GOVIND GANGADHAR SABANE,,HINGOLI vs. INCOME-TAX OFFICER,,

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the Assessee emanates from the order of the Ld. CIT(Appeals)-1, Aurangabad dated 08.03.2016 as per the grounds of appeal on record.

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sworn in affidavit wherein the reasons for delay is explained and submitted

that the delay is not intentional and therefore, prayed that the delay of 60

days be condoned. Ld. DR did not seriously object to the prayer of

condonation. On the issue of condonation of delay of appeal, we have gone

through the sworn in affidavit filed by assessee and heard the Ld. DR. After

considering the reasons stated in the affidavit we are of the view that the delay

in filing the appeal has been satisfactorily explained. In view of these facts,

delay in filing the appeal is condoned and appeal is admitted for hearing.

raised both, the legal grounds as well as ground on merits. However, at the

time of hearing, the legal grounds raised by assessee were ‘not pressed’.

Hence, they are dismissed as ‘not pressed’.

of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The facts on

the grounds on merits are that on the basis of AIR information, the Assessing

Officer noted that late Shri Gangadhar Govindrao Sabne had sold the

agricultural land for Rs.18,70,000/-. The stamp duty valuation of this

property was made by the Sub-Registrar at Rs.61,17,000/-. Thereafter, Shri

Gangadhar Govindrao Sabne died on 24.08.2010. The assessment hearing

was attended by Legal Heir namely, Govind Gangadhar Sabne and explained

transactions relating to the sale of land. The Legal Heir furnished various

documentary evidences viz. copy of sale deed, computation of income, and

completion certificate of the Consulting Engineer i.e. Shri Ganesh Subash

Tiwadi certifying the estimated sale value of the property at Rs.18,13,500/-.

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The exemption was also claimed u/s.54F for the new house constructed by the

assessee. The completion certificate from Consulting Engineer has also been

filed. The Assessing Officer deputed his inspector to verify the construction of

the residential house. The inspector reported that residential house has been

constructed consisting of 6 RCC rooms on the ground floor. However, the

Assessing Officer adopted the full value of sale consideration at

Rs.61,70,000/- as against actual sale consideration of Rs.18,70,000/- by

invoking the provisions of section 50C of the Act. The Assessing Officer did not

allow claim of exemption on the ground that though completion certificate was

by the Government registered contractor and consulting engineer, the

completion certificate from municipal council had not been produced. The

Assessing Officer, accordingly, computed long term capital gain at

Rs.57,04,400/-.

the entire sale consideration that has been received has been utilized for the

construction of the house and that Inspector of the Department has examined

and verified the place and have submitted the concerned report. Therefore,

deduction in accordance with section 54F of the Act which is net consideration

received and used for construction of the residential house that should be

allowed, whereas, the Assessing Officer has resorted to section 50C of the Act

which is for the purpose of section 48 and not for section 54F of the Act. The

ld. CIT(Appeals) did not allow the deduction claimed u/s.54F of the Act on the

ground that bills and vouchers were not produced though admitting in his

order that Inspector had verified the place and has reported that the

construction of house has taken place and also for all other various reasons as

appearing in the CIT(Appeals) order which is already on record. That being

further aggrieved, the assessee is in appeal before us.

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Authorities and vehemently stated that entire net consideration received has

been utilized for construction of the house which have been verified by

Revenue Authorities through inspection by the Inspector. Once the net

consideration has been spent for acquiring new capital asset then the assessee

is eligible for deduction u/s.54F of the Act. The Ld. AR has placed reliance on

the following decisions:

i) Pr. Commissioner of Income Tax Vs. C. Gopalaswamy reported as 384 ITR 307 (Karnataka).

ii) Commissioner of Income Tax Vs. K. Ramachandra Rao, reported as 277 CTR 522 (Karnataka)

below and supported the action of Assessing Officer in resorting to section 50C

of the Act.

find that there is no dispute to the fact that one capital asset was sold and

thereafter, new house was constructed. That both the Revenue Authorities in

their respective orders have agreed that the Inspector had visited the site and

has reported that residential house has been constructed consisting of 6 RCC

rooms on the ground floor. That without negating this report, Revenue

Authorities have simply rejected the claim of deduction u/s.54F of the Act so

far as the assessee is concerned. Moreover, neither Assessing Officer nor

CIT(Appeals) has conducted any specific enquiry to demonstrate that the

construction of the new house was from any other source other than the net

consideration received from sale of land. The CIT(Appeals) denied the

deduction u/s.54F of the Act simply because bills and vouchers were not

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produced. But the factual parameters of existence of new residential house

was not denied by the CIT(Appeals). Nor he has shown the fund utilized for

such construction was from other sources. In absence of these specific enquiry

and not granting deduction u/s.54F of the Act to the assessee, is not

permitted within the ambit of welfare legislation which is embedded in the

taxing statutes. We take guidance from the judicial pronouncements in Pr.

Commissioner of Income Tax Vs. C. Gopalaswamy (supra.) where the Hon'ble

Karnataka High Court opined that “where assessee invested money in

construction of a residential house, deduction u/s.54F of the Act cannot be

denied merely because construction was not complete in all respect within

stipulated time”. Similarly in the case of Commissioner of Income Tax Vs. K.

Ramachandra Rao (supra.), the Hon'ble Karnataka High Court held “where

assessee invested entire sale consideration in construction of a residential

house within three years from date of transfer of land, deduction u/s.54F of the

Act cannot be denied just because he did not deposit the said amount in capital

gains account scheme.”

In view of the above facts, we allow the appeal of the assessee setting aside

the order of CIT(Appeals).

In the result, appeal of the assessee is partly allowed. 9.

Order pronounced on 18th day of December, 2018.

Sd/- Sd/- R.S. SYAL PARTHA SARATHI CHAUDHURY VICE-PRESIDENT JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 18th December, 2018. SB

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आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-1, Aurangabad. 4. The Pr. CIT-1, Aurangabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy //

आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

7 ITA No. 1654/PUN/2016 A.Y.2009-10

Date 1 Draft dictated on 17.12.2018 Sr.PS/PS 2 Draft placed before author 18.12.2018 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order