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TMI Blog2018 (6) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. - ITA No. 480/JP/2017 - - - Dated:- 11-6-2018 - SHRI VIJAY PAL RAO, JM AND SHRI BHAGCHAND, AM For The Assessee : Shri Rajeev Sagoni (C.A.) For The Revenue : Smt. Seema Meena (JCIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 11.04.2017 of CIT (A), Jaipur for the assessment year 2013-14. The assessee has raised the following grounds:- 1. (a) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the ld. AO in making addition of ₹ 13,49,532 as Long Term Capital Gain. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 13,49,532. ( b) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO in invoking the provisions of section 50C of the Income Tax Act, 1961 and adopting the sale consideration at ₹ 2,03,49,532 against the declared sale consideration of ₹ 1,90,00,000. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO in not applying the DLC rate of land as on the date of Agreement to Sale.. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by applying the DLC rate of land as on the date of Agreement to Sale. ( d) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO in not treating the proposed amendment in Budget 2016 in section 50C of the Income Tax Act, 1961, as retrospective. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by treating the said amendment as retrospective. ( e) In the facts and circumstances of the case and in law the Id. CIT(A) has erred in confirming the action of the Id. AO in extending the scope of section 50C of the Income Tax Act, 1961, on the investments required under section 54B and 54F of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be adopted in terms of Section 50C of the IT Act. Further, merely because the agreement to sell is not registered the existence of same cannot be denied with the part consideration received by the assessee. The ld. AR has further contended that there was enhancement of DLC rates at the time of the sale deed dated 05.06.2012 which was withdrawn by the authority subsequently and therefore, the DLC rates at the time of first sale deed on 20.03.2012 and 19.12.2012 were not in dispute. Thus, only for a short period of time the DLC rates were enhanced which were subsequently withdrawn. The DVO determined the fair market value of the land by considering the enhanced the DLC rates. He has referred to the notification on this issued whereby the DLC rates of the land in question were enhanced only for a short period of time. The ld. AR has further submitted that the entire sale consideration received by the assessee was invested for purchase agricultural land as well as new house property and therefore, the assessee is eligible for full benefit claim U/ss 54B and 54F of the IT Act without any tax liability on the capital gain computed as per the provisions of Section 50C of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 - Half (1/2) (Land A) G2 05.06.2012 2013-14 3,75,00,000 5,83,46,400 5,76,13,300 One fourth(1/4) Land B) G1 16.12.2012 2013-14 1,90,00,000 2,03,49,532 2,80,81,700 The first controversy is regarding the DLC valuation/stamp duty valuation as per sale deed as against the claim of the assessee that the stamp duty valuation shall be adopted as on the date of agreement to sell. Further, the assessee has also raised an objection against the fair market value adopted by the DVO based on the DLC rates which were enhanced during the short period vide notification dated 08.05.2012 and were subsequently withdrawn vide notification dated 12.07.2012. Thus, it is clear that the enhanced DLC rates were existence only for a short period of 2 months while the sale deed dated 05.06.2012 was executed. We find merits and substance in the contention of the ld. AR that while determining the fair market value of the land in question the DVO ought to have taken into considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possibila (law does not compel a man to do that which he cannot possibly perform) and impossibilum nulla oblignto est (law does not expect a party to do the impossible) are well known maxims in law and would squarely apply to the present case. The statute viz. Section 54EC of the Act provides for exemption from tax to long term capital gain provided the same is invested in bonds of Rural Electrification Corporation Limited or National Highway Authority of India. However, as the bonds were not available, it was impossible for the respondentassessee to invest in them within six months of the sale of their factory building. Therefore, in the circumstance one would have to interpret Section 54EC of the Act to ensure that it does not lead to injustice. The Apex Court in the matter of Directorate of Enforcement v. Deepak Mahajan [1994] 3 SCC 440 observed as under: Though the function of the Court is only to expound the law and not legislate, none the less the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law. In such circumstances, it is the duty of the Court to mould or creatively interpret the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) the assessee, - ( i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or ( ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or ( iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and ( b) the income from such residential house, other than the one residential house owned on the date, of transfer of the original asset, is chargeable under the head Income from house property . Explanation. - For the purposes of this section - ** ** ** net consideration , in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. ( 2) Where the assessee purchases, within the period of [two years] after the date of the transfer of the original asset, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he new asset: Provided that 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 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 utilised 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 to withdraw the unutilised amount in accordance with the scheme aforesaid.' 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al construction or to purchase a residential house. It is not the requirement of law that he should purchase a residential site and then putup construction. Therefore, in the instant case admittedly the assessee has purchased a vacant site pri-31.3.2001. He sold the original asset on 27.8.2003 on which date he was already owning 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 therefrom 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. 4.1 Re.Question No.2 : As is clear from Sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose as it was considered by the stamp duty authority while revising the value of the said property for the purpose of stamp duty. The Hyderabad Benches of the Tribunal in case of N Revathi Vs. ITO 45 tamann.com 30 as relied upon by the ld. AR of the assessee has considered this issue in para 10 as under:- 10. We have heard the submissions of the parties and perused materials on record as well as orders of the revenue authorities. The sole issue before us is whether the building in question constructed by the assessee on which exemption u/s 54F of the Act has been claimed is a residential building as claimed by the assessee or a building constructed for commercial use. As can be seen from the assessment order the Assessing Officer has come to a conclusion that the building is not a residential building basically for the reason that the building is used for a school. However, only because the building is used as a school cannot change the nature and character of the building from residential to commercial. Even a residential building can be used as a school or for any other commercial purpose but the relevant factor to judge is whether the construction made is for resident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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