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TMI Blog2017 (4) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... As per agreement dated 17-01-2011 , the assessee was required to issue the cheques in favour of ‘Windsor Park Collection account’. All other cheque were issued by the assessee in favour of ‘Windsor Park Collection account’ except this cheque which was stated to be returned by builder after one month due to technical reasons. Contention of the assessee of having paid defective cheque of ₹ 40,45,975/- to the builder namely ‘Kumar Builder’ which was not encashed by the said builder due to technical defects in cheque does not inspire confidence and cannot be accepted to the extent of granting exemption u/s 54F of 1961 Act due to reasons cited above. Thus, based on our above detailed discussions and reasoning and keeping in view factual matrix of the case, the assessee will be entitled to benefit u/s 54F of 1961 Act of the amount which was invested by the assessee in acquiring the aforesaid new under construction residential property till the date of filing of return of income on 18-08-2011 for which the AO is directed to grant exemption u/s 54F of 1961 Act after verification of records Decided against the assessee. - I. T. A. No. 5420 /Mum/ 2016 - - - Dated:- 30-3-2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessee had paid total sum of ₹ 50,34,991/- in addition to stamp duty and registration charges of ₹ 2,21,260/-. The assessee submitted that as per section 54F of the Act, the sale proceeds can be invested in an under construction house property within a period of three years and hence the assessee was entitled for full deduction of ₹ 92.66 lakhs. The A.O. did not accepted contentions of the assessee. The A.O. observed that the assessee has got transfer of lease in perpetuity for a period of 999 years for plot No. 119 admeasuring 562 sq. mtrs equivalent to 6049.4 sq.ft., bearing survey No. 31 situated at Village Bhose, Mahabaleshwar in Satara District which was registered on 17th January, 2011 for a total consideration of ₹ 89,91,055/- and in addition to this the assessee had incurred registration charges and stamp duty of ₹ 2,21,260/- and , thus the total cost of the asset was ₹ 92,12,315/-. The AO observed that the assessee had claimed exemption u/s 54F of 1961 Act of ₹ 91.86,156/-. The A.O. observed that the assessee has not invested net consideration received on sale of shares for purchasing new under-construction residential prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-2016. However, ld. CIT(A) observed that assessee is entitled to a exemption of ₹ 52,47,251/- u/s 54F of 1961 Act which was invested by the assessee in new residential house property before 31-07-2011 which was the due date of filing of return of income u/s 139(1) of 1961 Act as the assessee did not deposited the balance un-utilized portion of net sale consideration on sale of shares of Bombino Video Private Limited on which long term capital gain arose with the capital gain account with bank or as specified by Central Government. Thus, the learned CIT(A) held that unutilized portion of sale consideration on sale of shares is ₹ 41,27,149/- (Rs 93,74,400 - ₹ 52,47,251) and the assessee is not entitled for an exemption u/s 54F of 1961 Act on unutilized portion of net sale consideration of ₹ 41,27,149/- while the AO had denied exemption of ₹ 42,08,060 u/s 54F of 1961 Act, vide appellate order dated 09-06-2016 passed by learned CIT(A). 6, Aggrieved by appellate order dated 09.06.2016 passed by ld. CIT(A), the assessee filed appeal before tribunal. 7. The ld. Counsel for the assessee submitted before tribunal that assessee has earned long term capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also that the assessee having not complied with provisions of Section 54F(4) of 1961 Act as the unutilized net sale consideration on sale of shares was not deposited with capital gain account maintained with bank or as specified by Central Government before the due date of filing of return of income u/s 139(1) of 1961 Act which happened to be 31-07-2011. It was argued that section 54F of 1961 Act is a beneficial provision and the assessee cannot be denied exemption u/s 54F of the Act as the assessee had complied with provisions of Section 54F(1) of 1961 Act by investing ₹ 92,93,226 within three year in an under construction new residential property while there was non compliance of provisions of Section 54F(4) of 1961 Act as the assessee did not deposited the balance un-utilized portion of net consideration in capital gain account maintained with bank or as specified by Central Government. It was submitted that assessee did invested net sale consideration to the tune of ₹ 92,93,226/- towards under construction new residential property within 3 years from transfer of shares on 15-03-2011 thus complying with provisions of Section 54F(1) of 1961 Act, which exemption shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing sector will be defeated. The ld. Counsel for the assessee also relied upon the decision of Hon ble Supreme Court in the case of Sanjeev Lal and Smt. Shail Moti Lal v. CIT [2014] 365 ITR 389 (SC), and decision of Hon ble Supreme Court in the case of Oxford University Press v. CIT (2001) 247 ITR 658(SC) , decision of Hon ble Karnataka High Court in the case of CIT v. Sambandam Udaykumar reported in (2012) 345 ITR 389 (Kar. HC) , decision of ITAT, Chennai in the case of Smt. V A Tharabai v. DCIT reported in (2012) 149 TTJ (Chennai) (UO) 41, decision of Hon ble Delhi High Court in the case of CIT v. Suresh Nanda (2015) 375 ITR 172(Del HC) and also decision of ITAT, Chennai Bench in the case of ACIT v. Umayal Annamalai (2016) 46 CCH 0524 (Chennai Trib.) and submitted that full benefit should be granted to the assessee to the extent of amount invested in new under construction residential property within three years from the date of transfer of shares, as section 54F of 1961 Act being beneficial provision the same should be liberally construed. It was submitted that period for making investment should be so construed to include period allowed by 1961 Act for filing belated return as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ini (Mahabaleshwar) by way of transfer of lease in perpetuity for 999 years on plot No. 119 admeasuring 562 sq. mtrs equivalent to 6049.4 sq.ft. bearing survey No. 31 situated at Village Bhose, Mahabaleshwar in Satara District which was registered on 17th January, 2011 in favour of assessee for a total consideration of ₹ 92,93,226/- ( inclusive of stamp duty, registration charges and VAT ) (pb/1- 38).. The assessee had paid ₹ 52,47,251/- towards acquisition of aforesaid new residential house before the due date of filing of return of income u/s 139(1) of 1961 Act on 31-07-2011. The assessee did not deposit the balance net consideration on sale of shares of ₹ 41,27,145/- with capital gain account maintained with bank as stipulated u/s 54F(4) of 1961 Act, before 31-07-2011 i.e. due date of filing of return of income u/s 139(1) of 1961 Act. The CIT(A) allowed benefit of Section 54F of 1961 Act of the amount which was actually paid towards acquisition of the new residential house property of ₹ 52,47,251/- which was paid before the due date of filing of return of income u/s 139(1) of 1961 Act i.e. 31-07-2011 and the benefit u/s 54F of 1961 Act towards rest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated by Section 54F(4) of 1961 Act before the due date of filing of return of income as stipulated u/s 139(1) of the Act is an essential requirement to avail exemption u/s 54F of 1961 Act or else the amount is invested in new residential property before the date of furnishing of return of income u/s 139 of 1961 Act . The assessee while claiming benefit under exemption provision has to prove its entitlement strictly in accordance with the provision of statute granting exemption and once the assessee proves its entitlement to exemption in accordance with provision of statute, then the said provision is to be liberally construed to give full effect to provision granting exemption to achieve the desired object of granting exemption. The assessee in the instant case did not deposited the entire net consideration received on transfer of original asset on which long term capital gain arose either in new residential property nor deposited the unutilized portion of net consideration on transfer of original asset with capital gain account with bank or as stipulated by Central Government. Section 54F of 1961 Act as was in force during relevant period is reproduced hereunder: [Capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the period of [two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue arose before Hon ble Bombay High Court and decision of jurisdictional High Court is binding on us , wherein Hon ble Court has discussed the issue of Section 54F(4) and 54F(1) of 1961 Act in details and held that the benefit of Section 54F of 1961 Act will be available for the amount invested in acquiring new residential house property till the date of actual filing of return of income even though belatedly filed within period stipulated u/s 139(4) of 1961 Act, in case the assessee did not comply with deposit of unutilized net consideration with capital gain account with bank as stipulated u/s 54F(4) of 1961.The Hon ble Bombay High Court also held that Section 54F(1) of 1961 Act is subject to Section 54F(4) of 1961 Act after amendment brought in by Finance Act, 1987 w.e.f. 01-04-1988 and it is essential for the tax-payer to comply with provisions of Section 54F(4) of 1961 Act. The decision of Hon ble Bombay High Court in Humayun Suleman Merchant(supra) is reproduced hereunder: (d) For a proper appreciation of the rival submissions, it is necessary to reproduce the relevant portion of Section 54F of the Act which arises for our consideration : 54F(1)[Subject to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be accompanied by proof of such deposit; and for the purposes of sub-Section (1), the amount, if any, already utilized 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 utilized wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then - (i) the amount by which - (a) the amount of capital gain arising from the transfer of the original asset not charged under Section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-Section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilized by the assessee for the purchase or construction of the new asset within the period specified in sub-Section (1) been the cost of the new asset, shall be charged under Section 45 as 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 where a residential house is constructed within 3 years from the date of sale of the capital asset, is now subject to the provisions of Section 54F(4) of the Act. Thus, where the consideration received on sale of capital asset is not appropriated (where purchase was earlier than sale) or utilized (where purchase is after the sale) then the same would be subject to the charge of capital gain tax, unless the unutilized amounts are deposited in specified bank account as notified in terms of Section 54F(4) of the Act. The exemption would be available to the unutilized amounts only if the mandate of sub-section (4) of Section 54F of the Act is complied with. Further the proviso to sub-section (4) of Section 54F of the Act, safeguards the Revenue where the assessee had not invested the amounts chargeable to Capital Gains within the time prescribed under sub-section (1) of Section 54F of the Act. This by providing that in such cases, Capital Gain under Section 45 of the Act would be charged on the unutilized amount as Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial amount in a Society for construction of a residential flat in the building to be constructed. The assessee therein had paid substantial amounts to the society and also acquired domain over the flat within a period of 2 years from the date of the sale of her house. At that point of time i.e. for the Assessment Year 1973-74 there was no requirement of depositing any unutilized amount in a specified bank account as now provided under Section 54(2) of the Act (similar to Section 54F(4) of the Act). Therefore the Court had no occasion to consider the provisions of Section 54(2) of the Act which is similar to Section 54F(4) of the Act, with which we are concerned. (l) Mr. Chatterji, then placed reliance on the observation of this Court in Mrs. Hilla J.B. Wadia's case (supra) that the Circular issued by the Central Board of Direct Taxes dated 15th October, 1986 in relation to construction of a home by Delhi Development Authority should also be extended to cities like Mumbai, as there is no control over the time taken by the developer/builder to construct the house and give possession of the same to the assessee. The Central Board of Direct Taxes Circular dated 15th Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to allotment letter in instalments would not in any manner affect the assessee having satisfied Section 54F(1) of the Act. This submission ignores the fact that Sub-Section (1) of Section 54F has been made subject to Sub-Section (4) of the Act. The requirement under Section 54F(4) of the Act is the deposit of the unutilized amount in the specified bank account till it is utilized. This requirement has not been done away with in either of the above two Circulars dated 15th October, 1986 and 16th December, 1993 relied upon by the Appellant-Assessee. (o) Mr. Chatterji, learned Senior Counsel next submitted that in any case the issue now stands concluded in favour of the Appellant by the decision of the Karnataka High Court in K. Ramachandra Rao's case (supra) wherein an identical question came up for consideration and it was held that even where the assessee had not deposited the unutilized Capital Gain in an account which was duly notified by the Central Government in terms of Section 54F(4) of the Act, the benefit of Section 54F(1) of the Act would still be available. The Court held that if the intention was not to retain the capital gains but was to invest it in constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;; and Twisden J agreed : 'precedents sub-silentio and without argument are of no moment'. This rule has ever since been followed. (q) In fact this Court in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 (Bom.) has observed that a decision of one High Court is not binding as a precedent on another High Court unlike a decision of the Apex Court. In support, reliance was placed in the above order upon the decision of the Apex court in Valliamma Champaka Pillai v. Sivathanu Pillai AIR 1979 SC 1937 to hold that it is well settled that decision of one High Court is not a binding precedent upon another High Court and at best can only have persuasive value. However, at the cost of repetition we must emphasize that the decision of another High court rendered in the context of an all India Act would have persuasive value and normally to maintain uniformity and certainty we would adopt the view of the other High Court. However, with the greatest respect, we find that the decision of Karnataka High Court in K. Ramachandra Rao's case (supra) has been rendered sub-silentio. Therefore, we cannot place any reliance upon it to conclude the issue on the basis of that de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the Legislature . . . (Emphasis Supplied) Similarly this Court in Thana Electricity Supply Ltd's case (supra) had observed as under :- If the provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted. This is a well-accepted view of law. It is the satisfaction of the court interpreting the law that the language of the taxing statute is ambiguous or reasonably capable of more meanings than one, which is material. If the court does not think so, the fact that two different views have been advanced by the parties and argued forcefully or that one such view which is favourable to the assessee has been accepted by some Tribunal or High Court, by itself will not be sufficient to attract the principle of beneficial interpretation In the present facts the provision of Section 54F(4) of the Act are very clear. There is no ambiguity. Thus, there is no occasion to apply liberal/beneficial construction while interpreting the Section as contended by the Appellant. (t) It was next contended by Mr. Chatterji, learned Senior Counsel for the appellant that the word a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above case was concerned with the interpretation of Section 54 of the Act. It construed the provision of sub-Section (2) of Section 54 of the Act which is identically worded to sub-section (4) of Section 54F of the Act The Court in the aforesaid decision held that the requirement of depositing before the date of furnishing of return of Income under Section 139 of the Act has not to be restricted only to the date specified in Section 139(1) of the Act but would include all sub-section of Section 139 including sub-section (4) of the Act. On the above basis it concluded that if the amount is utilized before the last date of filing of the return under Section 139 of the Act then the provision of Section 54(2) of the Act would not hit the assessee before it. It is not very clear in the above case whether the amounts were utilized before the assessee filed its return of income or not. (w) However, the factual situation arising in the present case is different. The return of income is admittedly filed on 4th November, 1996. In terms of Section 54F(4) of the Act as interpreted by the Gauhati High Court in Rajesh Kumar Jalan's case (supra) the amounts subject to capital gain o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count . All other cheque were issued by the assessee in favour of Windsor Park Collection account except this cheque which was stated to be returned by builder after one month due to technical reasons. The afore-said contentions of the assessee cannot be accepted due to following reasons : 1. The assessee could not explain why she issued this cheque of ₹ 40,45,975/- dated 12-08-2011 favouring Kumar Builders while all other cheques were issued in favour of Windsor Park Collection account , and more-so Windsor Park Collection account was the correct payee for issuance of cheque instead of Kumar Builders as per agreement dated 17-01-2011. 2. The assessee did not brought on record that the assessee bank was sufficiently funded during the period 12-08-2011 till it was returned a month later by Kumar builder . It was incumbent on the assessee to have brought on record the said evidence to prove its bonafide and no such evidence is brought on record. 3. The assessee did not produce receipt from Kumar Builders as to having received the cheque from assessee on 12-08-2011 carrying so called technical defects. 4. The assessee did not brought on record evidence as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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