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TMI Blog2018 (10) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act. 3. Briefly stated the facts of the case are that during the year the assessee has sold his 50% share in house property in New Delhi. The house property was sold for a consideration of Rs. 2.01 crores and half share of assessee works out of Rs. 1.05 crores. The assessee disclosed his share of long term capital gain at Rs. 5915345/- out of which exemption of Rs. 5334447/- has been claimed u/s 54 of the Act. The assessee purchased booking of flat in a project developed by Vardhman Infrahome Private Limited. The details of payment are as under :- Date Cheque No. Amount 29.10.2012 RTGS 25,13,122.00 23.02.2013 343101 4,23,760.96 18.03.2013 931125 2,17,582.00 27.04.2013 343104 2,17,580.00 27.05.2013 343105 2,17, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential house, therefore, the claim of exemption cannot be denied as per CBDT Circular No.471 dated 15.10.1986 and 672 dated 16.12.1993. Per contra the DR strongly supported the findings of the CIT(A). The undisputed fact is that the assessee has made substantial investment towards the purchase of new residential house. The Assessing Officer himself has given exemption to the extent of Rs. 38.49 lacs as against the claim of Rs. 53.34 lacs. A similar issue arose before the coordinate bench in the case of Seema Sabharwal in ITA No.272/Chd/2017 relevant findings read as under :- "8. We have heard the rival contentions. Before deliberating further on this issue we would like to reproduce the relevant provisions of section 54 of the Act her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of. the new asset any capital gain arising from its transfer within a period of three years of its -purchase or construction, as. the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the ' assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee, after sale of his residential property, has within a period of one year before or two years after the date of such transfer or within a period of three years, constructs a residential house, the capital gains will not be charged to tax upto the extent of the amount spent on the purchase or construction of residential house. Sub Section (1) of section 54 of the Act is a substantive provision enacted with the purpose of promoting purchase / construction of residential houses. However, sub section of section 54 is an enabling provision which provides that the assessee should deposit the amount earned from capital gains in a scheme framed in this respect by the Central Government till the amount is invested for the purchase / co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting a proof of such deposit, hence, sub section (2) is an enabling provision which governs the Act of the assessee, who intends to claim the benefit of the exemption 'provisions of section 54. S-he real purpose of the enabling provision is the compliance of the substantial provision of sub section (1) to section 54 of the Act. Sub section (2), in fact, regulates the procedure for the substantive rights of the exemption provisions u/s 54 of the Act. This enabling section, in our view, cannot abridge or modify the substantive rights given vide sub section (1) of section 54- of the Act, otherwise, the real purpose of substantive provision i.e. sub section (1) will got defeated. The primary goal of exemption provisions of section 54 is to prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 139(1) of the IT Act?" 10. The said question has been answered by the Hon'ble High Court in the following words:- "As is clear from Sub Section (4) in the event of the assessee not investing the capital gains either in purchasing the residential house or in constructing a residential house within the period stipulated in Section 54 F(i), if the assessee wants the benefit of Section 54 F, then he should deposit the said capital gains in an account which is duly notified by the Central Government. In other words if he want of claim exemption from payment of income tax by retaining the cash, then the said amount is to be invested in the said account. If the intention is not to retain cash but to invest in construction or any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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