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TMI Blog2015 (4) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... the law, the ld. CIT(A) has erred in upholding the ld. AO's action to restrict the admissible deduction u/s 80C at Rs. 59,576/-, as against claimed by the assessee at Rs. 88,341/- 3. That on the facts of the case and under the law, the charging of interest u/s 234A & 234B is unjustified & illegal in rejecting the claim made by the appellant u/s 54F in respect of purchase of new assets (C) for Rs. 46,68,400/-, against long term capital gain on sale of assets (A). 3. The grounds raised in the departmental appeal read as under: "1. That the Ld. CIT(A) had erred in law and on facts by observing that section 54F is applicable on the instant case. 2. That the Ld. CIT(A) had erred in law and on facts by ignoring the various judicial pronouncements given by Assessing Officer without any basis. 3. That the Ld. CIT(A) has erred in ignoring the fact that the assessee has violated the provisions of clause (ii) of the proviso of section 54F(1), as he had purchased other residential house after the purchase of a new asset within a period of one year after the date of transfer of original asset. &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and how the original property was sold to two persons when the property was considered to be one indivisible lot. In response to the above the assessee submitted to the AO as under: "Kindly refer to the discussion held with the undersigned, the Assessee has claimed the exemption u/s 54(1) of the Income tax Act, 1961. In respect of sale consideration of the Long term Capital Gain for the purpose of purchase of Residential Properties. Your goodself has pointed out that the exemption is not applicable being Vacant Land sold by the Assessee. The exemption is applicable only in case of sale of Residential House and Sales consideration is invested for the purpose of purchase/construction of Residential House. As per Section 54F(1) of the Income Tax Act, 1961, "(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 (two years) after the due date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deeds, I did not own any residential house other than the New Assets. That I wish to clarify here that I never owned the Residential House, bearing no. C-48, Vivek Vihar, Delhi 110095. The said Residential House was & is owned by my mother. That during the previous year, relevant to the assessment year under consideration, I had sold my two immovable properties to two different persons, through two separate Sale Deeds. I have reworked out the assessable Long Term Capital Gains separately for both the sold immovable properties, as per sheets enclosed as Appendix A & B. You will observe/appreciate I had claimed exemption on a/c of two different New Assets against two different sales made by him. You will further observe/appreciate that I had not violated the provisions of section 54F of the I.T. Act, 1961. On the facts of the case and under the law the exemption claimed u/s 54F of the I.T. Act, 1961 cannot be denied to me. That now I have realized that the taxable Long Term Capital Gains had been incorrectly worked out at Rs. 25,56,756/-, while the taxable Long Term Capital Gains was Rs. 27,92,432/- (see Appendix- C). To this extent my return of income may kindly be treated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indo-Mercantile Bank Ltd. (1959) 36 ITR 1(SC) S. C. Cambatta and Co. Ltd. Vs CIT (1952) 21 ITR 121(Bom.) Tarulata Shyam Vs CIT 108 ITR 318 Mc Dowell & Co. Ltd. (1985) 154 ITR 148(SC) Workment of Associated Rubber Industry Ltd. Vs Associated Rubber Industry Ltd. (1986) 157 ITR 77 (SC) CIT Vs Durga Prasad More 82 ITR 540(SC) Bombay Oil Industries Ltd. VS DCIT (2000) 82 ITD 626(Mumbai) 10. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that there was no violation of the provisions of proviso (a)(ii) to section 54F of the Act. It was further stated that the assessee had not purchased any residential house other than the new assets which were purchased in respect of two different deeds. It was further stated that the assessee was neither having any residential house as on the date of transfer of the original asset nor had he purchased any residential house after acquiring those two new assets. As regards to the case laws relied upon by the AO, the assessee submitted that those were not relevant because none of the case laws referred to by the AO with reference to section 54F. It was also stated that even if the exemption u/s 54F was to be disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et 'C') on 10.05.2008 and subsequently purchased another house property (asset 'D') on 02.09.2008 and apart from these two residential houses, the assessee did not have any other residential house i.e. on the date of transfer of the original asset on 09.04.2008, the assessee did not have any residential house. Therefore, if the asset 'C' is considered as the new asset then exemption u/s 54F cannot be allowed to the assessee in terms of clause (ii) of the proviso as the assessee purchased a residential house asset 'D' other than the new asset within one year of the date of transfer of the original asset. The ld. CIT(A) further stated that if the asset 'D' is to be considered as new asset then the proportionate exemption cannot be allowed to the assessee as in that case, the assessee would have one residential house other than the new asset which is allowed in terms of clause (i) of the proviso. As the total investment in asset 'D' was only Rs. 21,10,500/- (total net consideration was Rs. 94,73,002/- and total Long Term Capital Gains were Rs. 93,35,656/-), exemption on proportionate basis amounting to Rs. 20,79,900/- was allowable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 & 26 of the assessee's paper book. The another Plot No. 11A was measuring 414 sq. yds. i.e. 346.15 sq meter. The Plot No. 12A was sold to Sh. Pradeep Gupta for a sum of Rs. 47,30,747/- and the another plot i.e. 11A was sold to Smt. Sarita Gupta for a sum of Rs. 47,42,255/-. The assessee claimed the exemption u/s 54F in respect of two residential houses purchased for Rs. 46,68,400/- and Rs. 21,10,500/- from the sale proceeds of Plot Nos. 11A and 12A respectively. In the instant case to resolve the present controversy, it is relevant to discuss the provisions contained in section 54F(1) of the Act which read as under: 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 [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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000 19.03.2008 14,12,480 10.05.2008 9,00,000 Expenses on dalali, documentation Development & finishing 7,55,920 46,68,400 The exemption u/s 54F of the Act in respect of this plot worked out to Rs. 46,00,630/-. From the above details it would be clear that the assessee purchased the new residential house on 10.05.2008 and the Plot No. 12A was sold to Sh. Pradeep Gupta on 11.04.2008 for a sum of Rs. 47,30,747/- which is evident from the copy of the sale deed placed at page nos. 22 to 41 of the assessee's paper book. As such the taxable Long Term Capital Gains worked out at Rs. 1,30,117 (Rs. 47,30,747/- - Rs. 46,00,630/-), when the assessee purchased this residential house for a sum of Rs. 46,68,400, he was not having any other house, so he was entitled for the exemption u/s 54F of the Act. Thereafter the assessee sold another plot bearing no. 11A to Smt. Sarita Gupta on 11.04.2008 which is evident from the page nos. 42 to 58 of the assessee's paper book which is the copy of the sale deed for a sum of Rs. 47,42,255/-, The indexed cost of acquisition of the said plot was at Rs. 68,673/-, as such the Long Term Capital Gains worked out to Rs. 46,73,582/-. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of proof) 08/10/2008 3,193.00 LIC of India Deduction allo wed 23/01/2009 12,075.00 LIC of India Deduction allo wed 49,091.00 DATE CHILD 1 CHILD 2 Total Fees Tuition Fees Total Fees Tuition Fees 25/04/2008 8,930 3750 8,540 3,510 18/07/2008 3,750 3750 3,510 3,510 14/11/2008 3,750 3750 3,510 3,510 28/01/2009 3,750 3750 3,510 3,510 20,180 15000 19,070 14,040 19. The ld. Counsel for the assessee requested that the matter may be sent back to the AO for verification because the assessee was not able to produce the copies of the payments before the AO which were available with the assessee. The ld. DR in her rival submissions strongly supported the orders of the authorities below and submitted that the matter may not be sent back to the AO because the opportunity was given by the AO as well as the ld. CIT(A) but the assessee could not furnish the proof of making the payments to justify the claim of Rs. 88,341/-. 20. After considering the submissions of both the parties and the material on record, we deem it appropriate to remand this issue back to the file of the AO for verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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