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TMI Blog2016 (11) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... 54F should not be restricted to Rs. 42,00,000/-. The assessee also asked to show reasons why sales consideration of Rs. 87,500,000/- received out of sale of land at survey No.290/2 admeasuring 1840 sq.mtr. of non-agriculture land should not be treated as Short Term Capital Gain. The assessee explained that the assessee purchased this land at Rs. 13,20,600/- on 16.02.2006 and the sales of this land happened on 03.03.010 and hence it is a long term capital assets. The assessee was asked to show reasons why the amount of deduction claimed u/s.54F should not be restricted for purchase of "Safar Amrakunj", Bungalow No.101 to the extent of Rs. 42,00,000/-. The assessee is asked to show reasons why the exemption claimed u/s.54F to the extent of Rs. 65,95,405/- should not be restricted to Rs. 42,00,000/- as the assessee has invested a new capital assets being new residential house. The assessee is also asked to show reason why the deduction of u/s.54F should not be disallowed as the assessee has already one house property in his possession on the basis of which he took housing loan. The assessee vide reply dated 0/01/2013 submitted that before the due date as per section 139(4), i.e. 31-03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter assessment was framed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 22/02/2013 and the total income was determined at Rs. 32,94,150/-. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide order dated 03/02/2014 (in Appeal No.CIT(A)- I/Wd.7(1)/308/2013-14) dismissed the appeal of the assessee. 2.2. The ld.CIT(A) has dismissed the assessee's appeal by observing as under:- "6. I have gone through the assessment order and submissions of the A.R. of the appellant carefully. The only contention of the appellant is that as per the decisions of the courts the date upto which the investment can be made in acquisition of the property is the date prescribed u/s.139(4) and not the date prescribed u/s.139(1) of the Act. The contention of the appellant is misplaced because in the instant case the appellant has already filed his return of income on 15.10.2010. Once the appellant has filed the return of income u/s.139(1) of the Act then there is no question of time u/s.139(4) of the Act. It is seen that on the day when the appellant had filed his return of income the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stipulated period and exemption was duly given. On the other hand, ld.Sr.DR cited a judgement of Hon'ble Bombay High Court in the case of Humayun Suleman Merchant vs. CCIT(supra), which is contrary to the decision of Hon'ble Karnataka High Court in the case of CIT vs. K.Ramachandra Rao(supra), but it is well settled law held by the Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. reported in (1973) AIR 927, 1973 SCR (3) 448 that where there is contrary findings of different two High Courts and in the absence of direct citation of Hon'ble Jurisdictional High Court, then benefit of citation which is in favour of assessee to be applied. We therefore reproduce the relevant portion of the aforesaid judgements hereunder:- 1. Portion of Judgement of Hon'ble High Court of Karnataka - in the case of CIT vs. K. Ramachandra Rao ■ Section 54(F) deals with capital gains on transfer of certain capital assets not to be charged in case of investment on house. ■ Section 54F(1) provides, 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 residentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to purchase a residential house. It is not the requirement of law that he should purchase a residential site and then put-up construction. ■ Therefore, in the instant case admittedly the assessee has purchased a vacant site on 31-3-2001. He sold the original asset on 27-8-2003 on which date he already owned a site. In fact even before sale of the original asset he had started construction on such site by availing loan from the bank. In terms of section 54F(1) all investments made in the construction of the residential house of the said site within a period of one year prior to 27-8-2003 would be eligible for exemption under section 54F(1). Similarly all investments in the said construction after 27-8-2003 within a period of three years there from is also eligible for exemption. Therefore, the argument that such investment in putting up a residential construction cannot be made on a site owned by him to be eligible for exemption is without any substance. Both the appellate authorities have rightly extended the benefit to the assessee and there is no error committed by them which calls for interference. ■ As is clear from sub-section (4) in the event of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct a residential house within a period of 3 years from the date on which capital asset has been sold. However, while implementing section 54F, it was noticed that at times assessments were completed prior to the expiry of above period of two/three years from the date of sale of the Capital Asset and the assessee had not utilized the amount within the prescribed period provided in section 54F. This would lead to Assessment orders being rectified by appropriate orders,to determine the availability of benefit of exemption under section 54F.[Para 6(f)] ■ This led to the introduction of sub-section (4) to section 54F by the Finance Act, 1987 with effect from 1-4-1988. Besides introducing sub-section (4) to section 54F the Finance Act, 1978, also amended sub-section (1) of section 54F to make it subject to provision of sub-section (4) thereof.[Para 6(g)] ■ As the instant case is for assessment year 1996-97, it is the amended provision which applies. Therefore, now section 54F(1) which grants exemption from Capital gain tax where a flat is purchased either within one year prior to the sale of capital asset or within 2 years after the date of sale of the capital asset or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , i.e., 4-11-1996 under section 139.Therefore, on plain interpretation of section 54F, it appears that the impugned order of the Tribunal cannot be faulted. [Para 6(i)] ■ The mandate of section 54F(4) is clear that amount which has not been utilized in construction and/or purchase of property before filing the return of income, must necessarily be deposited in an account duly notified by the Central Government, so as to be exempted. [Para 6(o)] ■ Further, section 54F(4) specifically provides that the amounts which have not been invested either in purchase/construction of house have to be deposited in the specified accounts before the due date of filing of return of income under section 139(1). [Para 6(p)] ■ It is a settled position in law that no occasion to give a beneficial construction to a statute can arise when there is no ambiguity in the provision of law which is subject to interpretation. Thus, in the face of the clear words of the Statute the intent of parties and/or beneficial construction is irrelevant. In the instant facts the provision of section 54F(4) are very clear. There is no ambiguity. Thus, there is no occasion to apply liberal/benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized before the date of filing of return of income. In instant case 4-11-1996 is the date of filing the return of Income. It is not disputed that on 4-11-1996 when the return of income was filed, the entire amount which was subject to capital gain tax had not been utilized for the purpose of construction of new house nor were the unutilized amounts deposited in the notified Bank Accounts in terms of section 54F(4) before filing the return of income. It is also to be noted that, the Assessing Officer had taken into account all amounts utilized for construction of a house before filing the return of income on 4- 11-1996 for extending the benefit of exemption under section 54F. Therefore, in the instant facts, the decision of the Gauhati High Court in Rajesh Kumar Jalan's (supra) would not apply so as to hold that the assessee had complied with section 54F(4). [Para 6(w)] ■ In view of the above, the Appellate Tribunal was right in holding that the Assessing Officer had rightly computed the deduction under section 54F, restricting the investment in the new asset at Rs. 35 lakhs and, thus, restricting the exemption under section 54F proportionately to the amount invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lahore and Delhi High Courts have taken a different view. But the view taken by the Calcutta and Mysore Hi,-,It Courts cannot be said to be untenable view. Hence, particularly in view of the fact that we are interpreting, not merely a taxing provision but a penalty provision as well, the interpretation placed by the Calcutta and Mysore High Courts cannot be rejected.. Further as seen earlier, the consequences of accepting the interpretation placed by the Revenue may lead to harsh results. For the reasons mentioned above, this appeal is dismissed with, costs." 4.1. As the Hon'ble Apex Court has held in the case of CIT vs. Vegetable Products Ltd.(supra) as well as supported by several decisions of Superior Court that where there are two different decisions have been taken by the different High Court and there is no direct judgement of Jurisdictional High Court on the subject matter, then whichever judgement is in favour of the assessee, shall apply. Therefore keeping in view the ratio laid down by the Hon'ble Karnataka High Court in the matter of CIT vs. K. Ramachandra Rao (supra), we set aside the order of the ld.CIT(A) and direct the AO to delete the disallowance made of Rs. 23, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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