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TMI Blog2019 (9) TMI 1138X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd, the amount is not shown as loan to the assessee. The words in Section 2(22)(e) of the Act clearly states any advance or loan given to a person . In this case, there is no loan or advance given from the company to the assessee. When no loan or advance has been given to the assessee, then Section 2(22)(e) of the Act is not triggered. We, therefore, set aside the order of the Ld. CIT(Appeals) and direct the Assessing Officer to delete the addition on account of deemed dividend u/s.2(22)(e) of the Act. The Assessing Officer is directed to provide appeal effect accordingly. Thus, ground No.3 raised in appeal by the assessee is allowed. Addition on the basis of ITS data - HELD THAT:- In view of the submissions made by the parties herein, we set aside the order of the CIT(Appeals) on this issue and restore the matter to the file of Assessing Officer for necessary verification and adjudication wherein the assessee is directed to file the reconciled details. AO is directed to adjudicate the issue after considering the reconciled details in compliance with the principles of natural justice. Thus, ground No.4 raised in appeal by the assessee is allowed for statistical purposes. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into unregistered agreement with the above two entities. He has further stated that the assessee is an interested party in both the above concerns. The assessee has further not received the possession of the flat within the specified time limit. The Assessing Officer has stated that the assessee has failed to comply with the provisions of section 54F of the Act and hence, the exemption claimed is not justified. Accordingly, the claim of exemption has been denied by the Assessing Officer. 5. The Ld. CIT(A) has confirmed the disallowance made by the Assessing Officer. The Ld. CIT(A) has discussed this issue in Paras 4.4 and 4.5 of the order. The Ld. CIT(A) reiterated the fact that the assessee has entered into unregistered agreements with both the entities wherein the assessee has substantial interest. It is further stated that no physical possession of the flat has been received by the assessee. Accordingly, the claim of the assessee has been rejected by the Ld. CIT(A). Therefore, the contentions of the Revenue for denying the exemption claimed u/s.54F of the Act is because of the following reasons: i. The Agreements entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been refunded back to the assessee. 6.1 The Ld. AR of the assessee further submitted that the project is genuine one since apart from the assessee there are other people who have paid advance to the developer in respect of their booking of flat and thus, it is clear that the transactions are genuine. The Ld. AR further submitted that Courts have taken a view, what is important is the utilization of money realized from sale of capital asset that utilization process should commence and if it is bona-fide utilization then just because physical possession was not given to the assessee, should not be a ground for denial of exemption u/s.54F of the Act. For this proposition, the Ld. AR of the assessee relied on the decision of the Mumbai Bench of the Tribunal in ITA No.3782/Mum/2014 in the case of Mr. Sanjay Sharma Vs. the Assistant Commissioner of Income Tax 26(1) and in that decision, the Mumbai Bench of the Tribunal had a occasion to consider the issue and followed the findings of the Hon ble Karnataka High Court in the case of CIT Vs. Smt. B.S. Shanthakumar (2015) 233 taxman 347 (Karnataka) wherein it has been held that the words used in the sectioned are pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in ITA No.1026/Mum/2017 for the assessment year 2011-12, in this case, there was no agreement entered into even by the assessee, however, he had paid 85% of the total cost of the said flat which he was purchasing from builder/developer. The Mumbai Bench of the Tribunal in this case has observed that the only objection from the point of view of the Revenue is that the agreement was not registered and therefore, is not genuine document. However, in plethora of decisions, the Tribunal has noted the bona-fide nature of the assessee and the genuineness of the transactions and particularly in that case where more than 85% was already paid regarding cost of acquiring new property, the benefit of exemption u/s.54F was granted to the assessee. 6.3 The Ld. AR of the assessee further submitted that if in a case, total capital gain is not utilized for the purchase of new property or construction of a new property as enshrined u/s.54F of the Act, in such scenario, the requirement placed u/s.54F(4) of the Act states that the remaining amount should be deposited in the capital gain deposit scheme. The language enacted by the legislature in section 54F(4) is absolutely similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no question of the assessee establishing the title over the property which was not approved for construction at the material time. 8. We have perused the case records and heard the rival contentions. We have also given considerable thought to the judicial pronouncements placed on record. Here is a case, where the assessee had entered into an agreement with a developer for purchasing of new residential flat from a project undertaken by the said developer and had paid ₹ 22.10 Crores as advance amount on account of purchase of the new flat. The agreement is not registered and neither the possession of the flat has been given to the assessee. It is also the ground of the Revenue that since the assessee is associated party with M/s. Kumar Builders, therefore, it is not genuine transaction and somehow, money had come back to the assessee. The assessee had filed an affidavit sealed and signed by notary wherein he solemnly affirms and states that he had booked a 21st floor and terrace above in the project Kumar Heights [now known as KUL Couture, Worli, Mumbai. The total consideration which was agreed for purchase of the said flat was ₹ 23,65,60,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the benefit of exemption u/s.54F of the Act should be given to the assessee. The intent of the legislature in order to incorporate Section 54F of the Act is to promote housing Project and development activities. That once a person sells some assets and acquires capital gain that money should be utilized for procuring some new assets as per requirements of the statutes. The assessee should have parted with that money or substantial amount of it in order for procuring new residential house. What essentially is looked into in this regard is bona-fide nature of the assessee and the genuineness of the transactions. 9.1. In the instant case, the facts are undisputed that the assessee had paid ₹ 22.10 Crore to M/s. Kumar Builders and that money is still lying with the said developer as sworn in by the affidavit filed in record by the assessee and that once the project is completed, the assessee will go ahead and procure the new residential house by paying the balance amount. 10. The Ld. DR neither controverted these facts nor could bring any evidence on record to show that whatever money was paid by the assessee that again came back to him. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mework of welfare legislation. The object of each provision is ultimately for the development of the society as well as for the individual and also at the same time taking care of the interest of tax payers. The interpretation, therefore, in the case of Income Tax Act in reference to a particular ratio or decision has to be interpreted in holistic manner and not separately. We have also perused the language inserted in Section 54F r.w.s. 54G(2) of the Act. The Hon ble Supreme Court of India in the case of Fibre Boards (P.) Ltd. Vs. Commissioner of Income Tax, Banglore (supra.) has held that so long as the amount is utilized before the due date of filing return of income, the claim of exemption u/s.54G of the Act cannot be denied. That even with regard to Section 54F of the Act, the decisions referred herein above in this order in the preceding paragraphs, the Courts are not making it mandatory (i) whether certain agreement is registered or not; (ii) whether possession has been given or not. If it is established that the transactions are genuine, the Judiciary has provided benefit of exemption u/s.54F of the Act to the assessee. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act on account of deemed dividend. He has discussed this issue in para 6 of his order. The Assessing Officer has stated that the prop. concern of the assessee mainly Kumar Builder had received a loan from Kumar Urban Development Ltd. of ₹ 3,54,94,895/-. The Assessing Officer stated that assessee is having substantial interest in both the concerns and therefore, the provisions of deemed dividend are applicable. 17. The learned CIT(Appeals) has confirmed the action of the Assessing Officer. 18. The Ld. AR of the assessee submitted that the prop. concern of the assessee had already advanced an amount more than ₹ 5 Crs. to Mis. Kumar Builders a partnership firm in which Kumar Urban Development Ltd. is a partner. Advance tax was required to be paid of Shri Lalit Jain, the assessee herein. Since Shri Lalit Jain who is prop. concern had already advanced money to the partnership firm, it was directed to pay advance tax by adjusting against the amount already lent. The partnership firm in turn requested its partner Kumar Urban Development to pay the amount. In the books of the firm and Kumar Urban Development Ltd. these transactions are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details before the Assessing Officer and place their case on merits and for this purpose, the matter may be remitted to the file of Assessing Officer for necessary verification and adjudication. 24. The Ld. DR fairly conceded to the prayer of the Ld. AR of the assessee. 25. We have perused the case records and heard the rival contentions. In view of the submissions made by the parties herein, we set aside the order of the Ld. CIT(Appeals) on this issue and restore the matter to the file of Assessing Officer for necessary verification and adjudication wherein the assessee is directed to file the reconciled details. The Assessing Officer is directed to adjudicate the issue after considering the reconciled details in compliance with the principles of natural justice. Thus, ground No.4 raised in appeal by the assessee is allowed for statistical purposes. 26. In the result, appeal of the assessee in ITA No.1345/PUN/2017 is partly allowed for statistical purposes. ITA No.1346 1347/PUN/2017 A.Y.2012-13 27. Both the parties herein are unanimous in stating that the ground No.1 raised in these appeals a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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