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TMI Blog2012 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... nd prejudicial to the interest of Revenue therefore, we find justification in invoking the revisional jurisdictional u/s 263 by CIT – Decided against the assessee. - IT Appeal No.58/Ind./2011 - - - Dated:- 25-1-2012 - JOGINDER SINGH, R.C. SHARMA, JJ. ORDER Joginder Singh, Judicial Member By way of this appeal, the assessee seeks to challenge the order of the learned CIT-I, Indore, dated 17.3.2011 on the ground that the learned CIT was not justified in holding that the order passed by the AO u/s 147/143(3) of the Act was erroneous and prejudicial to the interest of the revenue. 2. During hearing, we have heard Smt. Richa Parwal, learned counsel for the assessee and Shri Keshave Saxena, learned CIT DR. The crux of arguments on behalf of the assessee is that the ld. CIT passed order u/s 263 by holding that the deduction u/s 54F was wrongly allowed by the Assessing Officer. The original assessment was claimed to be framed u/s 147 r.w.s. 143(3) of the Act as the reason for reopening was the issue of capital gain. It was strongly contended that since the subject matter u/s 147 was capital gain and the ld. Assessing Officer extensively and exhaustively verified the calc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, the amount of capital gain would have escaped taxation, therefore, he also ordered for initiation for penalty proceedings u/s 271(1)(c) of the Act. Admittedly, as contained in para 2 of the assessment order, the details filed by the assessee were duly examined by the Assessing Officer. The main grievance of the assessee is that while invoking the revisional jurisdiction u/s 263 of the Act by the ld. CIT, the time limit of three years for claiming exemption u/s 54F was available to the assessee, therefore, ld. CIT exceeded its jurisdiction. On questioning from the Bench whether the assessee has started construction even today, it was clarified that no construction has yet started as the plot has not been handed over to the assessee by the builder/coloniser. Before coming to any conclusion, we are reproducing hereunder the relevant provisions of Section 54F of the Act: 54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain arising from the transfer of the original 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 previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original 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 previous year in which such new asset is transferred. (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before furnishing such return, in any account or in capital gain account in the bank or institution as specified in any scheme by the Central Government, by notification in the official gazette and the proof of the such deposit in the capital gains tax account shall be accompanied while filing the return. As per sub-section (1) to Section 54F, the capital gain arises from transfer of any long term capital asset, the assessee has to invest the amount within a period of one year before such transfer or within two years after the date on which such transfer took place or within a period of three years for construction of a residential house (new asset) then the capital gain shall be dealt with in accordance with the provisions of Section 45 of the Act or as the case may be. The main thrust of the Section is construction of a residential house. However, in the case of the assessee, till today, even no construction has started, therefore, the benefit of the exemption provided u/s 54F is not available to the assessee. At most, we can show a lip sympathy to the assessee because the plot was not handed over to the assessee by the coloniser/builder, therefore, no investment could be made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction u/s 263 of the Act is concerned, it can be invoked when the assessment order is either erroneous as well as prejudicial to the interest of Revenue. Both the conditions of order being erroneous as well as prejudicial to interest of revenue is required to be satisfied. There had been judicial debate on the word "prejudice to the Revenue". One view is that it does not necessarily mean loss of revenue and the expression is not to be construed in a pettifogging manner and must be given a dignified construction. Another view is that even if one item is found prejudicial to the interest of the Revenue, the order can be revised. However, both the twin conditions, erroneous and prejudicial to the interest of the Revenue, must be satisfied before invoking the revisional jurisdiction by the ld. CIT. What it may be we are of the view that allowing unproved deduction/exemption not only renders the order of Assessing Officer erroneous but also prejudice the interest of Revenue. If the facts of the present appeal are kept in juxtaposition with the judicial scrutiny, we find that these twin conditions are existing in the present appeal, therefore, we find justification in invoking the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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