COMMISSIONER OF INCOME TAX Vs. K. RAMACHANDRA RAO

JUDGEMENT

(1.) As these four appeals are in respect of the same assessee and arise out of a non residential asset, they are taken up for consideration together and disposed of by this common order.

(2.) The assessee sold certain converted lands in Laxmipura Village and Kalkere village, Jigani Hobli, Anekal Taluk on 17.12.2014 to Paramahamsa Foundation Trust for a consideration of Rs.2,87,28,750/-. In the returns filed under Section 153A of the Income Tax Act (for short hereinafter referred to as the Act) the assessee computed Long Term Capital Gains of Rs.2,87,28,750/- before claiming exemption under Section 54B and 54F of the Act. During the course of assessment proceedings the assessee's representative was asked to substantiate the claim made for exemption under section 54B and 54F of the Act. In reply the assessee stated in the year 2005 i.e. on 31.3.2005 a sum of Rs.31,00,000/- has been contributed towards house construction. Till that date a loan of Rs.2,10,00,000/- was taken from Bank which was also utilized for construction. Therefore to the extent of 1,36,00,000/- he claimed exemption for construction of the house. After considering the said reply the Assessing Authority held the assessee has admitted that the land sold is a capital asset. The assessee claimed exemption under Section 54F to the extent of 1,63,23,064/-. He also claimed that he has utilised 1,36,00,000/- for house construction. On the ground that the assessee has not furnished how much amount was in fact utilized for construction after the date of sale, the claim of the assessee for claiming exemption was not accepted. The assessee claimed to have utilized 14,00,000/- in the previous year towards house construction. It is not clear as to whether the amount of Rs.1,36,00,000/- claimed to have been spent for house construction is inclusive of 14,00,000/- spent earlier. Further it was held the assessee ought to have deposited the unutilized sale consideration in a Bank account under the Capital Gains Accounts Scheme. It has not been done. He has not furnished any proof in this regard along with the return filed. Therefore, the assessee's claim for exemption under Section 54F was disallowed. Aggrieved by the said order the assessee preferred an appeal to the Commissioner of Income Tax (Appeals). The Appellate Authority held the assessee's investment in construction subsequent to the date of sale and investment in the eligible project even after the project of the house is started beyond one year will be eligible for exemption under Section 54F. However investment is made prior to more than one year before the date of transfer is not eligible for exemption. Accordingly, he granted exemption. The Revenue preferred an appeal challenging the said order. The Tribunal has affirmed the said order. It is against the said order the Revenue has preferred the said appeals.

(3.) The two substantial questions of law which arise for consideration in these batch of appeals are as under :-