ITO NON CORPORATE WARD 12(1) , CHENNAI vs. SRIMURUGAN PARAMASIVAM , CHENNAI

आदेश /O R D E R

PER VIKRAM SINGH YADAV, ACCOUNTANT MEMBER: This is an appeal filed by the Revenue against the order of CIT(A)-13, Chennai, dated 06.06.2017 wherein the Revenue has challenged the action of the ld.CIT(A) in allowing the exemption to the assessee u/s.54F of the Act. 2. At the outset,the ld.AR submitted that along with his brother,he has sold the impugned piece of land and the Co-ordinate Bench of this

2 I.T.A. No.1993/Chny/2017

Tribunal has since decided the matter in the case of brother of the

assessee Shri Paramasivam Gnanavel in ITA No.1920/Mds/2017 dated

05.02.2018 wherein under identical set of facts and circumstances of the

case, the deduction u/s.54F has been allowed. In this regard, our

reference was drawn to paras 7 & 7.1 of the decision of Co-ordinate

Bench of this Tribunal which reads as under:-

“7. We have heard the rival submissions and carefully perused the materials available on record. From the facts of the case it is apparent that the Ld.AO has denied the benefit of Section 54F to the assessee only for the reason that he has not deposited the sale proceeds in the capital gain scheme account within the due date of filing the return U/s.139(1) of the Act, though the amount was placed with the Nationalized Bank and invested for the purchase of a residential house within the time limit stipulated U/s.54F of the Act. We find this identical issue have been already decided in favour of the assessee by this Bench of the Tribunal in ITA No.2455/Mds/2017 vide order dated 30.01.2018. The gist of the order is reproduced herein below:- 7. We have heard the rival submissions and carefully perused the material on record. At the outset we find this issue squarely covered by the decision of the Chennai Bench of the Tribunal in ITA No.1167/Mds/2016 vide order dated 15.09.2016 wherein on the identical situation it was held that such small technical breach will not disentitle the assessee the benefit of Section 54 of the Act. The gist of the decision is reproduced herein below for reference:-

“8. We have heard the rival submissions and carefully perused the materials available on record. In the decision of Shri Madhuvan Prasad Vs. ITO, supra the Chennai Bench of the Tribunal has allowed the benefit of section 54 of the Act because the assessee had fulfilled all the conditions prescribed under section 54 of the Act barring the deposit of the sale proceeds in the “capital gain scheme account” as prescribed under section 54(2) of the Act. In that decision reliance was also placed in the decision of Hon’ble Apex Court

3 I.T.A. No.1993/Chny/2017

in the case of Motilal Padampat Sugarmill Co.Ltd. Vs. State of Uttar Pradesh & Ors wherein it was held, that ‘thus there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement there is no such Maxim known to the law. In the given case before us also, it is not disputed that the assessee had not fulfilled the conditions prescribed under section 54 of the Act barring the deposit of the sale proceeds in the “capital gain scheme account”. Moreover, the facts reveal that the assessee had deposited the entire sale proceeds in his savings bank account maintained with nationalized bank out of which he has constructed his house. The only small lacuna assessee had made is that the assessee though had placed the entire sale proceeds in the nationalized bank he has not transferred the same in the “Capital gain scheme account”. Considering these facts of the case and the decisions of the Tribunal and the Hon’ble Apex Court cited above, we are of the considered view that for this small technical lapse of the assessee, the benefit of section 54 should not be denied. Section 54 of the Act is a beneficial provision and a beneficial interpretation has to be made as far as possible for giving benefit to the assessee. The assessee had proceeded to comply with the provisions of section 54 of the Act but has only made a small technical breach which we are of the considered view should not disentitle the assessee for the benefit of section 54 of the Act. Therefore, we hereby direct the learned Assessing Officer to grant the benefit of section 54 of the Act to the assessee and accordingly delete the addition made by him which was further sustained by the learned Commissioner of Income Tax (Appeals).”

7.1 Further the Ld.CIT(A) has also followed the decisions of various higher Judiciary wherein the issued is held in favour of the assessee in similar circumstances. Therefore we do not find it necessary to interfere with the order of the Ld.CIT(A) on this issue.”

7.1 Since the issue has been already decide in favour of the assessee by the Chennai Bench of the Tribunal, Bangalore Bench of the Tribunal mentioned supra and also by the Hon’ble Karnataka High Court mentioned supra, which the Ld.CIT(A) has followed, we do not find it necessary to interfere in his order.”

4 I.T.A. No.1993/Chny/2017

Officer. He submitted that since the assessee has not deposited the sale

consideration before the due date of filing of the return of income, the

ld.Assessing Officer has rightly disallowed the exemption so claimed by

the assessee u/s.54F of the Act.

available on record. During the year under consideration, the assessee

along with his brother Shri Paramasivam Gnanavel has a piece of land at

Noombal Village under Survey No.114 part 3A comprising of 1.68 acres

(belonging to assessee) under Kundrathur SRO Ambathur Circle,

Registration District of Thiruvallur for total consideration of

Rs.1,87,00,000/- and the assessee’s share therein comes to Rs.96 lakhs

and after allowing the indexed cost of land, the assessee had claimed the

long term capital gains u/s.54F of the Act amounting to Rs.87,39,205/-

and the whole of that has been claimed as deduction u/s.54F of the Act.

As per the findings of the ld.Assessing Officer, the assessee has made a

total payment of Rs.83,22,500/- and has entered into a sale agreement

for a purchase of house property on 06.12.2013 and has also entered

into Renovation Contract Agreement for carrying out the necessary

renovation within a period of 9 months from the date of commencement

of work. However, given that the assessee has not spent any amount

5 I.T.A. No.1993/Chny/2017

towards purchase of the new asset before the due date of filing of the

return of income and the amount has not been invested in the specified

Scheme of capital gains, the deduction claimed u/s.54F of the Act has

been denied by the ld.Assessing Officer.

has purchased a residential house within two years of transfer of the

original asset, which is the prime condition so specified u/s.54F of the Act

and since he has satisfied the said condition, he shall be eligible for

exemption u/s.54F of the Act. Ld.CIT(A) relying on the order of the Hon’ble

Karnataka High Court in the case CIT vs. Ramachandra Rao reported in

56 taxmann 163, has directed the ld.Assessing Officer to allow the claim

u/d.54F of the Act for the reason that undisputedly the assessee has

purchased a new residential asset within two years of sale of the original

asset.

Co-ordinate Bench of this Tribunal in the case of brother of the assessee

Shri Paramasivam Gnanavel in respect of the same transaction of sale of

the land, has given the relief to the assessee in terms of exemption

u/s.54F of the Act. Therefore, in the light of facts and circumstances of

the case, following the decision of the Co-ordinate Bench of this Tribunal

in the case of brother of the assessee Shri Paramasivam Gnanavel, the

assessee is eligible for exemption u/s.54F

of the Act. However, as far as the quantum of exemption, which

6 I.T.A. No.1993/Chny/2017

can be allowed to the assessee, we find that the assessee has spent an amount of Rs.83,22,500/- towards purchase and renovation of the new house property against his share of sale consideration amounting to Rs.96 lakhs. Therefore, the ld.Assessing Officer is directed to allow the exemption proportionately in terms of Section 54F(1) of the Act. To this limited extent, the matter is remanded back to the file of ld.Assessing Officer. 7. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes. Order pronounced in the open court on 05/07/2019 at Chennai. Sd/- Sd/- (जॉज� माथन) (�व�म �संह यादव) (George Mathan) (Vikram Singh Yadav) �या�यक सद�य/Judicial Member लेखा सद�य/Accountant Member

चे�नई/Chennai, 6दनांक/Dated, the 05th July, 2019.

Ks sundaram

आदेश क0 .�त%ल#प अ8े#षत/Copy to: 1. अपीलाथ-/Appellant 2. ./यथ-/Respondent 3. आयकर आयु9त (अपील)/CIT(A) 4. आयकर आयु9त/CIT 5. #वभागीय .�त�न�ध/DR 6. गाड� फाईल/GF.