BASARIBANU MOHD RAFIQ LATIWALA,MUMBAI vs. ITO 12(3)(3), MUMBAI

आयकर अपील"य अ"धकरण “H” "यायपीठ मुंबई म"। IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 5420/Mum/2016 ("नधा"रण वष" / Assessment Year : 2011-12) Smt. Basaribanu Mohd. Rafiq Income Tax Officer बनाम/ Latiwala, 12(3)(3), v. 701/702 Neelam, Aayakar Bhavan, Rizvi Complex, Mumbai. Carter Road, Bandra (West), Mumbai – 400 050. "थायी लेखा सं./PAN : ABGPL0686G (अपीलाथ" /Appellant) .. (""यथ" / Respondent)

Assessee by : Shri Deepak Tralshawala, AR Revenue by : Shri B.S. Bist, DR

सुनवाई क" तार"ख /Date of Hearing : 06-03-2017 घोषणा क" तार"ख /Date of Pronouncement : 30-03-2017 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member

This appeal, filed by the assessee, being ITA No. 5420/Mum/2016, is directed against appellate order dated 9th June, 2016 passed by learned Commissioner of Income Tax (Appeals)- 28, Mumbai (hereinafter called “the CIT(A)”), for assessment year 2011-12, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 23-01-2014 passed by learned Assessing Officer (Hereinafter called “ the AO”) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called “the Act”).

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“The learned Commissioner of Income Tax (A) – 28, Mumbai erred in restricting deduction u/s 54F to Rs. 52,47,251/- as against assessee’s claim of deduction u/s 54 of the Act at Rs. 91,86,156/-. The learned Commissioner of Income Tax (A) – 28, Mumbai failed to appreciate that it was a genuine mistake of the assessee’s husband to issue cheque for a sum of Rs. 40,45,975/- on 12.8.2011 in the name of the builder of the property purchased by the assessee.”

construction house property within a period of three years and hence the assessee was entitled for full deduction of Rs. 92.66 lakhs.

The A.O. did not accepted contentions of the assessee. The A.O. observed that the assessee has got transfer of lease in perpetuity for a period of 999 years for plot No. 119 admeasuring 562 sq. mtrs equivalent to 6049.4 sq.ft., bearing survey No. 31 situated at Village Bhose, Mahabaleshwar in Satara District which was registered on 17th January, 2011 for a total consideration of Rs. 89,91,055/- and in addition to this the assessee had incurred registration charges and stamp duty of Rs. 2,21,260/- and , thus the total cost of the asset was Rs. 92,12,315/-. The AO observed that the assessee had claimed exemption u/s 54F of 1961 Act of Rs. 91.86,156/-. The A.O. observed that the assessee has not invested net consideration received on sale of shares for purchasing new under-construction residential property wherein payment of only Rs. 51,66,340/- was made by the assessee , and also the AO observed that the assessee did not deposited the balance amount in capital gain account with a bank or as specified by the Central Government for which no evidence had been produced by the assessee, hence, the balance amount of Rs. 42,08,060/- was held by AO to be taxable under the head long term capital gain for the impugned assessment year which was brought to tax by A.O. , vide assessment order dated 23.01.2014 passed by AO u/s 143(3) of 1961 Act.

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52,47,251/- u/s 54F of 1961 Act only , out of net sale consideration of shares of Rs. 93,74,400/- received by the assessee. The assessee also contended before learned CIT(A) that assessee had issued a cheque dated 12/08/2011 of Rs 40,45,975/- which was returned back to the assessee by the builder ‘Kumar Builders’ a month later with the comments "cheque sent back as favoring is wrong and date is also rewritten" and the assessee should not be penalized for the act of the builder in returning the cheque and this should not be a reason to deny exemption u/s 54F of 1961 Act. The ld. CIT(A) observed that cheque was issued in the name of 'Kumar Builders' on 12-08- 2011 which date was beyond the date stipulated for filing return of income u/s 139(1) of 1961 Act, while due date of filing return of income u/s 139(1) of 1961 Act in the case of the assessee was 31-07-2011 . It was also observed by learned CIT(A) that all other cheques prior to issue of this cheque of Rs. 40,45,975/- were all correctly issued by the assessee in the name of ‘Windsor Park Collection Account’ and agreement dated 17th January, 2011 on page 7 clearly stipulates that payments were all to be drawn in favor of ‘Windsor Park Collection Account’. Thus, the assessment order dated 23-01-2014 passed by A.O. u/s 143(3) of 1961 Act was upheld by the ld. CIT(A) vide appellate order dated 09-06-2016. However, ld. CIT(A) observed that assessee is entitled to a exemption of Rs 52,47,251/- u/s 54F of 1961 Act which was invested by the assessee in new residential house property before 31-07-2011 which was the due date of filing of return of income u/s 139(1) of 1961 Act as the assessee did not deposited the balance un-utilized portion of net sale consideration on sale of shares of Bombino Video Private Limited on which long term capital gain arose with the capital gain account with bank or as specified by Central Government. Thus, the learned CIT(A) held that unutilized portion of sale consideration on sale of shares is Rs 41,27,149/- (Rs 93,74,400 - Rs 52,47,251) and the assessee is not entitled for an exemption u/s 54F of 1961 Act on unutilized portion of net sale consideration of Rs. 41,27,149/- while the AO had denied exemption of Rs 42,08,060 u/s ITA 5420/Mum/2016 5

54F of 1961 Act, vide appellate order dated 09-06-2016 passed by learned CIT(A).

6, Aggrieved by appellate order dated 09.06.2016 passed by ld. CIT(A), the assessee filed appeal before tribunal.

Dection 54F(1) of 1961 Act. It is submitted and claimed that as per section 54F of 1961 Act, the net sale proceeds can be invested in an under construction residential property within a period of three years from the date of transfer of original asset and hence the assessee was entitled for full deduction of Rs. 92,66,395/- of long term capital gains earned by the assessee u/s 54F(1) of 1961 Act as the assessee duly invested the net consideration on sale of 837 shares of Bombino Video Private Limited within three years from the date of transfer of shares towards purchase of new residential property wherein some of the amount was even invested beyond the period stipulated u/s 139(4) of 1961 Act despite also that the assessee having not complied with provisions of Section 54F(4) of 1961 Act as the unutilized net sale consideration on sale of shares was not deposited with capital gain account maintained with bank or as specified by Central Government before the due date of filing of return of income u/s 139(1) of 1961 Act which happened to be 31-07-2011. It was argued that section 54F of 1961 Act is a beneficial provision and the assessee cannot be denied exemption u/s 54F of the Act as the assessee had complied with provisions of Section 54F(1) of 1961 Act by investing Rs. 92,93,226 within three year in an under construction new residential property while there was non compliance of provisions of Section 54F(4) of 1961 Act as the assessee did not deposited the balance un-utilized portion of net consideration in capital gain account maintained with bank or as specified by Central Government. It was submitted that assessee did invested net sale consideration to the tune of Rs. 92,93,226/- towards under construction new residential property within 3 years from transfer of shares on 15-03-2011 thus complying with provisions of Section 54F(1) of 1961 Act, which exemption should be allowed u/s 54F of 1961 Act keeping in view that the assessee invested Rs. 92,93,226/- in new residential asset within three years from the date of transfer of original asset. Thus, It was submitted that the assessee made investment for purchase of new under construction residential property beyond the date of filing of ITA 5420/Mum/2016 7

return u/s 139(1) of 1961 Act but within three years from the date of transfer of shares on 15-03-2011 on which long term capital gain arose. It was submitted that out of Rs. 92,93,226/- of the total investment made by the assessee with under construction new residential property within three years from the date of transfer of shares on 15-03-2011, the assessee invested Rs. 74,95,014/- prior to the date stipulated u/s 139(4) of 1961 Act for filing of belated return. It was submitted that there was compliance of substantive provisions as stipulated u/s 54F(1) of 1961 Act and non compliance with Section 54F(4) of 1961 Act cannot take away the benefit as provided by 1961 Act vide Section 54F(1) of 1961 Act, as Section 54F(4) of 1961 Act does not control Section 54F(1) of 1961 Act. He invited our attention to the decision of Hon’ble Bombay High Court in the case of Humayun Suleman Merchant v. The Chief Commissioner of Income Tax, IT Appeal No. 545 of 2002 dated 18th August, 2016 (2016) 387 ITR 421(Bombay) and submitted that Hon’ble Bombay High Court has allowed deduction u/s 54F of 1961 Act made till the filing of return by the tax-payer although filed beyond the time stipulated u/s 139(1) of 1961 Act but prior to the date stipulated for filing of belated return u/s 139(4) of 1961 Act . It was submitted that section 54F of the Act is a beneficial provision which has been brought into the Act with the object of encouraging investment in housing sector, hence, a liberal and beneficial interpretation/construction be given to section 54F of the Act and since the assessee complied with requirement of Section 54F(1) of the Act and merely non compliance with provisions of Section 54F(4) cannot disentitle the assessee from claiming exemption u/s 54F of the Act and Section 54F(1) is not subject to Section 54F(4) of 1961 Act. It is submitted that if it is held that Section 54F(1) of the Act is subject to Section 54F(4) of 1961 Act, then the whole purpose of Section 54 of the Act being beneficial provision for encouraging investment in housing sector will be defeated. The ld. Counsel for the assessee also relied upon the decision of Hon’ble Supreme Court in the case of Sanjeev Lal and Smt. Shail Moti Lal v. CIT [2014] 365 ITR 389 (SC),

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and decision of Hon’ble Supreme Court in the case of Oxford University Press v. CIT (2001) 247 ITR 658(SC) , decision of Hon’ble Karnataka High Court in the case of CIT v. Sambandam Udaykumar reported in (2012) 345 ITR 389 (Kar. HC) , decision of ITAT, Chennai in the case of Smt. V A Tharabai v. DCIT reported in (2012) 149 TTJ (Chennai) (UO) 41, decision of Hon’ble Delhi High Court in the case of CIT v. Suresh Nanda (2015) 375 ITR 172(Del HC) and also decision of ITAT, Chennai Bench in the case of ACIT v. Umayal Annamalai (2016) 46 CCH 0524 (Chennai Trib.) and submitted that full benefit should be granted to the assessee to the extent of amount invested in new under construction residential property within three years from the date of transfer of shares, as section 54F of 1961 Act being beneficial provision the same should be liberally construed. It was submitted that period for making investment should be so construed to include period allowed by 1961 Act for filing belated return as stipulated u/s 139(4) of 1961 Act rather than due date as stipulated u/s 139(1) of 1961 Act. The ld. Counsel also took us through page 39/paper book wherein copy of cheque issued in favour of ‘Kumar Builders’ for Rs. 40,45,975/- which was returned back by the builder as there was a mistake in the name of the payee is placed and it was also contended that the cheque was duly issued but since it was issued in favour of wrong name , it was returned by builder as also there were cuttings in the said cheque. The statement showing details of payments made for purchase of the property “Panchgini(Mahabaleshwar)” is placed at paper book page 38 by way of chart and it was submitted that the assessee could not be faulted as even the payments of Rs. 74,95,014 out of Rs.92,93,225/- were made prior to the date prescribed for filing belated return of income u/s 139(4) of 1961 Act and the entire payment of Rs. 92,93,225/- was made within three years from the date of transfer of shares on 15-03-2011 and the same should be allowed as exemption u/s 54F of 1961 Act.

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31-07-2011 i.e. due date of filing of return of income u/s 139(1) of 1961 Act. The CIT(A) allowed benefit of Section 54F of 1961 Act of the amount which was actually paid towards acquisition of the new residential house property of Rs. 52,47,251/- which was paid before the due date of filing of return of income u/s 139(1) of 1961 Act i.e. 31-07-2011 and the benefit u/s 54F of 1961 Act towards rest of the amount of cost of acquisition/ construction of new residential property to the tune of Rs. 41,27,149/- was disallowed on the ground that the assessee has not deposited the said amount of Rs. 41,27,149/- in the capital gain account maintained with the bank as stipulated u/s 54F(4) of 1961 Act . We have also observed that section 54F of 1961 Act is a beneficial provision which grants exemption from payment of tax on long term capital gains if the amount is invested in acquisition/ construction of new residential property and is meant to encourage investment in housing sector. Section 54F(4) of 1961 Act clearly provides that the amounts of net consideration received by the assessee which has not been invested either in purchase or construction of house have to be deposited in the specified capital gain accounts maintained with bank before the due date of filing of return of income u/s 139(1) of the Act. . Section 54F(4) of 1961 Act clearly stipulates that the exemption shall be provided u/s 54F of 1961 Act for investing net consideration received on transfer of original asset in acquisition or construction of new residential house property before the date of furnishing of return of income within time stipulated u/s 139 of 1961 Act. We have also observed that Section 54F(1) of 1961 Act is specifically made subject to Section 54F(4) of 1961 Act by an amendment brought in by Finance Act, 1987 w.e.f. 01.04.1988. The language of section 54F of the Act is clear and unambiguous and it is fundamental principle of interpretation of statute that where the language of statute is plain, clear and unambiguous , the Courts are duty bound to follow the same and there is no need for Courts to resort to other principles of interpretation of statute such as equity, purposive or harmonious construction etc. . It is also well accepted

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proposition that there is no equity in taxation and provisions are to be strictly construed . If the subjects falls within taxing provisions of the statute as per clear, plain and unambiguous language used in the statute, he/she must be brought within the ambit of tax as per provision of the statute. Section 54F(1) of the Act clearly stipulates that it is subject to Section 54F(4) of 1961 Act and requirement to deposit of unutilized net consideration of the asset sold in capital gain bank account or as specified by Central Government as manadated by Section 54F(4) of 1961 Act before the due date of filing of return of income as stipulated u/s 139(1) of the Act is an essential requirement to avail exemption u/s 54F of 1961 Act or else the amount is invested in new residential property before the date of furnishing of return of income u/s 139 of 1961 Act . The assessee while claiming benefit under exemption provision has to prove its entitlement strictly in accordance with the provision of statute granting exemption and once the assessee proves its entitlement to exemption in accordance with provision of statute, then the said provision is to be liberally construed to give full effect to provision granting exemption to achieve the desired object of granting exemption. The assessee in the instant case did not deposited the entire net consideration received on transfer of original asset on which long term capital gain arose either in new residential property nor deposited the unutilized portion of net consideration on transfer of original asset with capital gain account with bank or as stipulated by Central Government. Section 54F of 1961 Act as was in force during relevant period is reproduced hereunder:

“ [Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital

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gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where— (a) the assessee,— (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property”.] Explanation.—For the purposes of this section,— [***] [***] “net consideration”, in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of [two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head “Income from house property”, other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head “Capital gains” relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head “Capital gains” relating to long-term capital assets of the previous year in which such new asset is transferred.] [(4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the ITA 5420/Mum/2016 13

case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount by which— (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub- section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires ; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid. Explanation.— [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]]”

The provisions of section 54F of the Act has been considered by the Hon’ble Bombay High Court in detail in the case of Humayun Suleman Merchant (supra) wherein similar issue arose before Hon’ble Bombay High Court and decision of jurisdictional High Court is binding on us , wherein Hon’ble Court has discussed the issue of Section 54F(4) and 54F(1) of 1961 Act in details and held that the benefit of Section 54F of 1961 Act will be available for the amount invested in acquiring new residential house property till the date of actual filing of return of income even though belatedly filed within period stipulated u/s 139(4) of 1961 Act, in case the assessee did not comply with deposit of unutilized net consideration with capital gain account with bank as stipulated u/s 54F(4) of 1961.The Hon’ble Bombay High Court also held that Section 54F(1) of 1961 Act is subject to Section 54F(4) of 1961 Act after amendment brought in by Finance Act, 1987 w.e.f. 01-04-1988 and it is ITA 5420/Mum/2016 14

essential for the tax-payer to comply with provisions of Section 54F(4) of 1961 Act. The decision of Hon’ble Bombay High Court in Humayun Suleman Merchant(supra) is reproduced hereunder:

“(d) For a proper appreciation of the rival submissions, it is necessary to reproduce the relevant portion of Section 54F of the Act which arises for our consideration : "54F(1)[Subject to the provisions of sub-Section (4), where, in the case of an assessee being an individual or a Hindu undivided family] the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this Section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased or has within a period of three years after that date constructed, a residential house (hereafter in this Section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this Section, that is to say - (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under Section 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under Section 45: Provided that nothing contained in this sub-Section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset. (2) & (3)** ** ** (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-Section (1) of Section 139] in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and for the purposes of sub-Section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-Section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in ITA 5420/Mum/2016 15

sub-section (1), then - (i) the amount by which - (a) the amount of capital gain arising from the transfer of the original asset not charged under Section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-Section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilized by the assessee for the purchase or construction of the new asset within the period specified in sub-Section (1) been the cost of the new asset, shall be charged under Section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilized amount in accordance with the scheme aforesaid." (e) We shall first examine the scheme of Section 54F of the Act. Section 54F is part of Chapter IV of the Act which inter alia provides for computation of total Income and for that purpose, sets out the various heads of income. Part E of Chapter VI deals with the head of income viz. Capital Gains. It provides for Computation of Capital gains and also for exemption available thereunder. Section 54F of the Act introduced into the Act with effect from 1st April, 1983 by the Finance Act, 1982 provides exemption from Capital gain on transfer of any long term capital asset in case the same is invested in a residential house. However, the Section when introduced provided that any capital gain arising from transfer of long-term capital asset would not be chargeable to capital gains tax, if the same were utilized for purchase of an housing accommodation within a year before or after the date on which the transfer of an capital asset took place or was used for construction of a residential house within a period of three years from the date of transfer of the Capital Asset. (f) Thus, Section 54F of the Act as incorporated made available the benefit of exemption to purchase a house within one year (amended to two years) or construct a residential house within a period of 3 years from the date on which capital asset has been sold. However, while implementing Section 54F of the Act, it was noticed that at times assessments were completed prior to the expiry of above period of two/three years from the date of sale of the Capital Asset and the assessee had not utilized the amount within the prescribed period provided in Section 54F of the Act. This would lead to Assessment orders being rectified by appropriate orders, to determine the availability of benefit of exemption under Section 54F of the Act. (g) This led to the introduction of sub-section (4) to Section 54F of the Act by the Finance Act, 1987 with effect from 1st April, 1988. Besides introducing sub-section (4) to Section 54F the Finance Act, 1978, also amended Sub-section (1) of Section 54F of the Act to make it subject to provision of sub-section (4) thereof. (h) As we are concerned with Assessment Year 1996-97, it is the amended provision which applies. Therefore, now Section 54F(1) of the Act which grants exemption from Capital gain tax where a flat is purchased either within one year prior to the sale of capital asset or within 2 years after the date of sale of the capital asset or where a residential house is constructed within 3 years from the date of sale of the capital asset, is now subject to the ITA 5420/Mum/2016 16

provisions of Section 54F(4) of the Act. Thus, where the consideration received on sale of capital asset is not appropriated (where purchase was earlier than sale) or utilized (where purchase is after the sale) then the same would be subject to the charge of capital gain tax, unless the unutilized amounts are deposited in specified bank account as notified in terms of Section 54F(4) of the Act. The exemption would be available to the unutilized amounts only if the mandate of sub-section (4) of Section 54F of the Act is complied with. Further the proviso to sub-section (4) of Section 54F of the Act, safeguards the Revenue where the assessee had not invested the amounts chargeable to Capital Gains within the time prescribed under sub-section (1) of Section 54F of the Act. This by providing that in such cases, Capital Gain under Section 45 of the Act would be charged on the unutilized amount as Income of the previous year in which the period of three years from the date of transfer of the capital asset expires. (i) On the basis of the above broad analysis, we shall now examine the facts of the present case. The sale of capital asset took place on 29th April, 1995 for a consideration of Rs. 85.33 lakhs. The agreement for purchase of construction of flat for consideration of Rs. 69.90 lakhs was entered into by the appellant on 16th July, 1996. An amount of Rs. 35 lakhs were utilized by the Appellant in purchase of flat before the return of income was filed on 4th November, 1996 under Section 139 of the Act. However, the mandate under sub-Section (4) of Section 54F of the Act is that the amount not utilized towards the purchase of the flat has to be deposited before the due date of filing return of Income under Section 139(1) of the Act in the specified bank account. In this case admittedly the entire amount of capital gains on sale of asset which is not utilized has not been deposited in a specified bank account before due date of filing of return under Section 139(1) of the Act. Therefore where the amounts of capital gains is utilized before filing of the return of income in purchase/construction of a residential house, then the benefit of exemption under Section 54F of the Act is available. Before us it is an undisputed position that except Rs. 35 lakhs, the balance of the amounts subject to capital gains tax has not been utilized before date of furnishing of return of income i.e. 4th November, 1996 under Section 139 of the Act. Therefore, on plain interpretation of Section 54F of the Act, it appears that the impugned order of the Tribunal cannot be faulted. (j) However, the aforesaid view would be subject to the result of our examination of the submissions and case laws relied upon by Mr. Chatterji in support of the appeal to urge a view contrary to the plain meaning of Section 54F of the Act. (k) Reliance placed by the Appellant upon the decision of this Court in Mrs. Hilla J. B. Wadia's case (supra) to contend that the issue stands concluded in favour of the appellant- assessee is not acceptable. This for the reason that the only issue for consideration before the Court in the above case was the interpretation of Section 54 of the Act. In the above case the assessee had sold her residential property and invested a substantial amount in a Society for construction of a residential flat in the building to be constructed. The assessee therein had paid substantial amounts to the society and also acquired domain over the flat within a period of 2 years from the date of the sale of her house. At that point of time i.e. for the Assessment Year 1973-74 there was no requirement of depositing any unutilized amount in a specified bank account as now provided under Section 54(2) of the Act (similar to Section 54F(4) of the Act). Therefore the Court had no occasion to consider the provisions of Section 54(2) of the Act which is similar to Section 54F(4) of the Act, with which we are concerned. (l) Mr. Chatterji, then placed reliance on the observation of this Court in Mrs. Hilla J.B. Wadia's case (supra) that the Circular issued by the Central Board of Direct Taxes dated 15th October, 1986 in relation to construction of a home by Delhi Development Authority

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should also be extended to cities like Mumbai, as there is no control over the time taken by the developer/builder to construct the house and give possession of the same to the assessee. The Central Board of Direct Taxes Circular dated 15th October, 1986 was issued only in the context of Section 54 and 54(F) of the Act to clarify that an investment in a flat under the self-finance scheme of Delhi Development Authority would be treated as construction for the purpose of capital gain, where an allotment letter has been issued by the Authority and facility of payment in instalment is provided for the purchase of flat. It did not even remotely concern itself with the provision of Section 54(2) and/or 54F(4) of the Act with which we are concerned. The Circular only extended the meaning of constructing a residential house within a period of three years from the sale of the capital asset. The subsequent Circular issued in 16th December, 1993 by the Central Board of Direct Taxes relied upon by the Appellant, only extended the meaning of "constructed within a period of three years" to allotment letters issued by the Co-operative Housing Society or other similar institution for the purpose of section 54F of the Act. Therefore, it does not in any manner do away with and/or relax the statutory mandate of depositing the unutilized amount in the specified bank account as required by sub-section (4) of Section 54F of the Act. Therefore, neither the decision of this Court in Mrs. Hilla J. B. Wadia's case (supra) nor the Central Board of Direct Taxes Circulars dated 15th October, 1986 and 16th December, 1993 would govern the issue so as to conclude the issue in favour of the Appellant. (m) The reliance upon the decision of the M.P. High Court in Smt. Shashi Varma's case (supra), also does not advance the case of the Appellant. We find that the facts in the above case are similar to the one in Mrs. Hilla J.B. Wadia's case (supra) and for the same reasons, will not govern the present dispute. In fact, the issue stood covered by the Circular dated 15th October, 1986 as the property purchased therein was of the Delhi Development Authority. Thus, the above decision has no application to the present facts. (n) Mr. Chatterji, learned Senior Counsel appearing for the appellant assessee then contended on the basis of the two Circulars dated 15th October, 1986 and 16th December, 1993 of the Central Board of Direct Taxes that once an allotment letter has been issued to the assessee, then it follows that the title of the constructed house has passed on to the assessee. Therefore the payment made subsequent to allotment letter in instalments would not in any manner affect the assessee having satisfied Section 54F(1) of the Act. This submission ignores the fact that Sub-Section (1) of Section 54F has been made subject to Sub-Section (4) of the Act. The requirement under Section 54F(4) of the Act is the deposit of the unutilized amount in the specified bank account till it is utilized. This requirement has not been done away with in either of the above two Circulars dated 15th October, 1986 and 16th December, 1993 relied upon by the Appellant-Assessee. (o) Mr. Chatterji, learned Senior Counsel next submitted that in any case the issue now stands concluded in favour of the Appellant by the decision of the Karnataka High Court in K. Ramachandra Rao's case (supra) wherein an identical question came up for consideration and it was held that even where the assessee had not deposited the unutilized Capital Gain in an account which was duly notified by the Central Government in terms of Section 54F(4) of the Act, the benefit of Section 54F(1) of the Act would still be available. The Court held that if the intention was not to retain the capital gains but was to invest it in construction of property within the period stipulated in Sub-Section (1) of Section 54(F) of the Act then Section 54F(4) of the Act is not at all attracted. We are with respect unable to accept the reasoning adopted by Karnataka High Court in K. Ramachandra Rao's case (supra). The mandate of Section 54F(4) of the Act is clear that amount which has not been utilized in construction and/or purchase of property before filing the return of income, must necessarily be deposited in an account duly notified by the Central Government, so as to be exempted.

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(p) Further, Section 54F(4) of the Act specifically provides that the amounts which have not been invested either in purchase/construction of house have to be deposited in the specified accounts before the due date of filing of return of income under Section 139(1) of the Act. The aforesaid aspect it appears was not noticed by the Karnataka High Court. In any case, the entire basis of the decision of the Karnataka High Court in K. Ramachandra Rao's case (supra) is the intent of the parties. In interpreting a fiscal statute one must have regard to the strict letter of law and intent can never override the plain and unambiguous letter of the law. It is true that normally while construing an all India Statute like the Income Tax Act, we would not easily depart from a view taken by another High Court on an issue arising for our consideration. This on consideration of certainty and consistency in law. However, the view of the other High Courts are not binding upon us unlike a decision of the Apex Court or of Larger or a Co-ordinate Bench of this Court. Thus if on an examination of the decisions of the other High Court we are unable to accept the same, we are not bound to follow/accept the interpretation of the other High Courts leading to a particular conclusion. In this case we find that the decision of the Karnataka High Court in K. Ramachandra Rao's case (supra) was rendered sub-silentio i.e. no argument was made with regard to the requirement of deposit in notified bank account in terms of Section 54F(4) of the Act before the due date as provided in Section 139(1) of the Act. As observed in Salmond's Jurisprudence 12th Edition : "The rule that a precedent sub silentio is not authoritative goes back at least to 1661(m) when Counsel said : 'An hundred precedents sub-silentio are not material'; and Twisden J agreed : 'precedents sub-silentio and without argument are of no moment'. This rule has ever since been followed." (q) In fact this Court in CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 (Bom.) has observed that a decision of one High Court is not binding as a precedent on another High Court unlike a decision of the Apex Court. In support, reliance was placed in the above order upon the decision of the Apex court in Valliamma Champaka Pillai v. Sivathanu Pillai AIR 1979 SC 1937 to hold that it is well settled that decision of one High Court is not a binding precedent upon another High Court and at best can only have persuasive value. However, at the cost of repetition we must emphasize that the decision of another High court rendered in the context of an all India Act would have persuasive value and normally to maintain uniformity and certainty we would adopt the view of the other High Court. However, with the greatest respect, we find that the decision of Karnataka High Court in K. Ramachandra Rao's case (supra) has been rendered sub-silentio. Therefore, we cannot place any reliance upon it to conclude the issue on the basis of that decision. (r) It was next contented by Mr. Chatterji, that liberal/beneficial construction should be given to the provision of Section 54F of the Act as its object was to encourage the housing sector which would result in the benefit being extended to the appellant assessee. In support, reliance was placed upon the decision of Delhi High Court in Ravinder Kumar Arora's case (supra). We find that observation of the Delhi High Court in Ravinder Kumar Arora's case (supra) that Section 54F of the Act should be liberally construed was in the context of the benefit being denied as the name of the wife was added to purchase made by the assessee of a new flat. This denial was even though all the requirements of Section 54F of the Act stood satisfied. Therefore the observation of the Delhi High Court would have no application to the present facts. (s) It is a settled position in law that no occasion to give a beneficial construction to a statute can arise when there is no ambiguity in the provision of law which is subject to interpretation. Thus in the face of the clear words of the Statute the intent of parties and/or beneficial construction is irrelevant. In fact, the Apex court in Sales Tax

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Commissioner v. Modi Sugar Mills [1961] 12 STC 182 reiterated the well settled principle of interpretation in the following words: "In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statute be interpreted on any presumption or assumptions....It must interpret a taxing statute in the light of what is clearly expressed . . ." Recently, the Supreme Court in Mathuram Agrawal v. State of Madhya Pradesh [1999] 8 SCC 667 has observed as under :— "The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the Legislature . . . " (Emphasis Supplied) Similarly this Court in Thana Electricity Supply Ltd's case (supra) had observed as under :— "If the provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted. This is a well-accepted view of law. It is the satisfaction of the court interpreting the law that the language of the taxing statute is ambiguous or reasonably capable of more meanings than one, which is material. If the court does not think so, the fact that two different views have been advanced by the parties and argued forcefully or that one such view which is favourable to the assessee has been accepted by some Tribunal or High Court, by itself will not be sufficient to attract the principle of beneficial interpretation" In the present facts the provision of Section 54F(4) of the Act are very clear. There is no ambiguity. Thus, there is no occasion to apply liberal/beneficial construction while interpreting the Section as contended by the Appellant. (t) It was next contended by Mr. Chatterji, learned Senior Counsel for the appellant that the word "appropriation" used in Section 54F(4) of the Act would also apply in the present case where the capital asset has been sold and sale proceeds are earmarked to be invested in construction of house. A plain reading of Section 54F(4) of the Act militates against it. As pointed out by Mr. Malhotra, learned Counsel appearing for the revenue, Section 54F(4) of the Act deals with two classes of cases, one where purchase of new residential house is within a period of one year before the date on which capital asset is sold by assessee and second class of cases where the amount subjected to capital gains are utilized for purchase/constructing a flat, post the sale of the capital asset. In the present facts we are concerned with the second class i.e. purchase post the sale of the capital asset. (u) The parliament has used the word "appropriated" in the first class of cases i.e. where property has already been purchased prior to the sale of capital asset and the amount received on sale of capital asset is appropriated towards consideration which has been paid for purchase of the flat. In this case we are concerned with the purchase/construction of ITA 5420/Mum/2016 20

residential housing, after the sale of capital asset. This requires the amount which is to be subjected to capital gain has to be utilized before the date of filing of return of Income under Section 139 of the Act by the assessee. Section 54F(4) of the Act itself clearly states that the amount not utilized in purchase/construction of flat/house should be deposited in the specified Bank notified by the Government. Thus the plain language employed in Section 54F(4) of the Act makes a clear distinction between cases of appropriation (purchase prior to sale of capital asset) and utilization (purchase/construction after the sale of capital asset). Therefore the word "appropriated" would have no application in cases of purchase/construction of a house after the sale of capital asset with which we are concerned. (v) Lastly and in the alternative, it is submitted by Mr. Chatterji, that as the entire amount has been paid to the developer/builder before the last date to file the return of Income under Section 139 of the Act, the exemption is available to the appellant under section 54F(4) of the Act. In support, the decision of Gauhati High Court in Rajesh Kumar Jalan's case (supra) is relied upon. The Gauhati High Court in the above case was concerned with the interpretation of Section 54 of the Act. It construed the provision of sub-Section (2) of Section 54 of the Act which is identically worded to sub-section (4) of Section 54F of the Act The Court in the aforesaid decision held that the requirement of depositing before the date of furnishing of return of Income under Section 139 of the Act has not to be restricted only to the date specified in Section 139(1) of the Act but would include all sub-section of Section 139 including sub-section (4) of the Act. On the above basis it concluded that if the amount is utilized before the last date of filing of the return under Section 139 of the Act then the provision of Section 54(2) of the Act would not hit the assessee before it. It is not very clear in the above case whether the amounts were utilized before the assessee filed its return of income or not. (w) However, the factual situation arising in the present case is different. The return of income is admittedly filed on 4th November, 1996. In terms of Section 54F(4) of the Act as interpreted by the Gauhati High Court in Rajesh Kumar Jalan's case (supra) the amounts subject to capital gain on sale of the capital asset for purpose of exemption, has to be utilized before the date of filing of return of income. In this case 4th November, 1996 is the date of filing the return of Income. It is not disputed that on 4th November, 1996 when the return of income was filed, the entire amount which was subject to capital gain tax had not been utilized for the purpose of construction of new house nor were the unutilized amounts deposited in the notified Bank Accounts in terms of Section 54F(4) of the Act before filing the return of income. It is also to be noted that in line with the interpretation of Gauhati High Court on Section 54F(4) of the Act, the Assessing Officer had taken into account all amounts utilized for construction of a house before filing the return of income on 4th November, 1996 for extending the benefit of exemption under Section 54F of the Act. Therefore, in the present facts, the decision of the Gauhati High Court in Rajesh Kumar Jalan's case (supra) would not apply so as to hold that the appellant had complied with the Section 54F(4) of the Act. (x) In the above view question no. 2 is also answered in the affirmative i.e. in favour of the revenue and against the appellant-assessee.”

In our considered view, the assessee cannot get the benefit of Section 54F of the unutilized amount to the tune of Rs. 41,27,149/- as the said amount has not been invested by the assessee in the purchase/construction of new

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residential house property at Mahabaleshwar till the date of filing of return on 18-08-2011 nor the same has been deposited by the assessee in capital gain account with bank as stipulated u/s 54F(4) of 1961 Act. The assessee had claimed that she issued cheque to the Builder to the tune of Rs. 40,45,975/- dated 12th August, 2011 which was returned back to the assessee by the said builder namely ‘Kumar Builders’ a month later on 12-09-2011 with the comments "cheque sent back as favoring is wrong and date is also rewritten". The assessee has prayed that benefit of said cheque amount of Rs. 40,45,975/- should be granted to assessee u/s 54F of 1961 Act as it shows that the assessee made the payment on 12-08-2011 but due to some technical errors , cheque was returned by builder after one month . As per agreement dated 17-01-2011 , the assessee was required to issue the cheques in favour of ‘Windsor Park Collection account’. All other cheque were issued by the assessee in favour of ‘Windsor Park Collection account’ except this cheque which was stated to be returned by builder after one month due to technical reasons. The afore-said contentions of the assessee cannot be accepted due to following reasons : 1. The assessee could not explain why she issued this cheque of Rs. 40,45,975/- dated 12-08-2011 favouring ‘Kumar Builders’ while all other cheques were issued in favour of ‘Windsor Park Collection account’ , and more-so ‘Windsor Park Collection account’ was the correct payee for issuance of cheque instead of ‘Kumar Builders’ as per agreement dated 17-01-2011. 2. The assessee did not brought on record that the assessee bank was sufficiently funded during the period 12-08-2011 till it was returned a month later by Kumar builder . It was incumbent on the assessee to have brought on record the said evidence to prove its bonafide and no such evidence is brought on record .

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confidence and cannot be accepted to the extent of granting exemption u/s 54F of 1961 Act due to reasons cited above. Thus, based on our above detailed discussions and reasoning and keeping in view factual matrix of the case, the assessee will be entitled to benefit u/s 54F of 1961 Act of the amount which was invested by the assessee in acquiring the aforesaid new under construction residential property till the date of filing of return of income on 18-08-2011 for which the AO is directed to grant exemption u/s 54F of 1961 Act after verification of records . The other case laws cited by assessee are considered by us but being a direct and detailed judgment of Hon’ble Bombay High Court in the case of Humayun Suleman Merchant(supra) for allowability of exemption u/s 54F of 1961 Act which is binding on us wherein the issue under this instant appeal also arose before Hon’ble Bombay High Court which was decided by Hon’ble Court after detailed discussions in Humayun Suleman Merchant(supra) and the assessee not able to bring any other direct judgment of Court higher in hierarchy in support of its contentions, we are bound to follow the binding ratio of law laid down by Hon’ble Bombay High Court in the case of Humayun Suleman Merchant(supra) . We order accordingly.

Order pronounced in the open court on 30th March, 2017. आदेश क" घोषणा खुले "यायालय म" "दनांकः 30-03-2017 को क" गई । sd/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; "दनांक Dated 30-03-2017

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व."न.स./ R.K. R.K. R.K., Ex. Sr. PS R.K.

आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant 2. ""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- concerned, Mumbai 4. आयकर आयु"त / CIT- Concerned, Mumbai "वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai H” Bench 5. 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त //// उप/सहायक पंजीकार (Dy./Asstt.