing the deduction of Rs. 63,00,552 under section 54F of the Act as claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper book. 4. The Assessing Officer as well as CIT(A) have denied the deduction under section 54F of the Act in respect of the above investment in the construction of new bungalow on the ground that the bungalow plan was sanctioned on 6-1-2007. The assessee purchased plot Nos. 37 to 43 totalling the area of 17,336 sq.ft. while the bungalow is on plot No. 37 only and the area of the bungalow is about 4000 sq.ft. Thirdly, when the construction was not started prior to the due date of filing of the return under section 13(1) of the Act for assessment year 2005-06 (i.e., 31-7-2005), the assessee should have deposited the consideration received on transfer of the land in the capital gains account with the bank which has not been done. 5. The stand of the assessee is that the consideration receivable for the sale of the land to the MTCDC was appropriated against. The cost of new house on the date itself as per receipts annexed on pages 23 and 24 as discussed in preceding paragraph. Secondly, section 54F of the Act only specifies that the assessee should construct a residential house within a period of 3 years and that condition is also fulfilled as the assessee received the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made to the builder for purchase of a new house by the assessee and therefore, the Tribunal held that the assessee has paid substantial payment to the builder, the deduction under section 54F was allowable although the property was not yet ready. Thus, the substantial investment irrespective of construction of property was held the basis for allowing deduction under section 54F of the Act. In the present case, the entire purchase price of a new house was adjusted by the MTCDC against the sale consideration and the assessee never received the above said consideration in any manner. In view of this, deduction is allowable to the assessee. Similar view has been claimed to have been taken in the case of CIT v. Mrs. Hilla J.B. Wadia [1995] 216 ITR 376 (Bom.) and also in the case of CIT v. Smt. Brinda Kumari [2002] 253 ITR 343/[2001] 114 Taxman 266 (Delhi) wherein it was held that if a substantial payment is made to the builder within the stipulated period as envisaged in the provisions of section 54F of the Act, deduction should be allowed to the assessee even though the construction has not completed and possession is not given to the assessee. In the present case, the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing through the submissions of both the parties and perusing the material on record, we find the undisputed fact is that the assessee has transferred his ancestral agricultural land on 31-3-2005 to MTCDC and simultaneously the receivable amount was adjusted towards bungalow which included plot Nos. 37 to 43 totalling to 17,336 sq.ft. including bungalow on plot No. 37. The receipts placed at pages 23 and 24 of the paper book clearly indicate that the assessee entered into such an understanding with the company on 31-3-2005 itself. According to the Revenue in case the construction is not started prior to due date for filing of the return i.e. 31-7-2005, the assessee should have deposited the consideration received on transfer of the land in the capital gains account with the bank which has not been done in this case. There is no occasion for depositing the amount in question as it was not received by the assessee at any point of time. Had the assessee received the amount, the provision of depositing in the above said manner would have arisen but in this case the amount receivable from the ancestral agricultural land transferred in question has never been received by the assessee at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras Bench in the case of M.A.C. Khaleeli (supra) wherein the assessee was a builder himself. He received consideration on sale of asset for transfer and transferred the same to his division activity for buying a new house. In such a situation, the Tribunal held that the assessee was entitled to deduction u/s 54F of the Act. Similar view has been taken by Pune Bench of the Tribunal in the case of P.K. Datta (supra) wherein substantial payment was made to the builder for purchase of new house by the assessee and it was held allowable under the provisions of section 54F of the Act although the property was not ready at that time. In the case before us, the whole amount has been adjusted by the company for new house against the sale consideration. In fact, the assessee never received the above consideration in his hand at any point of time. Similar view has been taken by the Bombay High Court in the case of Mrs. Hilla J.B. Wadia (supra) wherein the Court has gone to the extent that if the substantial payment is made within the stipulated period deduction under section 54F of the Act should be allowed to the assessee even though construction of new house is not completed and the pos ..... 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