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TMI Blog2015 (2) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... tap, AM And Asha Vijayaraghavan, JM,JJ. For the Appellant : Sri A V Raghuram For the Respondent : Sri Ramakrishna Bandi ORDER Per: Asha Vijayaraghavan,JM. This appeal by the assessee is directed against the order of the CIT(A)-II, Hyderabad dated 17.09.2013 for assessment year 2009-10. 2. Facts of the case are that the assessee is an Individual. In the return of income filed by him on 30-10- 2009, he returned an income of ₹ 56,14,776 after claiming an exemption of ₹ 2,29,82,700 u/s 54F of Income-tax Act, 1961. The assessee had sold a property at Bangalore and had a long term capital gain of ₹ 2,29,82,700. He identified another residential flat at Gurgaon, Haryana called Palm Drive for a total consideration of ₹ 2,32,00,000. Palm Drive is a project promoted by internationally reputed builders called Emaar . The assessee entered into an agreement with the builder in respect of flat No. A 401 and has paid amounts to the builder towards the fulfilment of the agreement as requisitioned by the builder. While filing the Return of Income the amounts so paid were claimed as deduction. Subsequently during the course of assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has paid monies as per the agreement with the builder. However, unfortunately he was not aware of the further conditions in respect of the unutilized money, under section 54 F( 4). (c) In view of the judicial opinion brought to the notice of the assessee, the assessee is desirous to avail of the benefit or else he will be put to substantial loss in spite of his bona-fide investment, with a view to avail of the exemption. (d) The citation and gist of judicial precedents relied upon by the assessee are as under: i) Smt. Rajneet Sandhu vs. DCIT (2010) 133 TTJ 0064 (Chandigarh): In this case the construction of the house was not completed within the prescribed period. It was held that section 54F does not prescribe that the residential house should be completed within the prescribed period and benefit under s. 54F was allowed. It was held that thrust was on investment and not on completion. ii) Smt. Shashi Varma vs. CIT 224 ITR 106 (MP): In this case the assessee was denied exemption on the investments made with Delhi Development Authority. However, relief was granted by the Hon'ble High Court. It was held that section 54 of the Act of 1961 only says that within tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal before the Tribunal and filed additional grounds which are as follows: (1) On the facts and in the circumstances of the case, the learned CIT(A) and the AO have failed to appreciate that the provisions of section 54F of the Income Tax Act, 1961, contemplates 3 years period from the date of sale of original asset for construction of flat and not two years as considered in the assessment and appellate order. The authorities below failed to appreciate that the time limit available for purchase of flat is three years in the case of assessee as the assessee had not purchased readymade flat but was purchasing a flat which was to be constructed and which is equivalent to constructing a residential house. (2) Without prejudice to above ground or any of the grounds raised in the appeal memorandum, the authorities below failed to appreciate that since the assessee had invested sale proceeds of original asset for construction of new flat, the capital gains in case of violation of any of the provisions of section 54F of the Act could have been taxed in the assessment year corresponding to the previous year in which 3 years period for construction would elapse. The authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid proposition of law, the assessee is required to prove the actual date of investment and the amount invested towards purchase/ construction of the residential house with supporting evidence. 10. The learned counsel also relied on the decision of M. Janardhan Reddy vs. ITO in ITA No. 1238/Hyd/2006 dated 30.3.2009 and circular No. 471 reported in 59 CTR (St.) 19. 11. The learned DR, on the other hand, argued that section 54F clearly laid out as follows: 54F. (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 capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or 65[two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made 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 Gazett, frame in this behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply once we accept the decision of the co-ordinate Bench in the case of Narasimha Raju Rudra Raju (supra). (e) Section 54F is a benevolent provision. 14. In this scenario, the only issue is whether the amount of consideration received on transfer invested by the assessee in a flat constructed within three years would amount to construction of a residential house within the time limit of three years. In short, we are of the opinion that a flat which is newly constructed by a builder on behalf of the assessee is in no way different from a house constructed. Section 54F being a beneficial provision has to be interpreted so as to give the benefit of residential unit viz., flat instead of house in the present state of affairs. Further, as already pointed out even if only advance is given the benefit still will be available for exemption u/s. 54F. In the present case the assessee has given a chart of statement of payment made to M/s. Emaar MGF Land Ltd. which is as follows: Date of installment Amount (Rs.) 08/10/2007 2000000 14/11/2007 899906 16/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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