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TMI Blog2016 (12) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... on laid down by the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant (supra) and in accordance with law, by the AO after verification of the evidences - Decided in favour of assessee for statistical purposes. - I .T.A. No. 226/Mum/2012 - - - Dated:- 8-12-2016 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Nitesh Joshi For The Revenue : Shri Arun Kumar ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 226/Mum/2012, is directed against the appellate order dated 20th October, 2011 passed by learned Commissioner of Income Tax (Appeals)- 35, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2008-09, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 30th November, 2010 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called the Act ). 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) read as under:- 1) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was not complied with by the assessee. On being asked by the AO, the assessee submitted a copy of land purchase agreement for a consideration of ₹ 1,87,500/- for purchase of property in Rajasthan on 13.05.2008 , but failed to furnish proof for construction of the house within the period of two years and it was observed by the AO that the substantial portion of capital gain was deposited in the fixed deposit and remained in the fixed deposit till 26th August, 2008 , whereas the due date for filing the return of income u/s 139(1) of the Act was 31st July, 2008. Thus, the AO rejected the claim of the assessee for exemption u/s 54 of the Act as the assessee failed to deposit the un-appropriated capital gains in the capital gain account maintained with the bank as per capital gain scheme before the due date of filing of return of income with the Revenue. The assessee also failed to submit evidences of having spent the amount on construction of new house before the AO. Thus, the AO vide assessment orders dated 30.11.2010 passed u/s 143(3) of the Act rejected the claim of the assessee for exemption of ₹ 14,91,850/- u/s 54 of the Act. 4. Aggrieved by the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years before the AO. The ld. CIT(A) referred to the provisions of section 54F of the Act and came to the conclusion that the assessee has failed to re-invest the net consideration amount simultaneously or the assessee has not deposited the same with the capital gain account maintained with the bank before the due date of filing of return of income u/s 139(1) of the Act as per capital gain scheme. It was held that as the substantial portion of capital gain was put in fixed deposit and it remained in the fixed deposit till 26th August, 2008 ( as the due date for filing of return was 31st July, 2008) , the assessee was bound to comply the provisions of sub section 4 of Secton 54 and deposit the amount as per the Capital Gains Accounts Scheme, 1988-GSR 724(E), dated 22-6-1988 and deposit the amount in the account within the list of authorised branches of the banks specified to receive deposits and maintain accounts-GSR 725(E), dated 22-6-1988, however, the assessee failed to do so during the relevant period i.e. during the intervening period from the date of sale of first house and the date of completion of the new house at Rajasthan, hence appeal of the assessee was dismissed by lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plot , and ₹ 17.86 lacs as per chart upto 02-05-2009 towards construction of new residential house at Rajasthan and the amount spent towards construction of new residential house till the date of filing of return on 18.11.2008 should be allowed and the assessee is entitled for the exemption u/s 54 of the Act. 7. The ld. D.R. fairly conceded that the order of the Hon ble Bombay High Court in the case of Humayun Suleman Merchant (supra) is binding on the Revenue and exemption u/s 54 of the Act will be allowed for the amount spent on construction of new house at Rajasthan till the date of filing of return of income by the assessee on 18.11.2008 which is within time limit prescribed u/s 139 of the Act. It was submitted that the matter may be restored to the file of the AO for computing the amount of exemption u/s 54 of the Act in accordance with law and in accordance with aforesaid judgment of Hon ble Bombay High Court in the case of Humayun Suleman Merchant (supra), as the assessee did not submitted any evidence of construction of new residential house before the AO and also learned CIT(A) rejected the claim of the assessee at threshold on the grounds that the sale procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the AO for making necessary verification as to the amount of exemption which the assessee is entitled for exemption u/s 54 of the Act in accordance with the ratio of decision laid down by the Hon ble Bombay High Court in the case of Humayun Suleman Merchant (supra) and in accordance with law, by the AO after verification of the evidences . Needless to say the A.O. shall provide proper and sufficient opportunity of being heard to the assessee in accordance with the principles of natural justice in accordance with law. The assessee is also directed to produce necessary evidences and explanations before the A.O. in its defense which shall be admitted by the A.O. for examination and verification of the assessee s contentions with respect to the purchase/construction of the new residential house at Rajasthan on merits that the amount have been genuinely and bonafidely spent for the construction of the new residential flat at Rajasthan. We order accordingly. 9. In the result, the appeal filed by the assessee in ITA No. 226/Mum/2012 for the assessment year 2008-09 is allowed for statistical purposes. Order pronounced in the open court on 8th December, 2016. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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