M/s P.R. Kulkarni & Sons (HUF), Mysore v. Addl.CIT, Mysore

ITA 569/BANG/2009 | 2006-2007
Pronouncement Date: 29-01-2010 | Result: Allowed

Appeal Details

RSA Number 56921114 RSA 2009
Assessee PAN URING1810S
Bench Bangalore
Appeal Number ITA 569/BANG/2009
Duration Of Justice 7 month(s) 24 day(s)
Appellant M/s P.R. Kulkarni & Sons (HUF), Mysore
Respondent Addl.CIT, Mysore
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-01-2010
Date Of Final Hearing 09-12-2009
Next Hearing Date 09-12-2009
Assessment Year 2006-2007
Appeal Filed On 05-06-2009
Judgment Text
PAGE 1 OF 14 ITA NO.569/B/09 1 THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI SHAILENDRAKUMAR YADAV J.M. AND SHRI N L KALRA A.M. ITA NO.569/BANG/2009 (ASST. YEAR 2006-07) M/S P R KULKARNI & SONS (HUF) NO.34/1 1ST MAIN ROAD YADAVAGIRI CIRCLE YADAVAGIRI MYSORE. - APPELLANT VS THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-1 MYSORE. - RESPONDENT APPELLANT BY : SHRI KRISHNAMOORTHY P. RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER N L KALRA : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF LEARNED CIT(A) MYSORE DATED 26TH MARCH 2009. 2. THE GROUNDS OF APPEAL RAISED ARE AS UNDER:- I) THE HON'BLE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 54F OF THE I T ACT IN RESPECT OF THE CAPITAL GAIN ARISING DURING THE ASST. YEAR IN QUESTION. II) THE HON'BLE CIT(A) ERRED IN HOLDING THAT IN RESPECT OF THE TRANSACTIONS OF THE ASSESSEE WITH SILVER OAK BUILDERS & DEVELOPERS AND SHOBHA DEVELOPERS BOTH ARE CASES OF PAGE 2 OF 14 ITA NO.569/B/09 2 CONSTRUCTION AND AS THE ASSESSEE HAD CONSTRUCTED TWO APARTMENTS WITHIN THE PERIOD OF THREE YEARS THE PROVISIONS OF SUB CLAUSE (III) TO SECTION 54F(1) ARE ATTRACTED WITHOUT APPRECIATING THAT THE TWO TRANSACTIONS WERE MATERIALLY DIFFERENT. III) THE HON'BLE CIT(A) COMPLETELY OVERLOOKED THAT THE REGISTERED SALE DEED EXECUTED ON 6.11.2007 BY SILVER OAK BUILDERS & DEVELOPERS AND THE OTHERS OF THE LAND ON THE ONE SIDE AND THE APPELLANT ON THE OTHER SIDE WAS OF THE ENTIRE APARTMENT ITSELF ON THE SAID DATE WHICH FELL BEYOND ONE YEAR OF THE SALE OF THE ORIGINAL ASSET ON 10.3.2006 AND THAT IN THE CASE OF SHOBHA DEVELOPERS THE TRANSACTION WAS ONE FOR CONSTRUCTION AS CAN BE SEEN FROM THE FACT THAT ONLY UNDIVIDED INTEREST IN LAND WAS REGISTERED AND THUS BOTH THE TRANSACTIONS WERE ENTIRELY DIFFERENT IN MATERIAL RESPECTS. IV) THE HON'BLE COMMISSIONER ERRED IN NOT CONSIDERING THE CLAIM OF THE APPELLANT THAT THE ASSESSEE WAS ENTITLED TO EXEMPTION OF THE ENTIRE INVESTMENT UPTO THE DATE OF THE FILING OF THE RETURN U/S 139(4) AS WAS HELD BY OUR JURISDICTIONAL TRIBUNAL IN THE CASE OF NIPUN MEHROTRA REPORTED IN 297 ITR AT PAGE 110. V) THE APPELLANT DENIES LIABILITY TO INTEREST U/S 234B. 3. THE ASSESSEE DISCLOSED A SUM OF RS.25 33 039/- UNDER LONG TERM CAPITAL GAINS RECEIVED FROM THE PRI VATE TRUST IN RESPECT OF HER 33.3% SHARE FROM THE CONSIDERATION O F THE ASSETS SOLD BY THE TRUST. WHILE COMPLETING THE ASSESSMENT FOR THE ASST. YEAR 2006-07 THE TOTAL GAINS ON ACCOUNT OF SALE OF PROPERTY WAS PAGE 3 OF 14 ITA NO.569/B/09 3 RECOMPUTED AND ACCORDINGLY THE SHARE OF THE ASSESSE E WAS WORKED AS UNDER:- 1. LONG TERM CAPITAL GAINS RS.44 50 686/- 2. SHORT TERM CAPITAL GAINS RS. 3 00 835/- THE PROPERTY WHICH WAS TRANSFERRED BY THE TRUST WAS EFFECTED ON 10TH MARCH 2006. THE ISSUE BEFORE THE LEARNED CIT(A) WAS AS TO WHETHER THE ASSESSEE WAS ENTITLED TO DEDUCTIO N U/S 54F(1). FOR CLAIMING DEDUCTION U/S 54F(1) THE ASSESSEE HAS TO PURCHASE A NEW RESIDENTIAL HOUSE ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OR THE ASSESSEE MAY CONSTRUCT WITHI N 3 YEARS OF THE DATE OF TRANSFER OF A RESIDENTIAL HOUSE. THUS THE ASSESSEE WAS REQUIRED TO PURCHASE NEW RESIDENTIAL HOUSE BEFO RE 10TH MARCH 2008 OR ALTERNATIVELY THE ASSESSEE SHOULD HA VE CONSTRUCTED NEW RESIDENTIAL HOUSE WITHIN 10TH MARCH 2009. DEDUCTION U/S 54F IS SUBJECT TO PROVISO BELOW SECTI ON 54F AND AS PER THE PROVISO DEDUCTION IS NOT ALLOWABLE IN CASE THE ASSESSEE PURCHASES ANY RESIDENTIAL HOUSE (OTHER THAN THE NEW ASSET) WITHIN ONE YEAR FROM THE DATE OF TRANSFER OF ORIGIN AL ASSET OR CONSTRUCT ANY RESIDENTIAL HOUSE OTHER THAN THE ASSET WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET. A PROHIBITION HAS TO APPLY IN THE INSTANT CASE IF A SECOND NEW RES IDENTIAL HOUSE WAS TO BE PURCHASED WITHIN 10TH MARCH 2007 OR CONS TRUCTED WITHIN 10TH MARCH 2009. THE LEARNED CIT(A) NOTICE D THAT THE ASSESSEE HAS MADE ALTERNATIVE CLAIM IN RESPECT OF T WO NEW ASSETS FOR THE PURPOSES OF CLAIMING DEDUCTION U/S 54F. TH E ASSESSEE PAGE 4 OF 14 ITA NO.569/B/09 4 ENTERED INTO SALE AGREEMENT DATED 16TH MAY 2006 FOR PURCHASE OF UNDIVIDED 10% SHARE IN A RESIDENTIAL SITE ON WHI CH SILVER OAK APARTMENT WAS CONSTRUCTED. THE PROPERTY WAS REGIST ERED ON 6TH NOVEMBER 2007. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE WAS CONVEYED UNDIVIDED INTEREST IN LAND AS PER DEED DATED 6TH NOVEMBER 2007. THE POSSESSION OF T HE APARTMENT WAS GIVEN ON 28TH MAY 2008. IN RESPECT O F SECOND NEW ASSET THE ASSESSEE FILED COPY OF THE CONSTRUCTI ON AGREEMENT DATED 24TH JUNE 2006 FOR THE FLAT AND AL SO FILED COPY OF SALE AGREEMENT DATED 25TH MARCH 2008. BEFO RE THE LEARNED CIT(A) IT WAS SUBMITTED THAT SILVER OAK FL AT WAS PURCHASED ON 28TH MAY 2008. HENCE THE APARTMENT I N SILVER OAK FLAT HAS BEEN PURCHASED AFTER 10TH MARCH 2008 AND THEREFORE SUCH PROPERTY IS NOT ELIGIBLE FOR DEDUCTI ON U/S 54F. THE LEARNED CIT(A) AFTER GOING THROUGH THE SALE AGR EEMENT DATED 16TH MAY 2006 OBSERVED THAT THE PROPERTY WAS CONSTRUCTED AND NOT PURCHASED. ACCORDINGLY THE LEA RNED CIT(A) HELD THAT SILVER OAK APARTMENT HAS BEEN CONSTRUCTED AND THEREFORE THE LONGER TIME LIMIT OF 10TH MARCH 200 9 WILL APPLY TO IT. ANOTHER NEW ASSET IN SOBHA DAISY WAS AN APAR TMENT AND THAT STOOD CONSTRUCTED ON 25TH MARCH 2008. THE SE COND APARTMENT HAS ALSO BEEN CONSTRUCTED WITHIN 3 YEARS F ROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. IN VIEW OF CONSTRUCTION OF 2 FLATS WITHIN 3 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET AND DUE TO SUCH FACTUAL POSITION THE ASSESSE E IS NOT ENTITLED TO DEDUCTION U/S 54F IN VIEW OF PROVISO TO SECTION 54F. PAGE 5 OF 14 ITA NO.569/B/09 5 THE LEARNED CIT(A) THEREFORE CONFIRMED THE ACTION O F THE ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE PARTIES. THE APPELLANT ENTERED INTO SALE AGREEMENT DATED 16TH MAY 2006 WIT H MR. MANOHARAN JEYACHANDRAN AND OTHERS AND IN THAT AGREEM ENT M/S SQUARE BUILDERS AND DEVELOPERS WAS A CONFIRMING PAR TY. MR. MANOHARAN JEYACHANDRAN AND OTHERS WERE HAVING RIGHTS IN HIS SITE AND THE SITE WAS TO BE DEVELOPED BY THE CONFIRM ING PARTY I.E. M/S SQUARE BUILDERS AND DEVELOPERS. AS PER THE SAL E AGREEMENT THE ASSESSEE WAS PAID A SUM OF RS.5 LAKHS AND A BAL ANCE SUM OF RS.29 51 000 WAS TO BE PAID. THE LEARNED CIT(A) HA S REFERRED TO THE ABSOLUTE SALE DEED DATED 6TH NOVEMBER 2007. COPY OF THE SALE DEED IS AVAILABLE AT PAGES 121 TO 138 OF T HE PAPER BOOK FILED BY THE LEARNED AR. THIS IS IN CASE OF AN APAR TMENT IN THE SILVER OAK. CLAUSE (I) OF THE SALE DEED IS AS UNDE R:- 'THAT THE SELLERS HEREBY SELL TRANSFER AND CONVEY THE SAID APARTMENT UNIT BEARING FLAT NO.302 IN THE SECOND FLOOR OF THE APARTMENT BUILDING KNOWN AS 'SILVER OAK WITH SUPER BUILT-IP AREA ADMEASURING 1810 SQ FEET THE SCHEDULE C PROPERTY HEREIN TOGETHER WITH UNDIVIDED SHARE IN THE SCHEDULE A PROPERTY AS MENTIONED IN THE SCHEDULE B HEREIN BELOW IN FAVOUR OF THE PURCHASER SUBJECT TO THE TERMS AND CONDITIONS STATED HEREIN BELOW'. PAGE 6 OF 14 ITA NO.569/B/09 6 5. A TOTAL CONSIDERATION FOR THE SAID APARTMENT WA S AGREED AT RS.18 90 000/-. PURCHASER HAS PAID RS.5 LAKHS VIDE CHEQUE DATED 16TH MAY 2006. A SUM OF RS.11 LAKHS H AS BEEN PAID VIDE CHEQUE DATED 5TH JULY 2006 AND A SUM OF RS.2 90 000/- WAS PAID BY WAY OF CASH ON THE DATE WH EN THE SALE DEED WAS EXECUTED. SCHEDULE A PROPERTY DESCRIBED I N THE SALE DEED IS A RESIDENTIAL SITE NO.8 AND PART OF THE SIT E NO.9 KATHA NO.86 BEARING SURVEY NO.112/1 SITUATED AT CHELEKERE VILLAGE K R PURA HOBLI BANGALORE. THE ASSESSEE WAS GIVEN UND IVIDED 10% SHARE IN THE SCHEDULE PROPERTY MENTIONED IN SCHEDULE A AND THE SAME HAS BEEN DESCRIBED IN SCHEDULE B PROPERTY. SCH EDULE C PROPERTY IS A 3 BEDROOM APARTMENT FLAT NO.302 ON THE SECOND FLOOR OF THE APARTMENT BUILDING KNOWN AS SILVER OAK . HENCE FROM THIS ABSOLUTE SALE DEED IT IS CLEAR THAT THE ASSESSEE PURCHASED AN APARTMENT ALONG WITH UNDIVIDED SHARES IN THE LAND FOR A SUM OF RS.18 90 000/-. IT IS TRUE THAT AS PE R THE SALE AGREEMENT THE ASSESSEE WAS REQUIRED TO PAY MORE THA N RS. 34 51 500/-. IN VIEW OF THE REGISTERED SALE DEE D WE HAVE TO CONSIDER THAT THE APARTMENT IN SILVER OAK WAS PURCH ASED AT RS.18 90 000/- AS ON 6TH NOVEMBER 2007. AS PER CL AUSE 3 OF THE ABSOLUTE DEED IN RESPECT OF SILVER OAK APARTMEN T IT IS MENTIONED THAT THE SELLERS AND THE CONFIRMING PARTY HAVE PUT THE PURCHASER IN ACTUAL POSSESSION OF THE SAID APARTMEN T AT THE TIME OF EXECUTION OF THE SALE DEED. CLAUSE 10 OF THE SA LE DEED ALSO MENTIONED THAT THE PURCHASER HAS BEEN MADE IN ACTUA L POSSESSION OF THE SAID APARTMENT AND THE PURCHASER CAN SALE T RANSFER AND PAGE 7 OF 14 ITA NO.569/B/09 7 CONVEY THE SAID APARTMENT ALONG WITH RIGHT TO ENJOY C OMMISSION AND RESTRICTED AMENITIES AND THE POSSESSOR IS ABSOL UTE OWNER OF THE PROPERTY IN PERPETUITY AND FOREVER. HENCE IT IS CLEAR THAT THE APPELLANT BECAME PURCHASER OF THE APARTMENT VID E SALE DEED DATED 6TH NOVEMBER 2007. THE SILVER OAK APARTMENT HAD BEEN PURCHASED AFTER THE DATE OF TRANSFER OF THE ORIGINA L ASSET AFTER A PERIOD OF ONE YEAR AND THEREFORE (II) OF PROVISO T O SECTION 54F(1) WILL NOT BE APPLICABLE AND PROHIBITION MENTI ONED IN (II) TO PROVISO TO SECTION 54F WILL NOT BE APPLICABLE. 6. NOW WE WILL CONSIDER THE OTHER APARTMENT IN SOB HA DAISY. COPY OF AGREEMENT DATED 24TH JUNE 2006 WITH SOBHA DAISY IS AVAILABLE AT PAGES 108 TO 110. IN THIS AGR EEMENT M/S SOBHA INNERCITY TECHNOPOLIS PVT. LTD. IS VENDOR PART Y (I) AND M/S SOBHA DEVELOPERS LTD. IS VENDOR PARTY (II). THE OTH ER PARTY IS THE APPELLANT WHO HAS BEEN REFERRED AS PURCHASER. AS PER THIS AGREEMENT VENDOR PARTY (I) HAVING A RIGHT ON SITE SOLD AN UNDIVIDED INTEREST IN LAND TO THE PURCHASER FOR THE CONSTRUCTION OF AN APARTMENT. THE CONSTRUCTION OF APARTMENT WAS TO BE DONE BY M/S SOBHA DEVELOPERS LTD. I.E. VENDOR PARTY NO.(II ) ON BEHALF OF THE APPELLANT. VENDOR PARTY NO.(I) I.E. M/S SOBH A INNERCITY TECHNOPOLIS PVT. LTD. RECEIVED A SUM OF RS.3 35 695 /- TOWARDS THE UNDIVIDED SHARE OF THE LAND. SALE DEED DATED 2 5TH MARCH 2008 IS AVAILABLE AT PAGES 85 TO 103 OF THE PAPER B OOK. AS PER CLAUSE 20 OF THE SALE DEED BETWEEN THE APPELLANT AN D M/S SOBHA INNERCITY TECHNOPOLIS PVT. LTD. REFERRED TO THE FACT THAT THE PAGE 8 OF 14 ITA NO.569/B/09 8 APPELLANT PAID A SALE CONSIDERATION OF RS.3 35 695/ - FOR THE UNDIVIDED SHARE IN THE LAND AND THE APPELLANT ENTER ED INTO A SEPARATE CONSTRUCTION AGREEMENT WITH CONFIRMING PAR TY TO CONSTRUCT A 3 BEDROOM APARTMENT BEARING NO.A2-1072. AS PER THIS SALE DEED THE APPELLANT WAS GIVEN UNDIVIDED . 5% SHARE IN THE RESIDENTIAL SITE OWNED BY M/S SOBHA INNERCITY TECHNOP OLIS PVT. LTD. AND THE APPELLANT WAS ENABLE TO OWN APARTMENT IN THE BUILDING CONSTRUCTED ON THE SCHEDULE A PROPERTY. PA GE NO.101 TO 107 IS THE LEDGER ACCOUNT OF THE APPELLANT AS APPEA RING IN THE BOOKS OF SOBHA DEVELOPERS LTD. WE HAD ALREADY MENT IONED THAT SOBHA DEVELOPERS LTD. WAS A PARTY MENTIONED AS VENDO R PARTY NO.(II) FOR CONSTRUCTING THE APARTMENT. THUS CONS TRUCTION OF THIS APARTMENT HAS BEEN DONE BY THE ASSESSEE THROUGH SOBH A DEVELOPERS LTD. THE PAYMENTS HAVE BEEN MADE FROM 16 TH MAY 2006 UP TO 7TH MAY 2008. THE APARTMENT IN SOBHA DA ISY WAS HANDED OVER TO THE ASSESSEE ON 25TH MAY 2008 AS PER COPY OF LETTER OF THE SAME DATE AVAILABLE AT PAGE 104 OF TH E PAPER BOOK. HENCE FROM THE FACTS IT IS CLEAR THAT THE ASSESSE E HAS GOT THE APARTMENT CONSTRUCTED IN SOBHA DAISY ON 25TH MARCH 2008. THE SILVER OAK APARTMENT HAS BEEN PURCHASED. THE CO NSTRUCTION OF APARTMENT IN SOBHA DAISY HAS BEEN DONE WITHIN THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE ASSET ON WH ICH THE ASSESSEE WAS LIABLE TO PAY CAPITAL GAIN. THUS THE APARTMENT IN SOBHA DAISY WILL BE A NEW ASSET ON WHICH THE ASSESSE E WILL BE ENTITLED TO DEDUCTION U/S 54F. THE OTHER APARTMEN T IN SILVER OAK HAD BEEN PURCHASED AFTER THE DATE OF TRANSFER O F THE PAGE 9 OF 14 ITA NO.569/B/09 9 ORIGINAL ASSET AND THEREFORE THAT WILL NOT BE COVE RED UNDER THE PROVISO TO SECTION 54F. DEDUCTION U/S 54F CANNOT B E RESTRICTED ON ACCOUNT OF PURCHASE OF APARTMENT IN SILVER OAK. THE ASSESSEE WILL BE ENTITLED TO DEDUCTION U/S 54F ON APARTMENT IN SOBHA DAISY BY TREATING SUCH APARTMENT AS NEW ASSET. 7. PROVISO TO SECTION 54F(1) IS APPLICABLE IN CASE THE ASSESSEE PURCHASES RESIDENTIAL HOUSE WITHIN A PERIO D OF ONE YEAR OR CONSTRUCTS A RESIDENTIAL HOUSE WITHIN A PERIOD O F 3 YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET. DUE TO PROHIBITION PROVIDED IN SECTION 54F(1) THE CAPITAL GAIN ALLOWE D IN THE YEAR OF DEDUCTION U/S 54F IS TO BE DEEMED TO BE INCOME OF T HE PREVIOUS YEAR IN WHICH RESIDENTIAL HOUSE IS PURCHASED OR CONS TRUCTED. THIS IS CLEAR FROM SUB SECTION 2 OF SECTION 54F. T HOUGH WE HAVE HOLD THAT SECTION 54F WILL BE APPLICABLE IN THE CAS E OF THE ASSESSEE IN RESPECT OF APARTMENT IN SOBHA DAISY HOW EVER IN CASE IT IS FINALLY HELD THAT PROVISO WILL BE APPLICA BLE THEN THE CAPITAL GAIN IS TO BE CHARGEABLE IN THE PREVIOUS YEA R IN WHICH RESIDENTIAL HOUSE IS MADE OR CONSTRUCTED AND NOT IN THE ASST. YEAR UNDER CONSIDERATION. 8. THE LEARNED AO WHILE NOT ALLOWING THE DEDUCTIO N U/S 54F HAS OBSERVED THAT THE ASSESSEE HAS NOT PAI D AND HAS NOT DEPOSITED THE NET CONSIDERATION IN THE CAPITAL GAIN ACCOUNT. SUCH AN ISSUE HAS BEEN CONSIDERED BY THE BANGALORE BENCH IN THE CASE PAGE 10 OF 14 ITA NO.569/B/09 10 OF NIPUN MEHROTRA V ACIT 297 ITR (AT) 110. IT WILL BE USEFUL TO REPRODUCE THE FOLLOWING CONCLUSIONS DRAWN BY THIS BE NCH:- 'WE HAVE HEARD BOTH THE PARTIES. BEFORE DEALING WITH THE ISSUE IT WILL BE RELEVANT TO REPRODUCE SECTION 54F(4): '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 U/S 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 PAGE 11 OF 14 ITA NO.569/B/09 11 DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET'. PERUSAL OF THE ABOVE SECTION SHOWS THAT THE ASSESSEE HAS TO UTILIZE THE AMOUNT FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME U/S 139. THERE IS NO MENTION OF ANY SUB SECTION OF SECTION 139. HENCE ONE CANNOT INTERPRET THAT SECTION 139 MENTIONED SHOULD BE READ AS SECTION 139(1). SIMILAR LANGUAGE IS APPEARING IN SECTION 54(2) OF THE I T ACT. THE LEARNED GAUHATI HIGH COURT IN THE CASE OF CIT V RAJESH KUMAR JALAN (2006) 286 ITR 274 HAS HELD THAT SECTION 139 MENTIONED WILL NOT ONLY INCLUDE SECTION 139(1) BUT WILL ALSO INCLUDE ALL SUB0-SECTIONS OF SECTION 139. IN THE INSTANT CASE IT IS NOT DISPUTED THAT SALE CONSIDERATION HAS BEEN UTILIZED BEFORE THE DATE OF FILING OF THE RETURN U/S 139(4). THE LEARNED GAUHATI HIGH COURT WHILE INTERPRETING SECTION 54(2) AND HOLDING SECTION 139 MENTIONED THEREIN WILL INCLUDE ALL SUB SECTIONS HAVE TAKEN INTO ACCOUNT THE JUDGMENTS OF THE APEX COURT RELATING TO THE PRINCIPLE OF CONSTRUCTION OF STATUTES. IT WILL BE RELEVANT TO QUOTE THE FOLLOWING OBSERVATIONS OF THE GAUHATI HIGH COURT AS MENTIONED AT PAGE 283: 'THE APEX COURT IN STATE OF MAHARASHTRA V SANTOSH SHANKAR ACHARYA (2000) 7 SCC 463 HELD THAT IT IS TOO WELL KNOWN A PRINCIPLE OF CONSTRUCTION OF STATUTES THAT THE LEGISLATURE ENGRAFTED EVERY PART OF THE STATUTE FOR A PURPOSE. THE LEGISLATIVE PAGE 12 OF 14 ITA NO.569/B/09 12 INTENTION IS THAT EVERY PART OF THE STATUTE SHOULD BE GIVEN EFFECT. THE LEGISLATURE IS DEEMED NOT TO WASTE ITS WORDS OR TO SAY ANYTHING IN VAIN AND A CONSTRUCTION WHICH ATTRIBUTES REDUNDANCY TO THE LEGISLATURE WILL NOT BE ACCEPTED EXCEPT FOR COMPELLING REASONS. THE APEX COURT IN BHAVNAGAR UNIVERSITY V PALITANA SUGAR MILL P LTD. (2003) 2 SCC 111 HELD THAT IT IS THE BASIC PRINCIPLE OF CONSTRUCTION OF STATUTE THAT STATUTORY ENACTMENT MUST ORDINARILY BE CONSTRUED ACCORDING TO THEIR PLAIN MEANING AND NO WORDS SHOULD BE ADDED ALTERED OR MODIFIED UNLESS IT IS PLAINLY NECESSARY TO DO SO TO PREVENT A PROVISION FROM BEING UNINTELLIGIBLE ABSURD UNREASONABLE UNWORKABLE OR TOTALLY IRRECONCILABLE WITH THE REST OF THE STATUTE PARAGRAPHS 24 AND 25 OF THE BHAVNAGAR UNIVERSITY V PALITANA SUGAR MILL P. LTD. (20023) 2 SCC 111 READ AS FOLLOWS (PAGE 121):- '24. TRUE MEANING OF A PROVISION OF LAW HAS TO BE DETERMINED ON THE BASIS OF WHAT IT PROVIDES BY ITS CLEAR LANGUAGE WITH DUE REGARD TO THE SCHEME OF LAW. 25. SCOPE OF THE LEGISLATION ON THE INTENTION OF THE LEGISLATURE CANNOT BE ENLARGED WHEN THE LANGUAGE OF THE PROVISION IS PLAIN AND UNAMBIGUOUS. IN OTHER WORDS STATUTORY ENACTMENTS MUST ORDINARILY BE CONSTRUED ACCORDING TO ITS PLAIN MEANING AND NO WORDS SHALL BE ADDED ALTERED OR PAGE 13 OF 14 ITA NO.569/B/09 13 MODIFIED UNLESS IT IS PLAINLY NECESSARY TO DO SO TO PREVENT A PROVISION FROM BEING UNINTELLIGIBLE ABSURD UNREASONABLE UNWORKABLE OR TOTALLY IRRECONCILABLE WITH THE REST OF THE STATUE'. SECTION 54(2) WAS SUBSTITUTED BY THE FINANCE ACT 1987. THE SCOPE AND EFFECT OF AMENDMENTS WERE ELABORATED VIDE CIRCULAR NO.495 DATED SEPTEMBER 22 1987 (1987) 168 ITR (ST.) 87. SECTIONS 54(2) AND 54F(4) WERE INTRODUCED TO DISPENSE WITH RECTIFICATION OF ASSESSMENTS IN CASE THE TAX PAYER FAILS TO ACQUIRE THE CORRESPONDING NEW ASSET. HENCE IF THE NEW ASSET IS ACQUIRED BEFORE THE ATE OF FILING OF THE RETURN U/S 139 THEN THE ASSESSEE CAN FILE SUCH RETURN AND THERE WILL BE NO NEED OF RECTIFICATION. THUS THE INTERPRETATION WHICH HAS BEEN PLACED BY THE LEARNED GAUHATI HIGH COURT IS IN ACCORDANCE WITH THE LEGISLATIVE INTEND OF INTRODUCING SECTIONS 54(2) AND 54F(4). IT IS TRUE THAT THE INCOME TAX APPELLATE TRIBUNAL DELHI IN THE CASE OF TARAN BIRSINGH SAHNI V DEPUTY CIT (2006) 5 SOT 417 DID NOT ALLOW THE DEDUCTION U/S 54F THOUGH THE NEW ASSET WAS ACQUIRED ON DECEMBER 1 1997 BUT THE AMOUNT OF CAPITAL GAINS WAS NOT DEPOSITED IN THE CAPITAL GAIN ACCOUNT BY JUNE 30 1997 I.E. THE DUE DATE OF FILING THE RETURN. HOWEVER THE DECISION OF THE LEARNED GAUHATI HIGH COURT WAS NOT AVAILABLE TO THE LEARNED DELHI BENCH. WE FOLLOW THE DECISION OF THE GAUHATI HIGH COURT AND HOLD PAGE 14 OF 14 ITA NO.569/B/09 14 THAT THE ASSESSEE IS ENTITLED TO EXEMPTION OF RS.2 10 833 U/S 54F OF THE I T ACT'. IN VIEW OF THE ABOVE DISCUSSION IT IS HELD THAT TH E APPELLANT IS ENTITLED TO DEDUCTION U/S 54F AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON 29TH JANUARY 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (N L KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED:29/1/2010 COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT CONCERNED. 5. THE DR 6. GF 7. GF ITAT DELHI BENCH BY ORDER MSP/28/1/ ASSISTANT REGISTRAR ITAT BANGALORE.