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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 ..... he subject property. Only after the injunction was vacated, the developers could complete the premises and hand over possession to the respondent which admittedly is beyond the period of two years. On the basis of such fact, as the payment of the total consideration was paid by the respondent, merely because the residential premises were not occupied, as the possession was not delivered to the respondent by the Developer and the deed of conveyance was not executed within such period would not by itself be a ground to deprive the respondent from availing the exemption of payment of capital gain under Section 54 of the Income Tax Act. Our view also takes support of the judgment of the Delhi High Court reported in 2014 SCC OnLine Del 4087 in the case of the Commissioner of Income Tax II V/s Kuldeep Singh wherein it has been observed at paras 6, 8, 9, 10, 11, 12 and 13 thus : "6. This brings us to the other question whether the assessee had "purchased" the second property and, therefore, payment made of Rs. 37,86,273/- was entitled to exemption under Section 54 of the Act. Section 54 of the Act as applicable to assessment year 2006-07 reads as under:- "54. Profit on sale of propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing the return of income under subsection (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 Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub- section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in subsection (1), then,-- (i) the amount not so utilised shall be charged under section 45 as the 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 such amount in accordance with the scheme aforesaid. Explanation.--Omitted by Finance Act, 1992, wef 1- 4-1993." 8. The word "purchase" can be given both restrictive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chased on 30th April, 2003 whereas the earlier asset was sold only on 24th September, 2004. The Supreme Court allowing the appeal noticed that the agreement to sell was executed on 27th December, 2002 but the sale deed could not be executed because of inter-se litigation between the legal heirs, as one of them had challenged the will under which the assessee had inherited the property. The agreement to sell, it was held had given some rights to the vendor and reduced or extinguished rights of the assessee. This, it was observed was sufficient for the purpose of Section 2(47), which defines the term transfer in relation to a capital asset. In the light of the factual matrix, it was observed that the intention behind Section 54 was to give relief to a person who had transferred his residential house and had purchased another residential house within two years of transfer or had purchased a residential house one year before transfer. It was only the excess amount not used for making purchase or construction of the property within the stipulated period, which was taxable as long term capital gain while on the amount spent, relief should be granted. Principle of purposive interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of sale of the first property. No doubt the assessee was not constructing the new asset herself but she had purchased the flat. Reference was made to the decision of the Supreme Court in CIT vs. J.H. Gotla [1985] 156 ITR 323 (SC), wherein it has been observed: "Where the plain literal interpretation of a statutory provision produces a manifestly unjust result which could never have been intended by the Legislature, the court might modify the language used by the Legislature so as to achieve the intention of the Legislature and produce a rational construction. The task of interpretation of a statutory provision is an attempt to discover the intention of the Legislature from the language used. It is necessary to remember that language used is at best an imperfect instrument for the expression of human intention. It is well to remember the warning administered by Judge Learned Hand that one should not make a fortress out of the dictionary but remember that statutes always have some purpose or object to accomplish and sympathetic and imaginative discovery is the surest guide to their meeting." 12. Moreover, in Bharati C. Kothari's Case (supra) it was stated as under:- "Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to the conclusion that the purchase would be computed when the consideration is duly paid by the assessee for the purpose of purchasing the premises and the construction had already commenced by the builder which remained to be completed on account of the litigation. In the present case, the learned Tribunal has noted that the assessee has sold the property on 01.12.2009 and the assessee has made the payment on 16.03.2010. The assessee was required to get the house and occupancy certificate on or before 01.12.2011. But however, the assessee got the occupancy certificate of the property on 17.01.2014. The learned Tribunal further noted that the assessee submitted the documentary evidence to show that after purchasing the property there was a civil suit filed by the other parties and the assessee could not complete the construction and the licence 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, 302 ITR 286 (Chennai) wherein, it is held that in order to get the benefit under Section 54 of the Income Tax, the assessee need not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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