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TMI Blog2020 (10) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... vested in or construction of residential house, even though the construction is not complete in all respect as required under law, assessee cannot be denied benefit under section 54F. Further on a plain reading of case of CIT Vs. Sambandam [ 2012 (3) TMI 80 - KARNATAKA HIGH COURT] reveals that, there is no particular stage of completion of construction, that is contemplated. AR submitted that, the construction was later on completed and the sale deed was registered in favour of assessee on 05/07/2019 in respect of transfer of ownership of residential property. There is nothing placed by revenue on record to demonstrate any other violation in support of their arguments. In present facts we are of the view that assessee has substantially fulfilled all necessary conditions to be entitled for liberal interpretation of sec.54F. We hold that assessee is eligible for exemption u/s 54F. - Decided in favour of assessee. - ITA No.629/Bang/2019 - - - Dated:- 20-9-2020 - Shri. B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri Prashanth G.S, C.A For the Respondent : Shri Priyadarshi Mishra, JCIT (DR) ORDER PER BEENA PI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he delay in completion of the residential property by the builder is beyond control of the assessee on the facts of the case. ₹ 9,08,474/- 3 a) The appellant denies herself liable to be levied interest under sections 234B and 234D of the Act and further the computation of interest was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with sections 234B and 234D of the Act. b) Without prejudice, the interest levied under sections 234B and 234D of the Act requires to be waived off under the facts and circumstances of the case. ₹ 2,74,536/- 4 The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 5 In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed in the interest of justice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, however the amount of deduct ion, was restricted to the investment made by assessec in the construction OF new property, after the date of sale of original asset. Thus the above decision of JTAT is squarely applicable to the case of appellant.. 4.9 The reliance of the appellant on the decisions in the cases of Commissioner 0/ Income-lax V. Sambandam Udaykumar [2012] 19 taxmann.com 17 (Kar) and Principal Commissioner of Income-tax, Bangalore v. C. Gopalaswany [2017] 81 taxmann.com 78 (Karnataka) is found to be misplaced as the said decisions were not on the issue o investment in construction prior to sale of the original asset. Further, in the case of Commissioner of Customs (Import), Mumbai vs M/s Dilip Kumar and Company 0r in Civil Appeal No. 3327 of 2007, dt July 30, 2018.(2018-. TI0L-302-SC-Cus-CB) while discussing the issue of interpretation of exemption provisions, the Constitution Bench of tile Hon'ble Supreme Court held that a provision giving benefit to the assessee needs to be interpreted strictly and in case there is an ambiguity in the provision, which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 24.01.2019 The same is reproduced as follows: With reference to the above, the report is submitted as follows - As verified from the asessee's bank account statement, the assessee, Mr.Padma Rajagopalan has made payments to M/s. Nilachala Ventures Pvt. Ltd., during the F.Y.2013-14 as under :- Date Amount 19/08/2013 ₹ 1,00,000 14/09/2013 ₹ 30,00,000 16/12/2013 ₹ 34,00,000 Total ₹ 65,00,000 The sale consideration is ₹ 1,28,00,000/-. The assessee has kept ₹ 64,00,000/- in the capital gain account scheme. The assessee has utilised the a part of net consideration by Investing in the new asset and the unutilised amount has been kept in capital gain account scheme before the due date of filing of return of income for A.Y.2015-16. Hence, the assessee Is eligible to claim exemption u/s. 54F for the A.Y.2015-16. 11. Ld.AR also submitted that, decision referred to and relied by Ld.CIT(A) has been deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.08.2015 5,83,000/- 08.12.2017 18,31,500/- 03.05.2018 23,76,000/- 04.04.2019 24,75,000/- 05.07.2019 10,00,000/- 05.07.2019 24,69,500/- Total (b) 1,07,35,000/- Total Payments (a+b) 1,72,35,000/- 16. In decision relied by Ld.AR in case of Ms.Moturi Luxmi vs ITO (supra), decisions referred by Ld.CIT(A) was considered by Hon ble Madras High Court. Substantial question of law that arose before Hon ble Madras High Court was as under: Whether, for purpose of section 54 of the Income tax Act, the advance payment made by assessee for the purchase of residential flat would constitute a part of purchase or not, when such advance is made to the seller of flat prior to the date of sale of capital asset in question? 17. While considering aforesaid question framed by Hon ble Court, we note t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee should have purchased a residential house in India either one year before or two years after the date of transfer of the residential house which resulted in capital gain or alternatively constructed a new residential house in India within a period of three years from the date of the transfer of the residential property which resulted in the capital gain. (ii)If the amount of capital gain is greater than the cost of the residential house so purchased or constructed, the difference between the amount of the capital gain and the cost of the new asset is to be charged under Sect/On 45 as the income of the previous year. (iii)If the amount of the capital gain is equal to or less than the cost of the new residential house, the capital gain shall not be charged under Section 45. 20. What has to be adjusted and/or set off against the capital gain is, the cost of the residential house that is purchased or constructed. Section 54(1) of the said Act is specific and clear. It is the cost of the new residential house and not just the cost of construction of the new residential house, which is to be adjusted. The cost of the new residential house would necessarily include the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he new asset is to be charged under Section 45 as the income of the previous year. If the amount of capital gain is equal to or less than the cost of the new residential house, including the land on which the residential house is constructed, the capital gain is not to be charged under Section 45 of the said Act. 16. From the above, it is dear that the intention of the Legislature was to either purchase before or after the date of sale and the word 'purchased or 'constructed' used in the Notes on Clauses amply makes the intention clear. In the light of the above discussions, we hold that the substantial question of law is required to be answered in favour of the assessee. 18. We also refer to Full Bench decision of Hon ble Supreme Court in case of Commissioner of Customs (Import) Vs. M/s Dilip Kumar Sons Ors. (Supra). This decision was relied by Ld. CIT(A) to deny exemption claimed by assessee u/s 54F. On careful study of decision by Hon ble Supeme Court we note that, ratio has been expressly mentioned in para 27 as under: 27. Now coming to the other aspect, as we presently discuss, even with regard to exemption clauses or exemption notifications is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled. 21. Now coming to the decision of Hon ble Madras High Court in case of C Aryama Sundaram (Supra) relied in case of M/s Moturi Laxmi Vs. ITO (Supra). Hon ble Court first analysed the conditions assessee fulfilled to enter exemption clause and thereafter applicability was liberally interpreted. 22. Similar is the analysis by Hon ble Madras High Court in other decisions referred to in M/s Moturi Laxmi Vs. ITO (Supra). Hon ble Delhi High Court in case of CIT Vs. Bharti Mishra reported in (2014) 41 taxmann.com 50, decisions of Hon ble Karnataka High Court in case of CIT Vs J.R Subramnya Bhat reported in (1986) 28 Taxman 578 and CIT Vs. K Ramachandra Rao reported in (2015) 56 taxmann.com 163, all principally allowed exemption u/s 54/54F, only on substantial satisfaction of required conditions therein. Hon ble Karnataka High Court and Hon ble Madras High Court in decisions relied by Ld.AR widely interpreted the provision, consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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