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Income Tax Appellate Tribunal, BANGALORE BENCHES “B” , BANGALORE
Before: Shri Chandra Poojari, AM & Smt.Beena Pillai, JM
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “B” , BANGALORE Before Shri Chandra Poojari, AM & Smt.Beena Pillai, JM ITA No.613/Bang/2019 : Asst.Year 2015-2016 Smt.Tahera Begum The Income Tax Officer No.35/11, 38th A-Cross, 8th Vs. Ward 7(2)(4) Block, Jayanagar Bangalore. Bengaluru – 560 070 PAN : AHUPB7844A. (Appellant) (Respondent) Appellant by : Sri.B.S.Balachandran, CA Respondent by : Smt.Swapna Das, JCIT-DR Date of Date of Hearing : 30.01.2020 Pronouncement : 31.01.2020 O R D E R Per Chandra Poojari, AM : This appeal filed by the assessee is directed against the order of the CIT(A), dated 21.01.2019. The relevant assessment year is 2015-2016.
The assessee has raised the following grounds:- “1. CIT(A)’s order is opposed to the law and facts of the case. 2. CIT(A) wrongly held that appellant has not complied section 54F. CIT(A) failed to notice that Net consideration was fully utilized for land, compound and necessary infrastructure hence compliance of 54F was done by appellant. Hon’ble ITAT may kindly allow deduction u/s 54F. 3. CIT(A) failed to examine and adjudicate that the building approval was not received from BBMP hence appellant could not complete the building. This ground of Appeal was not adjudicated by CIT(A) since appellant was prevented to complete the building. Hon’ble ITAT may allow deduction u/s 54F. Appellant case is squarely covered by Karnataka High Court in the case of Smt. Santa Bai which CIT(A) failed to appreciate.
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Notwithstanding above contention section 54F(4) authorities Assessing Officer to disallow unutilized amount, whereas Assessing Officer has added the full amount. Hon’ble ITAT may restrict addition to only unutilized amount. 5. Hon’ble ITAT may kindly examine the facts and legal position and allow the appeal. 6. Appellant craves to add or delete grounds of appeal at the time of hearing. 7. For these and such the grounds that may be taken at the time of hearing ITAT may be allow the appeal and render justice to the appellant.”
Briefly stated the facts of the case are that the assessee is an individual. The fact involved in the case are that the assessee had sold two properties on 10.04.2014, during the financial year relevant to the assessment year under consideration for a total consideration of Rs.1,36,82,500. The assessee has purchased a vacant site on 08.05.2015 at 15/5, Puttenahalli village, Uttarahalli Hobli, Bangalore South for an amount of Rs.98,27,000 out of the sale proceeds of the properties. The assessee claimed deduction u/s 54F claiming that she has started construction of the house on the property purchased by her. The assessee furnished an estimate for construction amounting to Rs.1.40 lakh from New India Bui8lders and Developers Pvt. Ltd. and also furnished a receipt of payment for Rs.12 lakh dated 10.06.2017 towards construction of the house from the same builder. The assessee also informed the Assessing Officer that the plan for construction has been approved by the BBMP on 01.07.2017 and a housing loan of Rs.75 lakh has been sanctioned to the assessee by PNB Housing on 27.09.2017. 4The AO noted that
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as per the provisions of the Act, the assessee was required to complete the construction before April 2017, within three years of sale of the property on 10-04-2014. But the approval of the construction plan has been sanctioned by the BBMP only on 01-07-2017. In response to the letter of the AO, the assessee replied that though she has applied for plan approval to BBMP on 16-11-2015, the approval was done on 16-06-2017. There was a delay in getting the 'A' khata certificate tor the property. Due to delay in plan approval, she could not start the construction work. Therefore, the AO concluded that as there was no construction of house. the assessee should have deposited the unutilized sale proceeds in the capital gain account before due date of filing of return for A Y 2015-16 i.e 31-07-2015 in order to avail the deduction u/s 54F, which has not been done. Consequently, the AO disallowed the deduction claimed u/s 54F and added the total sale consideration of Rs.1,36,82,500 as Income of the assessee under capital gain.
In first appeal, the CIT(A) confirmed the addition made by the Assessing Officer, by observing in paragraph 5.1 to 7 of his order, concluded that the assessee has not utilized the sale consideration in construction of a residential house nor the unutilized amount has been deposited in the notified capital gain account before furnishing of the return of income by the assessee u/s 139(1) of the Act. Therefore, he held that the assessee will not be entitled to claim of exemption u/s 54F of the Act, on the entire amount.
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We have heard the rival submissions and perused the material on record. We find that similar issue came up for consideration before this Tribunal in ITA No.2203/Bang/2019 for the assessment year 2012-2013 in the case of Sri.M.N.Sheshagiri v. ITO. The Tribunal vide order dated 27.01.2010 held as follows:-
“7. I have heard the rival submissions and perused the material on record. Coming to the allowability of deduction u/s 54 of the Act on the reason that the assessee had not complied with the requirement of section 54 by depositing the amount into the specific bank account as notified in the Act, in terms of section 54(2) of the Act. In my opinion, the assessee should be given the benefit of deduction u/s 54 of the Act on the sum invested by the assessee in the construction of new residential house within the time allowed u/s 139(4) of the Act. My this view is fortified by the decision of the Co-ordinate Bench of the Kolkata Tribunal in the case of Sunayana Devi v. ITO [(2017) 167 ITD 135 (Kolkata – Trib.)], wherein it was held that “the assessee invested the sale consideration in construction of a residential house within three years from the date of transfer. The assessee should be given the benefit of deduction under section 54F and cannot be denied the benefit for the reason that he had not complied with the requirements of section 54(2). Thus in effect the assessee would be entitled to deduction under section 54F for a sum utilized for construction of a residential house within this period specified in section 54F(1). The Assessing Officer is accordingly directed to allow deduction under section 54F.”. 7.2 In my opinion, the judgment relied on by the learned DR in the case of Prof.P.N.Shetty (supra) is not applicable to the facts of the present case, and hence, it was not considered. Regarding the judgment of the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant v. The CCIT, Mumbai & Anr. (supra), cannot be applied. The said judgment is not considered in view of the judgment on similar facts in the case of K.Ramachandra Rao (supra), which is very much binding on the issue. As regards the ambiguity in statute, the learned DR have taken help of the judgment of the Hon’ble Supreme Court in the case of Commissioner of Customs (Import) v. Dileep Kumar & Co. (supra). But in the present case, the CIT(A) himself has observed in his order that there is no ambiguity in the
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present section 54F. Thus, this case has also no help to the Revenue. 7.1 Further the Cochin Bench of the Tribunal in the case of ACIT v. Shri Tony J.Pulikkal in ITA No.472/Coch/2016 – order dated 25.07.2018, held that the assessee is entitled for deduction u/s 54F of the Act with regard to the investment made in a residential house up to the period mentioned u/s 139(4) of the Act. This view is also fortified by the judgment of the Hon’ble Guwahati High Court in the case of CIT v. Rajesh Kumar Jalan (206 CTR 361), wherein it was held that if the assessee claims exemption u/s 54F of the Act by retaining the cash, then the said amount is to be invested in the said account notified by the Central Government on this behalf. If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, i.e., section 139(4), then section 54F(4) is not at all attracted and therefore, the contention that the assessee has not deposited the amount in the bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct. 7.3 Similar view was taken by the Hon’ble Kerala High Court in the case of Dr.Xavier J.Pullikal v. Deputy Commissioner of Income-tax (104 DTR 134) where in the Hon’ble Kerala High Court held as under:- “The scheme for depositing capital gain is contemplated under Section 54F(4) and it depends upon when the property of the assessee is sold and when exactly the amounts were invested, whether it was invested in a residential house or otherwise. All these facts have to be considered with reference to provisions of Section 54F(4) along with Section 139 (1) of the Act, as the due time would be under Section 139(1) only not under Section 139(4) of the Act. I.T.A. No.10 of 2014 5 8. Tribunal, as a matter of fact, has accorded one more opportunity to the appellant assessee to place on record relevant facts for consideration and if his case were to be different from the facts of the other case and makes a vast difference altogether. So far as provisions of law is concerned, it is always open to him to place such facts before the Assessing Officer for consideration. However, Assessing Officer while applying the provisions of law to facts of a case without interdependent on facts of the other case has to consider the same. With these modifications, we dispose of the appeal directing the Assessing Officer to dispose of the matter in the light of the above observations.” 7.4 In my opinion, the assessee could make investment in construction of new building within three years from the date
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of transfer of the asset for claiming deduction u/s 54 of the Act. Section 54 of the Act are beneficiary and are to be considered liberally. In view of the above discussion, I am inclined the remit the issue to the file of the Assessing Officer to quantify the amount of exemption u/s 54 of the Act. The assessee is directed to prove the investment in residential building as prescribed u/s 54 of the Act before the due date of filing of the return u/s 139(4) of the Act. Accordingly, this issue is remitted for the limited purpose of quantifying the amount of deduction to the file of the A.O. after affording a reasonable opportunity of being heard to the assessee.” 6. In view of the above order of the Tribunal, we are inclined to remit the issue in dispute to the files of the Assessing Officer for fresh adjudication with similar direction as given in the case of Sri.M.N.Sheshagiri v. ITO (supra), after giving an opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced on this 31st day of January, 2020. Sd/- Sd/- (Smt.Beena Pillai) (Chandra Poojari) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore ; Dated : 31st January, 2020. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-7, Bengaluru. 4. The Pr.CIT-7, Bengaluru. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore