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TMI Blog2020 (1) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... of flat by the assessee. In accordance with the said agreement, the assessee was to make payment in installments and the builder was to construct an unfinished bare shell flat for finishing by the buyers. The possession was granted on 30.03.2013. The lower tax authorities after examining the terms of the agreement, the occupation certificate, and the other letters-offer to finalize the details of interiors, have come to a conclusion that the assessee had booked a semi furnished flat with the builder, namely, DLF Universal Ltd. in the residential group housing complex named as Magnolias DLF Golf Links. Accordingly, the assessee had a window of three years period from 21.12.2011 till 21.12.2014 to construct a house property, calculated from the date of transfer of original asset. The appellant has claimed deduction on amount invested till the due date of filing of return under Section 139 (1) - No cogent ground to hold that the Respondents do not fulfill the conditions laid down under Section 54 (1) of the Act so as to deny the benefit of the said provision. The apprehension expressed by the learned senior standing counsel for the Revenue is not borne from the facts on record. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt is due on any account whatsoever. Maintenance of the property was being done by the tenant itself. In absence of any evidence of receipt of any amount on account of maintenance, that would contradict the books of account, the deletion made by CIT (A) has been upheld. This consistent factual finding arrived at by the CIT (A) and ITAT does not give rise to any question of law. X X X X Extracts X X X X X X X X Extracts X X X X ..... see is an individual, earning income from house property, business and profession, capital gains and other sources. He filed his return of income for AY 201213 on 31.10.2012, declaring total income of ₹ 8,05,34,659/-, including long term capital gains from sale of property at Jor Bagh, New Delhi on 21.12.2011 for a sale consideration of ₹ 13 crores. The said property was purchased in Financial Year (FY) 2001-02, as per sale deed dated 19.10.2001, for ₹ 36,16,000/-. After indexation, the cost of acquisition was claimed to be ₹ 66,63,286/-, resulting in capital gain of ₹ 12,33,36,714/- against which, the assessee claimed deduction under Section 54 of the Act for investment in a new house property 'Magnolias DLF Golf Links' as per sale agreement dated 10.02.2006. Deductions were also claimed under Section 54EC of the Act. During the course of assessment proceedings, the assessee submitted a detailed computation of capital gains, showing payment of ₹ 2,88,80,619/- to DLF Magnolias up to 31.03.2012, towards cost of the property and further payment of ₹ 1,02,16,598/- towards bank interest and loans and cost of improvement on the above said proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief under Section 54 of the Act and resultantly, the disallowance of ₹ 4,01,93,262/- was deleted. 18. The relevant portion of the order of the CIT (A) reads as under: "6. Ground no.-4 relates to '"disallowance of deduction u/s.54 to the extent of ₹ 4,00,97,217/- (A.No.496/14-15), 4,10,45,578/- (A.No.494/14-15) and ₹ 4,01,93,262/- (A.No.495/14-15) to the returned income of ₹ 8,05,34,650 (A.No.496/14-15), ₹ 2,75,04,910/- (A.No.495/14-15) and ₹ 72,38,440/- (A.No.494/14-15). The fact of the case is that the appellant declared long term capital gain of ₹ 52087347/- (A.Nos.494/14-15) ₹ 12,33,36,714/- (A.No.496/14-15) and ₹ 71665302/- (A.No.495/14-15) from the sale of property at 146, Jorbagh, New Delhi on 21.12.2011 on which he claimed deduction u/s 54 amounting to ₹ 4,00,97,217/- A.No.496/1415), 4,10,45,578/- (A.Nb.494/14-15) and ₹ 4,01,93,262/- A.No.495/14-15). However, the AO disallowed the claim on the grounds that the appellant had entered into an agreement dated 10.02.2006 and therefore the date of agreement be treated as the date of acquisition, which falls beyond the period of one year prior to the date of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction". Reliance was placed on the judgment of Honorable Karnataka High Court in the case of CIT Vs J.R. Sobramanya Bhatt (1887) 165 ITR 571 (Karn), wherein it has been held that it is immaterial whether the construction of the new house was started before the date of transfer, it should be completed after the date of transfer of the original house. In the present case, he had booked a semi finished flat with the builder, namely DLF Universal Limited in the residential group housing complex named as Magnolias DLF Golf Links) and as per agreement, he was to make payment in installments and the builder was to construct the unfinished bare shell of flat for finishing by the buyers on their own to make it liveable (having specifications set out in Annexure-V) as per clause 10.1 of the said agreement. It .is ·also pertinent to mention that Builder Company offered vide letter dated 30.12.2011 (copy enclosed) that the Occupation certificate has been received from the Competent Authorities and the six months period for completing the interiors, in terms of agreement shall commence from 01.01.2012 and is to be completed before 30.06.2012. Builder Company's letter dated 20.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral sense of hyper technicalities/cannot be used as a tool to interpreted instructions of the board or decision of the law Courts, to deny the very relief to the otherwise compliant appellants. In a recent reference to Honorable. Delhi High Court, in the case of CIT vs Kuldeep Singh, the Honorable Court has observed and discussed various decision of the other Honorable High Courts and Honorable Supreme Court; as follows; A. CIT Andhra Pradesh vs. T. N. Aravinda Reddy (1979) 4 SCC 721; B. Civil Appeal nos. 5899-5900/2014 titled Sh Sanjeev La I etc etc vs. CIT Chandigarh & Anr decided on 01/07/2014, 2014 (8) SCALE 432 C. Reference was made to the decision of Supreme court in CIT vs J.H. Gotla [1985] 156 ITR 323 (SC). D. Moreover in CIT vs Bharati C Kothari (2000) 244 ITR 352 In the instant case, since the appellant entered· into an agreement for construction of a bare shell of a house by periodic payment of installments and he had to carry the internal fit-outs to make it live-able as per Annexure-V of the agreement with the Builder Company, within Six months from the date of certificate of occupation from the competent Authorities, this is to be treated as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed the deletions. 21. Mr. Ajit Sharma, learned senior standing counsel for the Appellant argues that the impugned order is perverse and the Tribunal has erred in deleting the additions/disallowances made by the AO without considering the detailed findings given in the assessment order. He argued that the AO had rightly taken the effective date of purchase as 10.02.2006 which is beyond the period of limitation prescribed under Section 54 of the Act. He further argued that since the property at Magnolias DLF was purchased prior to the sale of the long term asset, the assessee cannot take benefit of the amounts expended in the construction thereof as the sale proceeds of the long term assets have not been utilized in the construction of the said property. He argued that the property at Jor Bagh was sold on 21.12.2011 and as per the calculation submitted by the assessee, an amount of ₹ 3,00,86,525/- had been paid to Magnolias DLF up to 31.03.2012 and ₹ 1,01,06,737/- towards bank, interest on loans and on cost of improvement of the property. Such payments have not been made from the sale proceeds of the Jor Bagh property and therefore the benefit of Section 54 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category of other institutions and, therefore, booking of the flat with the builder has to be treated as construction of flat by the assessee. In accordance with the said agreement, the assessee was to make payment in installments and the builder was to construct an unfinished bare shell flat for finishing by the buyers. The possession was granted on 30.03.2013. The lower tax authorities after examining the terms of the agreement, the occupation certificate, and the other letters-offer to finalize the details of interiors, have come to a conclusion that the assessee had booked a semi furnished flat with the builder, namely, DLF Universal Ltd. in the residential group housing complex named as Magnolias DLF Golf Links. Accordingly, the assessee had a window of three years period from 21.12.2011 till 21.12.2014 to construct a house property, calculated from the date of transfer of original asset. The appellant has claimed deduction on amount invested till the due date of filing of return under Section 139 (1) of the Income Tax Act. In this factual background, we do not find any cogent ground to hold that the Respondents do not fulfill the conditions laid down under Section 54 (1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. [(1990) 4 SCC 256 : 1990 SCC (Tax) 422] and Mangalore Chemicals and Fertilisers Ltd. v. Dy. CCT [1992 Supp (1) SCC 21] to which reference has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014], to which one of us - R.Sudhakar,J. is a party). In the said decision, this Court held as under: "5. The key issue that arises for consideration is whether the first proviso to Section 54EC(1) of the Act would restrict the benefit of investment of capital gains in bonds to that financial year during which the property was sold or it applies to any financial year during the six months period. 6. For better understanding of the issue, it would be apposite to refer to Section 54EC(1) of the Act, which reads as under: 'Section 54EC. Capital gain not to be charged on investment in certain bonds.- (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charged on investment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gain shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. It is proposed to insert a proviso below first proviso in said sub-section (1) so as to provide that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years. Memorandum: Explaining the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to ₹ 50,00,000/- is incorporated in Section 54EC(1) of the Act itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years. For the foregoing reasons, we find no infirmity in the orders passed by the Tribunal warranting interference by this Court. The substantial questions of law are answered against the Revenue and these appeals are dismissed.' (Emphasis Supplied)" 5. The decision of this Court in Areva T and D India Ltd (supra) relied upon by the learned Senior Standing Counsel for the appellant is not applicable to the facts of the present case, as in the said decision the writ petitions filed "for issuance of writ of declaration declaring that the conditions occurring in Notification No. 380 of 2006 F. No. 142/09/ 2006-TPL, dated December 22, 2006, along with the words 'subject to the following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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