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TMI Blog2012 (11) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... roval for the plan within three years, assessee had offered the same to Capital Gain Account Scheme in Assessment Year 2009-10. Assessee here, having offered capital gains for tax in Assessment Year 2009-10 as stipulated in proviso-1 of section 54F of the Act, could not be saddled with the same liability for the impugned Assessment Year as well. Ld. CIT(A) was justified in directing the Assessing Officer to grant the assessee deduction under section 54F of the Act for impugned Assessment Year. - Decided in favor of assessee. - IT APPEAL NO. 589 (MDS.) OF 2012, C.O. NO. 66 (MDS.) OF 2012 - - - Dated:- 11-10-2012 - ABARAHAM P. GEORGE AND VIKAS AWASTHY, JJ. K.E.B. Rengarajan for the Appellant. V. S. Jayakumar for the Respondent. ORDER Abraham P. George, Accountant Member - These are appeal and Cross Objection of the Revenue and assessee respectively directed against an order dated 20.12.2011 of Commissioner of Income Tax (Appeals)-III, Chennai for the impugned Assessment Year. 2. Grievance raised by the Revenue is that CIT(A) allowed the exemption to assessee under section 54F of the Income Tax Act, 1961 (in short 'the Act'), which was denied by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs. 2.41 crores invested in purchase of agricultural land could not be considered as an investment, which satisfied the conditions set out in section 54F of the Act. Relying on a sworn statement taken from assessee, Assessing Officer came to a conclusion that assessee had not made the investment in the land in accordance with Sec.54F of the Act. Further as per Assessing Officer, there were withdrawals from the deposits in Capital Gain Account Scheme as well. Assessing Officer further noted that assessee had made deposits in Capital Gain Account Scheme only was 30.10.2006 whereas the due date for filing return for the impugned Assessment Year on 31.07.2006. For these reasons, he denied the claim of deduction under section 54F of the Act and brought to tax a sum of Rs. 3,47,01,162/- as long term capital gains of the impugned assessment year. 4. In its appeal before the CIT(A), argument of the assessee was that the land acquired was not 8.01 acres but only one acre and in support of this argument, a copy of sale deed was produced. As per assessee, it had prepared a plan of construction of residential house through an Architect, and also made necessary application to the compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitle the assessee from claiming exemption under section.54F of the Act in the impugned Assessment Year. Since assessee was a person subject to tax audit, his due date for filing return fell on 31.10.06 and not 31.07.06 as noted by the Assessing Officer. In this view of the matter, he directed the Assessing Officer to allow the claim of deduction under section 54F of the Act. 6. Now before us, Ld. Departmental Representative assailing the order of CIT(A) submitted that nature of the land purchased by the assessee, at the time of purchase was agricultural. Assessee was aware that no construction was possible in agricultural land unless approval for conversion was received. Thus, assessee had no intention for starting any construction of residential building at all. Therefore, according to him, action of the assessee in depositing balance sums in a deposit under Capital Gain Account Scheme had no relevance whatsoever. Even the deposits in Capital Gain Account Scheme were withdrawn by the assessee later for purposes other than construction and this went to show that assessee had no intention to construct residential building. The scheme of deduction under section 54F on long term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty that was impossible to perform. Here, on the other hand, according to Ld. Departmental Representative construction of residential house in the given land was impossible from very beginning. Assessee was aware that such construction was not possible but still wanted to claim deduction under section 54F of the Act. 9. We have heard the rival contentions and also carefully gone through the orders of authorities below. Revenue has not denied the observation of the CIT(A) that land acquired was one acre and not 8.40 acres. Cost of the land was Rs. 2.41 crores and the amount deposited by the assessee in Capital Gain Account Scheme was Rs. 1.06 crores. Total deduction claimed under section 54F was Rs. 3.47 crores. Argument of Revenue is that assessee had no intention to construct a house in the one acre property. Land was agricultural in nature and assessee would have been aware that a residential construction was not possible in an agricultural property. In our opinion, this contention itself is a pure presumption. As stated by Ld. Authorised Representative of assessee, at least a farm house could be constructed, if not a full-fledged residence in an agricultural property. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 45; (b) If the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45 : Provided that nothing contained in this sub-section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset. Explanation : For the purposes of this section, - "Net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1), then, - (i) The amount by which - (a) 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 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 had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified 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 the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid." Last proviso clearly mentions that when amounts deposited under Capital Gains Account Scheme were not utilised wholly or partly for the purchase or construction within the period specified, then such amount would be charged as income of the previous year in which the period of three years, starting from the date of the transfer of the asset expired. The term used is 'shall'. Section 54F does n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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