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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh, & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 24/07/2012 of the ld. First Appellate Authority, Mumbai. The only ground agitated in this appeal by the Revenue pertains to holding that the assessee was entitled to exemption u/s 54F of the Income Tax Act, 1961 (hereinafter the Act) amounting to Rs.34,62,522/- without appreciating the fact that the purchase and cancellation transactions claimed to have been made by the assessee with M/s Devendra Associates, wherein, the assessee is a partner, is a sham transaction.
During hearing, the ld. DR, Shri Mohammad Rizwan, advanced arguments, which is identical to the ground raised above. On the other hand, Shri Suresh Patni, ld. counsel for the assessee, advanced arguments in support of the conclusion drawn in the impugned order.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee, an individual and also partner in the firm namely M/s Devendra Associates, is engaged interest he business of builder and developer, declared income of Rs.2,47,290/- in his return filed on 05/02/2010, which was processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny, therefore, notice u/s 143(2) was served upon the assessee along with subsequent notice u/s 142(1) of the Act along with questionnaire. The assessee attended the proceedings. For the year under consideration, the assessee received income from M/s Red Rose Enterprise, M/s Devendra Associates, M/s Samyak Fab, Capital gain and also income from other sources. During the year under consideration, the assessee sold non-agriculture land for a consideration of Rs.40 lakh, which was earlier purchased on 15/09/2005 at the cost of Rs.4,58,980/- (Indexed cost Rs.5,37,478/-) resulting into long term capital gain of Rs.34,62,522/-. The assessee invested the sale proceeds of Rs.40 lakh of purchase of new flat on 15/12/2009, whereas, the sale of non- agriculture land took place on 21/12/2008, thus, the capital gains accrued to the assessee on the date of sale. The stand of the Assessing Officer as well as of the ld. DR is that since, as per the provisions of section 54F of the Act, if the amount is not utilized for purchase/construction of new house, till the date of filing of return, then the amount should be deposited “in capital gain deposit accounts scheme” and since the assessee had invested the sale proceed for the purchase of the new flat only on 15/12/2009, therefore, the assessee was asked as to why the claimed capital gain of Rs.34,62,522/- should not be taxed in the hands of the assessee as per provisions of section 54(ii)/54F of the Act. The assessee explained that he made the investment of Rs.40 lakh vide registered deed dated 15/12/2009 and the source of the investment was sale proceed of Rs. 40 lakh, received on sale of agriculture land on 21/12/2008 and further the sale consideration was utilized in new residential house and the assessee furnished the details of return of income on 30/09/2009, therefore, the same was not required to be deposited in capital gain account scheme. However, not satisfied with the explanation of the assessee, the claimed exemption u/s 54F was denied to the assessee.
2.2. On appeal, before the ld. Commissioner of Income Tax (Appeals), the factual matrix was considered and by following the decision in Nipun Mehrotra vs ACIT (2008) 110 ITD 520 (Banglore), CIT vs Rajesh Kumar Jalan (2006) 286 ITR 274 (Guwahati), CIT vs Prem Narayan Bhatia (195 taxman 152) (P & H) and various other decisions, the claimed exemption was allowed to the assessee. Now the Revenue is aggrieved and is in appeal before this Tribunal.
2.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, the main objection of the Department is that while coming to a particular conclusion, the ld. Commissioner of Income Tax (Appeals) did not appreciate that due date of filing of return is the date as per provisions of section 139(1) and not section 139(4) of the Act. We find that this issue has been deliberated upon by Hon’ble Guwahati High Court in CIT vs Rajesh Kumar Jalan (Supra) by holding that section 139 mentioned with respect to section 54F(4) shall include all sub-sections of section 139 of the Act. Thus, this fact is not in dispute even by the ld. Assessing Officer that sale consideration was utilized for purchase of residential property before filing of return u/s 139(4) of the Act. In the present case, the date of filling of return of income u/s 139(4) of the Act was 31/03/2010, whereas, the assessee filed his return on 05/02/2010. The assessee utilized the sale proceeds by investing in the residential flat on 15/12/2009, therefore, we find that section 54(2) was substituted by Finance Act, 1987, which has been elaborated in Circular No.495 dated 22/10/1987. The decision from Hon’ble Punjab & Haryana High Court in CIT vs Prem Narayan Bhatia (195 taxman 152) supports the case of the assessee. Undisputedly, the assessee within one year after the date of transfer, resulting in capital gains, invested the claimed sale proceeds of Rs.40 lakh in purchase of the flat, thus, the decision from Hon’ble Guwahati High Court in Rajesh Kumar Jalan (supra) comes to the rescue of the assessee, because, the assessee utilized the sale proceeds and acquired new asset before filing the return u/s 139 (4) of the Act. The requirement of section 54F is that the assessee has utilized the amount/sale consideration for acquiring new asset before furnishing of return u/s 139 and since no discrimination has been made u/s 139(1) or 139(4) with respect to section 54F of the Act, therefore, we find merit in the contention of the assessee.
2.4. By the Finance Act, 2000, a new proviso has been substituted (w.e.f.01/04/2001). The scope and effect of the substitution have been elaborated in Departmental Circular No.794 dated 09/08/2000. The provisions of section 54F of the Act specifically deal with the situation, where the assessee in order to save himself from payment of tax of capital gains decides to either purchase a house or construct a house within the specified period and if he fails to do so, the statute provides as to when the capital gains are to be treated as having arisen. The ratio laid down in CIT vs Sardar Mal Kothari (2008) 302 ITR 286 (Madras), CIT vs S Uday kumar (2012) 345 ITR 389 (Karnataka), CIT vs Jawahar Bhattacharyaji (2012) 342 ITR 74 (Guwahati ) and CIT vs Gita Duggal 357 ITR 153 (Del.), CIT vs P R Sehshadri 329 ITR 377 (Karn.), CIT vs Rajiv Shukla 334 ITR 138(Del.), CIT vs Ashok Kumar Rallhan 360 ITR 575 (Del.) supports our view. There is categorical finding in the impugned order that the assessee sold the assessee on 251/12/2008 and utilized the same for purchase of new asset on 15/12/2009 i.e. before date of furnishing of return of income u/s 139(4) of the Act (which was filed on 05/02/2010), therefore, we find no infirmity, in the conclusion of the ld. Commissioner of Income Tax (Appeals). It is affirmed. Finally, the appeal of the Revenue is dismissed. This order was pronounced in the open court in the presence of the ld. representative from both sides at the conclusion of the hearing on 03/12/2015