9911796707
TMI Blog2019 (11) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... being assessed separately with different PAN numbers. The petitioner had entered into a Development Agreement on 15.04.2013 with Sumanth & Co for the development of the above property. As per the Development Agreement, the petitioner would release 3/4th share in the ownership of the property on completion of its development in favour of the Developer or its nominees. The overall consideration for the release of 3/4th share of the property was fixed at Rs. 1600 lakhs by cash and constructed area of 3850 Sq.ft. was valued at Rs. 125 lakhs. As the owner of only 1/4th share in the property, the share of the petitioner HUF comes to Rs. 431.25 lakhs. Accordingly, the petitioner HUF filed return for the assessment year 2014-15 after computing the capital gains for the 1/4th share i.e. cash consideration of Rs. 400 lakhs and construction cost of Rs. 31.25 lakhs only. The petitioner HUF deposited the amount of Rs. 37.50 lakhs within the prescribed time in Capital gains Deposit Scheme with the State Bank of India and submitted a proof thereafter along with the income tax return. The income tax return filed by the petitioner was accepted under Section 143(1) of the said Act vide communicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section 54 on the additional cost of construction so claimed. It is well settled that a beneficiary to avail the benefit of a beneficial provision, the conditions prescribed therein is to be strictly followed. There cannot be any deviation or justification whatsoever, which can supersede non compliance of Section 54(2). In this connection, the decision of the Apex Court reported in 2018 SCC online SC 747, Commissioner of Customs v. Dilip Kumar and Company, is relied on. 4. A reply affidavit is filed by the writ petitioner, wherein it is stated as follows: The order impugned in this writ petition was passed totally contra to the view expressed by the Hon'ble Division Bench of Karnataka High Court in the case of The Commissioner of Income Tax and Others vs. K.Ramachandra Rao dated 14.07.2014 and various Income Tax Appellate Tribunals across India uniformly accepting the above decision of the Karnataka High Court. The petitioner complied with the mandatory conditions prescribed under Section 54(1) of the said Act by incurring the expenditure on acquiring the new residential property within the prescribed time limit of three years and submitted the relevant accounts for scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2014 is relied on. The petitioner in fact deposited the said amount in bank account and invested the same for the construction of the petitioner's building. Therefore the said amount is not deviated to any other purpose. In respect of the very same issue insofar as the individual is concerned, the Tribunal considered the same and remitted the matter back to the Assessing Officer to redo the assessment. Therefore the Revenue cannot take a different stand in the case of HUF in respect of the same issue. 6. Per contra, the learned Senior Standing Counsel for the respondents submitted as follows: In the case of the individual, where the matter was remitted to the Assessing Officer, the Tribunal has not considered the requirement of compliance of the condition stipulated under Section 54(2). Therefore, the said decision cannot be taken advantage by the petitioner. On the other hand, the decision to be made in this writ petition will have a bearing on the individual's case. The petitioner has not satisfied the mandatory requirement of Section 54(2), since the petitioner has not deposited the disputed amount under the Capital Gain Account. The impugned order has been rightly passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction is sought under Section 54 and rejected by Revenue, it appears that some confusion prevails between the pleadings made before the first respondent and before this Court. While the first respondent proceeded to decide the matter as if the HUF claims deduction towards the additional cost of construction of Rs. 1,02,13,527/-, the petitioner before this Court projects the case as if the deduction sought for is only in respect of a sum of Rs. 57.25 lakhs. Whatever the quantum may be, since the denial of deduction was made solely on the reason that the said disputed quantum was not deposited into capital gain account, this Court is inclined to proceed further and decide the matter, since the quantum in dispute will not have any impact or relevance in answering the issue involved in this matter. 10. Therefore, the point for consideration in this writ petition is as to whether the petitioner is entitled for benefit of deduction under Section 54 in respect of the disputed sum, even though the said sum was not deposited in the capital gain account as required under Section 54(2). 11. Section 54 of the Income Tax Act, 1961, deals with profit on sale of property used for reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with any scheme which the Central Government may, by notification frame in that behalf. In other words, if the assessee has not utilised the amount of the capital gain either in full or part, such unutilised amount should be deposited in a capital gain account to get the benefit of deduction in the succeeding assessment years. 13. In this case, the only objection raised by the Revenue is that the disputed sum has not been deposited in the capital gain account. At the same time, it is not in dispute that the petitioner/assessee has deposited Rs. 1.50 crores in the capital gain deposit account and the deduction was granted to the said sum under Section 54. The dispute is only with regard to the balance sum spent on additional construction cost, which according to the Revenue, is not entitled for deduction under Section 54, since it was not deposited in capital gain account as required under Section 54(2). 14. In my considered view, the contention of the Revenue to deny the benefit of deduction to the petitioner/assessee cannot be justified for the following reasons: Section 54(2) cannot be read in isolation and on the other hand, application of Section 54(2) should take place on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the additional construction within the period of three years from the date of the transfer and therefore, if such contention is factually correct, it is to be held that the assessee has satisfied the mandatory requirement under Section 54(1) to get deduction. Therefore, I find that the above decision relied on by the Revenue is not helping the case of the respondents under the facts and circumstances of the present case. 17. The claim of the assessee for deduction of the disputed sum towards the additional construction cost was rejected only on the ground that the said sum was not deposited in the capital gain account. In view of my findings rendered supra, the Revenue is not justified in making such objection. On the other hand, it has to verify as to whether the said sum was utilised by the petitioner within the time stipulated under Section 54(1) for the purpose of construction. If it is found that such utilisation was made within such time, the Revenue is bound to grant deduction. Therefore, this Court is of the view that the matter needs to go back to the first respondent for considering the issue as to whether the disputed amount, claimed by the assessee as deduction, has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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