9911796707
TMI Blog2012 (12) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... individual. She filed her return of income, admitting a total income of Rs.4,15,530/- which was initially processed u/s 143(1) of the Act. However, during the course of assessment proceedings for the assessment year 2008-09, it has been noticed by the AO that the assessee's claim u/s 54F of the Act in respect of Rs.1,45,33,925/- representing Long Term Capital Gains [LTCG] on sale of shares which was allowed u/s 143(1) of the Act for the AY 2007-08 was wrong. According to the AO, the assessee had not invested the capital gains in the construction of a residential house within the time frame stipulated u/s 54F of the Act. To verify the authenticity of the assessee's claim, the AO had reopened the assessment u/s 147 of the Act by issuance of a Notice u/s 148 of the Act after duly recording the reasons. In compliance, the AO was requested by the assessee to treat the return of income originally filed as the one in response to the notice u/s 148 of the Act. While concluding the reassessment proceedings u/s 143 (3) r.w. s. 147 of the Act, the AO brought to tax a sum of Rs.95,33,925/- as LTCG for the reasons recorded therein. Aggrieved, the assessee took up the twin issues - (i) re-openi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted enquiries and visited the site with the Inspector in the presence of the appellant's representative and has found that on 19/10/2010 the house had just started construction that too on a small area of 300 sq. ft. it is clear that no house was constructed within 3 years of the sale of the original asset. The appellant has accepted this fact and has filed a revised return of income for the assessment year 2010-11 declaring the said amount as her income for the said year............ 4.5. The case laws cited by the appellant viz., CIT v. Sardarmal Kothari [302 ITR 286] and Shashi Varma (Smt.) v. CIT [224 ITR 106] do not apply to the facts of the appellant's case as there was no substantial construction of the house in the present case. The decision of the Hon'ble High Court of Delhi in the case of D.P. Mehta v. CIT [251 ITR 529] squarely applies where the requirement to acquire/construct a residential house within the time allowed u/s 54F has been upheld. In the appellant's case, there was no construction whatsoever even as on the date of issue of notice u/s 148 of the Act. In view of the foregoing, I hold that it is a clear case of misuse of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished a paper book containing 1 - 40 pages which consist of, inter alia, copies of (i) agreement dated 6.6.2007; (ii) sale deed dated 21.6.2007; (iii) correspondence with the AO; (iv) mahzar of the ITI; (iv) ledger account of the assessee in the books of Eagleton Residents Association etc., 6. On the other hand, the learned DR had supported the stand of the authorities below. He had also placed strong reliance on the following case laws to support the Revenue's conclusions: * ITO v. M.B. Ramesh - ITA No.418/B/2006 dt: 19.6.2009; * M.B.Ramesh v. ITO (2010) 320 ITR 4512 (Kar); * D.P.Mehta v. CIT - 251 ITR 529 (Del); * Rajesh Surana v. CIT (2009) 306 ITR 368 (Raj); * Dr. A.S.Atwal v. CIT (2005) 277 ITR 0462 (P&H); * Dr. Harsha N. Billangady v. DCIT - ITA No.1298/B/2011 dt.20.7.2012 7. We have carefully considered the rival submissions, perused the relevant materials available on records and also various case laws on which the learned AR as well as learned DR have placed strong reliance. 7.1 Let us now take up the issues raised by the assessee chronologically as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which has duly been ratified by the CIT (A). In essence, no valid reason was brought on record to interfere with the findings of the CIT (A). It is ordered accordingly. (ii) Assessing of LTCG of Rs.95.33 lakhs: 7.4 The assessee had purchased a site vide sale deed dated 21.6.2007 for Rs.41.95 lakhs which inclusive of stamp duty, registration fee etc., Copy of the sale agreement dated 6/6/2007 evidenced payment of advance of Rs.82.62 lakhs towards cost of site + development charges etc. It was the case of the AO that since the sale of shares for Rs.1.49 crores took place on 18/1/2007 and as per the provisions of s. 54F(1) of the Act, the assessee was expected to construct a residential house on the subject property (site) not later than 18/1/2010. Since no house was constructed within the time frame of three years as prescribed in the afore-said section and even as on the date of issuance of a notice u/s 148 of the Act on 29/9/2010, the AO brought to tax the sum of Rs.95.33 lakhs for the AY under consideration by disallowing the claim of exemption u/s 54F of the Act. 7.5 Turning to the main issue, briefly, the assessee was in receipt of Rs.1.49 crores as on 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were conducted by the AO as late as on 7.10.2010, 10.11.2010 and 23.11.2010, the moot question lingering in our mind is - what should have come in the way of the assessee from furnishing such vital piece of evidences before the AO to strengthen her claim? 7.9 However, the AO's Mahzar had averred thus: "To-day on 19/10/2010 I have visited the Eagleton - The Golf Village situated in Bidadi Hobli of Ramanagar - Tq & Dist to verify the status of construction of residential house by Smt Archanakumari at site No. N-23/1 situated at Eagleton The Golf village, Shanmangala - village, Bidadi Hobli. On being called, Shri Shivakumar G.L, S/o Laxmipathi, an Accounts-Executive of Eagleton Residents Association -Eagleton The Golf village has identified and shown the site No. N-23/1, situated at Eagleton The Golf village, Shanmangala belongs to Smt Archanakumari, wherein the construction of residential house is going on as on date i.e., 19/10/2010. According to him, the construction on the said site has started just recently after getting electrical and water connection from the Eagleton Residents Association. The said construction is not complete any respect and is not fit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long term capital gain is liable to be charged for the assessment year 2007-08. Under the circumstances the original return filed on 27.7.2008 (sic) 27.7.2007 for the assessment year 2007-08 may be treated as return filed in response to your notice u/s 148." [Refer: P 21 of PB AR] 7.12 Let us now turn our attention towards the case laws on which the assessee had reposed her confidence. (1) Sambandam Udaykumar v. DCIT - ITA NO.634/Bang/2010 dt: 21.1.2011: The Hon'ble earlier Bench had, after due consideration of an identical issue to that of the present one, come to the conclusion that: "6.7.2. In the present case, the builder has given a letter detailing the payments made. In the said letter, it also stated that substantial construction was completed as on 12.11.08 (3 year period from the date of sale of share giving rise to capital gain) and only minor fitting like window shutters and some electrical work were required to be made. In other words, the Vilas were substantially ready and habitable with water connection and also temporary electrical connection. However, to sustain the stand of the AO, the Ld. CIT (A) took sanctuary in the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act i.e., to encourage investment in a residential building is completely fulfilled. 15. In that view of the matter, the Tribunal was justified in extending the benefit of section 54F of the Act to the assessee and the said order does not suffer from any infirmity which calls for interference." [Emphasis is supplied selectively] 7.14 With due respects, we have perused the observations of the earlier Bench of the Tribunal as well as the ruling of the Hon'ble Court in the case of Sambandam Udayakumar (supra). In this connection, we would like to point out that, that assessee had been put in possession of the property (residential house) and he was in actual possession. The assessee had invested the sale consideration in acquiring a residential premise and took possession of the residential building and was living in the said premises. Therefore, the Hon'ble Court took a view that "the object of enacting section 54 of the Act i.e., to encourage investment in a residential building is completely fulfilled." However, in the present case under dispute, the assessee was expected to construct a residential house not later than 18.1.2010 whereas when the AO mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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