IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `C' NEW DELHI
BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No. 6432/DEL/2015
A.Y 2012-13
Sh. Vijay Chaudhary Vs ITO, Ward 4(4)
C/o Ravi Gupta, Advocate Gurgaon
E-6A, Kailash Colony
New Delhi 110 048
PAN: AHIPC1553B
(Appellant) (Respondent)
Appellant by Sh. Rajesh Jain, C.A.
Respondent by Sh. Amit Katoch, Sr.D.R.
Date of Hearing 04.06.2019
Date of Pronouncement 10.06.2019
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 28/09/2015
passed by the CIT(A)-2, Gurgaon for Assessment Year 2012-13.
2. The grounds of appeal are as under:-
"1. That the Ld.CIT(A) has erred in law and on facts in confirming the order of
the AO.
2. That the Ld.CIT(A) has erred in law and on facts in sustaining the reduction
of exemption u/s 54 by Rs.46,75,657/-.
3. That the impugned appellate order is arbitrary, illegal, bad in law and in
violation of rudimentary principles of contemporary jurisprudence.
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ITA No.6432/Del/2015 AY: 2012-
Sh. Vijay Chaudhary vs. ITO
4. That the appellant craves leave to add, alter any/all grounds of appeal
before or at the time of hearing of the appeal."
3. The assessee has filed return declaring total income of Rs.6,40,320/- on
27.9.2012. During the course of assessment proceedings the Assessing Officer
noted that the assessee sold residential house situated at Raj Nagar,
Ghaziabad on 19.08.2011 for a consideration of Rs.1,05,00,000/-. Capital
gain on this transaction was shown at Rs.1,02,03,907/-. This capital gain was
claimed as exempt u/s 54 of the Income Tax Act, 1961 (the Act) on the ground
that the assessee constructed the residential house within the stipulated time.
The Assessing Officer observed that the assessee purchased a residential plot
in Sector 9, Gurgaon on 12.05.2011 for an amount of Rs.52,65,000 + Stamp
duty of Rs.2,63,250/- in the name of his wife Smt. Renu Chaudhary. After
purchasing the plot, the assessee constructed a house which was completed
within 3 years as the Competent Authority issued the Occupation Certificate on
25.07.2014. The assessee, however, did not deposit the unutilized part of the
sale consideration in an account in a specific bank or Institution before due
date of filing return u/s 139(1). The assessee before the Assessing Officer
submitted that the whole of funds for purchase of new plot for the purpose of
construction of new residential house to claim exemption u/s 54 of the Act
were utilized by the assessee out of advance money received from sale of old
residential house. The sale funds though invested by assessee in his wife's
name were out of sale proceeds of old house only. The assessee further
submitted before the Assessing Officer that in these circumstances the
investment towards purchase of plot in the name of his wife out of advance
received from sale of house was eligible for deduction u/s 54 of the Act. The
assessee also relied upon various case laws before the Assessing Officer. The
Assessing Officer after considering assessee's contentions, disallowed
Rs.46,75,657/- as claimed by assessee as deduction u/s 54 of the Act. The
Assessing Officer held that the claim of deduction on the balance amount was
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Sh. Vijay Chaudhary vs. ITO
not allowable as assessee failed to deposit the balance amount in the account
in specified bank or Institution before due date of filing of return u/s 139(1) of
the Act.
4. Being aggrieved by the assessment order, the assessee filed appeal before
the CIT(A) and dismissed the appeal of the assessee.
5. The Ld. AR submitted that the assessee has purchased the residential
plot from the sale proceeds of the earlier residential house. The sale proceeds
were utilized for construction of residential house and, therefore, deduction
u/s 54 is rightly claimed by the assessee. The Ld. AR relied upon the decision
of the Hon'ble Karnataka High Court in the case of CIT vs. Shri K Ramchandra
Rao (2014) 89, CCH 396. (Kar HC).
6. The Ld. DR distinguished the decision of Hon'ble Karnataka High Court
and submitted that the Assessing Officer as well as the CIT(A) rightly
disallowed the claim u/s 54 made by the Assessee.
7. We have heard both the parties and perused all the material available on
record. The Hon'ble Karnataka High Court in case of Shri K Ramchandra Rao
(supra) held as under:
"3. ..........
2) Whether the assessee invests the entire sales consideration in
construction of a residential house within three years from the date of
transfer can he be denied exemption under Section 54F on the ground that
he did not deposit the said amount in capital gains account scheme before
the due dated prescribed under Section 139(1) of the IT Act?
.........
4. Re. Question No. 2:
As is clear from Sub Section (4) in the event of the assessee not investing the
capital gains either in purchasing the residential house or in constructing a
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Sh. Vijay Chaudhary vs. ITO
residential house within the period stipulated in Section 54F(1), if the
assessee wants the benefit of Section 54F, then he should deposit the said
capital gains in an account which is duly notified by the Central Government.
In other words if he want of claim exemption from payment of income tax by
retaining the cash, then the said amount is to be invested in the said account.
If the intention is not to retain cash but to invest in construction or any
purchase of the property and if such investment is made within the period
stipulated therein, then Section 54F(4) is not at all attracted and therefore the
contention that the assessee has not deposited the amount in the Bank
account as stipulated and therefore, he is not entitled to the benefit even
though he has invested the money in construction is also not correct.
5. For the aforesaid reasons both the substantial questions of law are
answered in favour of the assessee and against the Revenue. Therefore, we
do not see merit in any of the appeals. Accordingly, all the four appeals are
dismissed."
In the present case, the assessee has purchased the residential plot from the
sale proceeds of the earlier residential house. The sale proceeds were utilized
for construction of residential house with the three years itself. The decision of
the Hon'ble Karnataka High Court is apt in the present case as the Hon'ble
High Court held that it is not a pre-condition to invest the money in the
specified Central Govt. Scheme of the sale proceeds if the property is
purchased and constructed for residential purposes. Though the Ld. DR tried
to distinguish the factual matrix but the same is not tenable as the ratio and
the facts determined by the Hon'ble Karnataka High Court are similar to the
present assessee's case as well. Therefore, the appeal of the assessee is
allowed.
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Sh. Vijay Chaudhary vs. ITO
8. In result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 10th June, 2019.
Sd/- Sd/-
(G. D. AGRAWAL) (SUCHITRA KAMBLE)
VICE PRESIDENT JUDICIAL MEMBER
Dated: 10/06/2019
*Gmv
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date
Draft dictated on 04/06/19
Draft placed before author 06/06/19
Draft proposed & placed before the second
member
Draft discussed/approved by Second
Member.
Approved Draft comes to the Sr.PS/PS
Kept for pronouncement on /06/19
&
Order uploaded on :
File sent to the Bench Clerk
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.
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