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Income Tax Appellate Tribunal, ‘B’ / ’SMC’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN
: अपीलाथ' क* ओर से/ Appellant by Mr.N.Devanathan, Adv. : Mr.B.Sagadevan, JCIT ()यथ' क* ओर से /Respondent by : सुनवाई क* तार"ख/Date of Hearing 19.04.2018 घोषणा क* तार"ख / : 19.04.2018 Date of Pronouncement आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER: is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-16, Chennai, in dated 19.05.2016 for the AY 2011-12.
Shri B.Sagadevan, JCIT, represented on behalf of the Revenue and Shri N.Devanathan, Adv., represented on behalf of the assessee. :- 2 -:
At the time of hearing, the Ld.AR did not wish to press the ground regarding the re-opening of assessment. Consequently, the said ground is dismissed as not pressed.
It was a further submission that the assessee is a Non-Resident Indian who owned four plots in Chennai. The assessee had purchased the same in 1990. During the relevant Assessment Year, the assessee had sold the same for a total consideration of Rs.68,78,750/- as per the Sale Deed. However, as the consideration received was Rs.91.00 lakhs, the assessee had disclosed the same for the purpose of computation of Capital Gains. The assessee had claimed investment of Rs.50.00 lakhs in NHAI Bonds and REC Bonds and had claimed deduction u/s.54EC. It was a submission that on the ground that two of the properties sold was on 15.07.2010 & 16.07.2010 and the date of investment in the bonds were 28.02.2011, the AO held that the investment was not made within six months from the date of transfer and consequently, denied the benefit of deduction u/s.54EC in respect of the said two sales. It was a submission that the fact of the investment of Rs.50.00 lakhs in the REC bonds was not disputed. It was a submission that the assessee being an NRI was able to make the investments out of the sale proceeds effected on 08.09.2010 and consequently, the assessee was entitled to the claim of the exemption u/s.54EC of the Act. :- 3 -:
In reply, the Ld.DR vehemently supported the order of the AO & the Ld.CIT(A). It was a submission that the sale took place on three dates one on 15.07.2010, the second on 16.07.2010 and the third on 08.09.2010. In respect of the sales which took place on 15.07.2010 & on 16.07.2010, the six months expired on 15.01.2011, 16.01.2011. In respect of the sale which took place on 08.09.2010 the due date of six months expired on 07.03.2011. It was a submission that the AO has granted the assessee the benefit of deduction u/s.54EC in respect of the investments made in relation to sales made on 08.09.2010 to an extent of Rs.43,02,876/- as against of Rs.50.00 lakhs claimed by the assessee. It was a submission that no further deduction was liable to be granted to the assessee.
I have considered the rival submissions.
A perusal of the facts in the present case clearly shows that the assessee is invested Rs.50.00 lakhs on 28.02.2011 in the bonds prescribed for the deduction u/s.54EC of the Act. Here, we must remember that the Sale Deed for these four transactions show only a consideration of Rs.68,78,750/-, whereas the assessee in his honesty has disclosed the actual sale consideration received of Rs.91.00 lakhs. Thus, the intention of the assessee clearly to be honest and to make the investment u/s.54EC. This cannot be discounted. When interpreting a provision in respect of granting exemptions, the same has to be construed :- 4 -: so as to advance the objective and not frustrate as has been categorically held by the Hon’ble Supreme Court in the case of M/s.Bajaj Temp Ltd., reported in 196 ITR 188. In the letter of the assessee dated 09.03.2015, the assessee has categorically stated that he has made investment in the Capital Gain Bonds out of the sales effected on 08.09.2010. The AO has not been able to dislodge the findings. The Sale Deed in respect of the plots sold on 15.07.2017 shown the sale consideration of Rs.17.00 lakhs, of 16.07.2010 shown Rs.17,10,000/-, of 08.09.2010 shown Rs.17,11,250/- and Rs.17,57,500/-. Thus, totaling into Rs.68,78,750/-.
The assessee has for the purpose of computing the Capital Gains disclosed additional consideration of Rs.22,21,250/-. The assessee has categorically admitted that the investment has been made out of the sale consideration received from the sale of the plots on 08.09.2010. If this is considered as correct, then the sale consideration in respect of the plots sold on 08.09.2010 show a consideration of Rs.56,90,000/- (i.e. Rs.91,00,000- Rs.68,78,750 = Rs.22,21,250 + Rs.17,11,250 + Rs.17,57,500), out of which, the assessee did have Rs.50.00 lakhs to make the investment in the 54EC Bonds. This being so, I am of the view that in the absence of the evidence to the contrary, the claim of the assessee is a valid claim and is liable to be allowed and I do so. In these circumstances, the AO is directed to grant the assessee the benefit of claim of Sec.54EC has made.
It was further submitted by the Ld.AR that the assessee had invested in the construction of a residential property and had claimed :- 5 -: deduction u/s.54F of the Act. It was a submission that the assessee had purchased a piece of land at Chengalpet on 25.06.2012 for a consideration of Rs.4,19,300/- had invested an amount of Rs.33,65,645/- in the construction of the said residential property as per the construction agreement dated 25.06.2012. It was a submission that the AO had denied the assessee the benefit of deduction u/s.54EC on the ground that the assessee had not deposited the sale consideration which was not utilized in the Capital Gains Accounts Scheme before the due date for furnishing the return of income u/s.139(1). It was a submission that the issue now stood covered by the decision of the Hon’ble Madras High Court in the case of Sardarmal Kothari and Another reported in [2008] 302 ITR 286 (Mad), wherein, it has been held that once the assessee has established the investment of the entire Capital Gains in the purchase of the land within the stipulated period, the completion of the construction was not material and that the assessee was entitled to the claim of exemption u/s.54F of the Act. It was a submission that the AO may be directed to grant the assessee the benefit of deduction u/s.54F of the Act.
In reply, the Ld.DR vehemently supported the order of the AO & the Ld.CIT(A). It was a submission that no evidence of construction has been produced before the AO. :- 6 -:
I have considered the rival submissions.
A perusal of the Assessment Order clearly shows that though in the Assessment Order at Para No.4.2 at Page No.5 talks of the cost of the land at Rs.4,19,300/- and the cost of the construction as per the construction agreement showed an amount of Rs.33,65,645/-, no evidence in respect of the completion of the construction has been shown before the AO. This being so, respectfully following the decision of the Hon’ble Madras High Court in the case of Sardarmal Kothari and Another, the AO is directed to grant the benefit of deduction u/s.54F of the Act subject to the assessee producing evidence to show that the evidence of investment in the residential property actually made within two years from the date of sale.
Consequently, this issue is restored to the file of the AO for verification of the quantum of investment made by the assessee in the acquisition of the new residential house and to grant the appropriate benefit u/s.54F of the Act.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court on April 19, 2018, at Chennai. (जॉज" माथन) (GEORGE MATHAN) "या"यक सद!य/JUDICIAL MEMBER :- 7 -: