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TMI Blog2016 (5) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... e for constructing the house was accordingly delayed. The learned Tribunal further noted that CIT (A) in his order relied upon the decision of the Madras High Court in the case of CIT V/s Sadarmal Kothani (2008 (6) TMI 15 - MADRAS HIGH COURT ) wherein, it is held that in order to get the benefit under Section 54 of the Income Tax, the assessee need not complete the construction of the house and occupy the same. It is further noted that the assessee has invested the money and the occupancy certificate is delayed which is beyond the control of the assessee then the assessee is entitled for deduction under Section 54 of the Act. The learned Tribunal as such found that the assessee was entitled for deduction under Section 54 of the Act - Decided against revenue - TAX APPEAL NO. 66 OF 2015 - - - Dated:- 17-3-2016 - F. M. REIS AND K. L. WADANE, JJ. For The Appellant : Ms. Asha A. Desai, Advocate For The Respondent : Mr. P. Rao, Advocate ORAL ORDER : Upon hearing the learned counsel appearing for the respective parties, the only contention which arise for consideration is whether the Income Tax Appellate Tribunal was justified to come to the conclusion that merely p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has within a period of three years after that date constructed, a residential house, then instead of the capital gain being charged to incometax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,-- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint ownership became separate ownership for price paid would be covered by the word purchase . It was observed that the word purchase‟ used in Section 54 of the Act should be interpreted pragmatically in a practical manner and legalism shall not be allowed to play and create confusion or linguistic distortion. The argument that purchase primarily meant acquisition for money paid and not adjustment, was rejected observing that it need not be restricted to conveyance of land for a price consisting wholly or partly of money‟s worth. The word purchase , it was observed was of a plural semantic shades and would include buying for a price or equivalent of price by payment of kind or adjustment of old debt or other monetary considerations. It was observed that if you sell a house and make profit, pay Caesar (State) but if you buy a house or build another and thereby satisfy the conditions of Section 54, you were exempt. The purpose was plain; the symmetry was simple; the language was plain. 9. Recently Supreme Court in Civil Appeal Nos. 5899-5900/2014 titled Sh. Sanjeev Lal Etc. vs. CIT, Chandigarh Anr., decided on 01/07/2014, 2014 (8) SCALE 432 again examined Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1997] 224 ITR 106 and Calcutta High Court in CIT vs. Smt. Bharati C. Kothari (2000) 244 ITR 352. In Shashi Verma (supra), the assessee had invested the sale consideration for purchase of a flat from Delhi Development Authority and had paid part installments. Reversing the decision of the Tribunal and allowing the appeal of the assessee, the High Court observed that the Tribunal had adopted a pedantic approach without noticing the fact that the capital gain was ₹ 31,980/- whereas the installments paid were ₹ 71,256/-, i.e. much more than the amount of capital gain. Reference was made to Circular No. 471 dated 15th October, 1986 [1986] 162 ITR (Stat.) 41. It was observed that Section 54 of the Act says that assessee could have constructed the house and not that the construction should have necessarily been completed. Noticing that it was not easy to construct a house within the time limit of three years and under the Government schemes, construction takes years. When substantial investment was made in the construction and it should be deemed that sufficient steps had been taken and it satisfied requirement of Section 54. 11. What has been stated in the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a residential house, which has been constructed for the assessee. Keeping in view the above observations and reasons given by the Tribunal, no case is made out for interference. It was observed that the basic purpose behind Section 54 is to ensure that the assessee is not taxed on the capital gains, if he replaces his house with another house and spends money earned on the capital gains within the stipulated period. 13. The view we have taken gets support from sub-section (2) to Section 54. The aforesaid sub-section requires the assessee to deposit unspent amount not utilized by the assessee for purchase or construction of a new asset before the date of furnishing of return, in a specified account. It further states that the amount, if already utilized for purchase or construction of the new asset with the amount so deposited will be deemed to be cost of a new asset subject to the proviso. The word purchase is used in subsection (2) and indicates that the said word is not restricted or confined to registered sale deed or even possession but has a wider connotation. The proviso supports the aforesaid interpretation and stipulates that the amount deposited but not utilized w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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