Ita/303/2015 Of Principle Commissioner Of Income Tax v. Sri C.gopalaswamy

IN THR HIGH COURT OF KARNATAKA AT BENGALURU DATEKD THIS THR 1 DAY OF FEBRUARY 2016 PRESENT THR HON’BLE MR.JUSTICE JAYANT PATEL AND THR HON’BLE MRS..JUSTICEHK S SUJAT ITA NO. 3033/201 BBRITWRE 1.Principle Commissioner of Income Tax, C.R.Building, Bangalore. a2Assistant Commissioner of Income Tax, Circle 15(1), Bangalore. .. Appellant (By Sri.E.I.Sanmathi, Adv) AN): ori.C.GopalaswamyNo.17, 3[ /]Cross,;[16]Main, AECS Layout,1[)1]stage, Geddalahalli,Aswathnagar,Bangalore - 560094 ... Respondent. This ITA is filed Under Section 260-A of I.T.Act,1961 arising out of Order dated 20.02.2015 passed inITA. No.933/Bang/2012, tor the Assessment year>2008-2009 praying to decide the foregoing question oflaw and / or such other questions of law as may beformulated by the Hon'ble Court as deemed fit set asidethe appellate order dated: 20/02/2015 passed by theITAT, “‘B’ Bench, Bengaluru, appeal proceedings No. ITANo.933/BNG/2012 for Assessment year 2008-09, assought for in this appeal; and to grant such other reliefas deemed fit, in the interest of justice. This Appeal coming on for admission this day,JAYANT PATEL J., delivered the following: JUDGMENT The appellant revenue has preferred the appeal on the following substantial question of law: “Whether on the facts and inéthe circumstances of the case,the Tribunal was justified inlaw in holding that assesee isentitled for exemption undersection o4F just because theassessee has re-invested entirecapitalgainsbymakingpayment in full to the builderand builder has not handedover the possession within thetime limit prescribed undersection oO4F notwithstandingthe fact that section beingtreated as beneficial provision,the exemption claimed by the assessee is. disallowed sincethe.initialagreementoT constructionitselfspoke|completiontimebeing.31/12/2011 against availabletimeOt|constructionby1/8/2010 and assessee had.failed to satisfy the specificcondition to get exemption’?Tax effect 1.61 crore. |We have heard Mr.E.I.Sanmathi, learnedAdvocate appearing for the appellant-Revenue. Asappears from the record that the assessee alongwith his son had effected sale of certain equityshares which resulted in long term capital gain ofRs.13,55,84,748/- and the son Sri Navin Kumarhad the share of Rs.4,20,283/-. 3Out of this capital gains, Rs.50,00,000/-. each were deposited by the respective assessee inREC Bond and claimed exemption under Section04-F of the Income Tax Act. As per the assessee, thebalance amount was invested in the residential. house. The assessing authority in the course ofassessment.order, dis-allowedtheclaimot.exemption of Rs.5.23 crore under Section 54-F ofthe Income Tax Act (hereinafter referred to as theAct) on the ground that the construction of villas—was not completed within the stipulated timeallowed under Section 54-F oft the Act. 4 |Being aggrieved by the said order, theassessee preferred an appeal before the CIT(A)which came to be dismissed. The assessee carriedthematterbefore|theTribunalinITA933(BNG)/2012 and the Tribunal after consideringthe submissions of the revenue observed at para-8 as under: “8. We have perused the ordersandheardtherivalcontentions.There|isTLOdispute that on 28-07-2008,the builder gave an allotmentletter to the assessee whichclearly mentions that Rs././70 house. The assessing authority in the course ofassessment.order, dis-allowedtheclaimot.exemption of Rs.5.23 crore under Section 54-F ofthe Income Tax Act (hereinafter referred to as theAct) on the ground that the construction of villas—was not completed within the stipulated timeallowed under Section 54-F oft the Act. 4 |Being aggrieved by the said order, theassessee preferred an appeal before the CIT(A)which came to be dismissed. The assessee carriedthematterbefore|theTribunalinITA933(BNG)/2012 and the Tribunal after consideringthe submissions of the revenue observed at para-8 as under: “8. We have perused the ordersandheardtherivalcontentions.There|isTLOdispute that on 28-07-2008,the builder gave an allotmentletter to the assessee whichclearly mentions that Rs././70 Crores for villa no.75 stood§paid by the assesses. The saleof shares giving rise to thecapital gains was on 20-0/72007. May be it is true thatthe agreement for construction|enteredbyaSSES SCCwith|builder gave an outer date,which went beyond the threeyear period from the date ofsale of the shares. However,assesses had done what all it§could do for acquiring the villaby paying the whole of thepriceOT)28-07 .2007itself. |Thereishho CaSforthe.revenue that the constructionitself was not started. Onlyerievance of the revenue is that.theunitnumbers havechanged and the outer limit forcompletingthe.constructionwent beyond three years limitmentioned in Section 54F ofthe Act. In our opinion, noneof these would disentitle the§assessee from claiming thebenefit u/s S4F of the Act. |Their Lordship’s in the case oforl Sambandam Udaykumar(Supra) had held as under: “A reading of Section S4F ofthe Act, 1961, makes it veryclear that if a capital gainarises from the transfer of any long term capital asset, notbeing a residential; house andthe assessee has within the'period of one year before or two—years after the date on which.transfer took place purchasedor has within a period of threeyCa#@satter|thatdateconstructedaresidentialhouse, if the cost of the newasset is not less than the net.consideration on respect of theoriginal asset the whole ofsuch capital gain shall not becharged under section 495 ofthe Act. However, if the cost ofthe new asset is less than thenet consideration in respect ofthe original asset, so much ofthe capital gain the same.proportion as the cost of thenew asset bears to the net'considerationshall|Not|be.charged under section 45 ofthe Act. Section 54F of the Act.is a beneficial provision of |promoting the construction ofresidential house. Therefore,the.provisionhas.TO|be|construedliberallyforachievingthe.PUTPOSCforwhich it was incorporated inthe statute. The intention of|the.legislatureWa STO encourage investments in theacquisition|oT|a|residential house.andcompletionotconstruction or occupation isnot the requirement of law. |The words used in the sectionare|“purchased”OT|“constructed”.HOTsuch.PUTPOSGE,thecapitalgainrealizedshouldhavebeeninvested in a residential house. |The condition precedent forclaiming the benefit under theprovision is that capital gains—realized from sale of capitalasset.shouldhave|beeninvested either in purchasing a.residential house.OT|inconstructinga|residential house. If after making theentirepayment,|merely|because a registered sale deedhad not been executed andregistered in favour of theaSSESSCCbefore|the.periodstipulated, he cannot be deniedthe benefit of section b4F oftthe Act. Similarly, if he has.invested theMoneyin.construction of a residential|house,merely|because.theconstruction was not completein all respects and it was not infit condition to be occupiedwithin the period under section.54F otf the Act. The essence ofthe provision is whether theassessee who received capital gainshas.invested1n-aresidential house. QOnce it is”demonstratedthattheconsiderationreceived OT]transfer|has”beeninvestedeitherin.purchasingaresidential house.OT|inconstruction of a residentialhouse.eve)|thoughthe.transactions are not completein all respects are requiredunder the law, that would notdisentitle the assessee from.benefit.” gainshas.invested1n-aresidential house. QOnce it is”demonstratedthattheconsiderationreceived OT]transfer|has”beeninvestedeitherin.purchasingaresidential house.OT|inconstruction of a residentialhouse.eve)|thoughthe.transactions are not completein all respects are requiredunder the law, that would notdisentitle the assessee from.benefit.” The wordings in Section 54 & 54F withregard to period with in which an assessee hasto acquire or construct a residential house arepari-materia. Assessee in any case would havebeen eligible for the claim under section 54, if|not under section b4F of the Act. We are|therefore, of the opinion that assessee’s could|not be denied the deduction claimed by them.” 3Consequently, the Tribunal allowed the appeal. Under the circumstances, the present appeal before this Court. 4We have heard the learned counsel for.the parties and perused the record. | 5.If the reasons recorded by the Tribunal as"considered as it is, the issue is already covered bythe decision of this Court in case of CIT vs.sambandham Udayakumar reported in 345 ITR389. If the Tribunal has followed the said decision of.this Court, no substantial question of law wouldarise for consideration in the present appeal. 6.|However,learnedcounsel forthe.appellant raised two contentions: © !3One was that the since the earlierdecision|otthisCourt.inCa SCot.sambandham Udayakumar (supra), thetax amount was less, the matter was notcarried before the Apex Court andtherefore, the said decision may not beholding the field. | !!3The learned counsel in furtherance of his submission contended that as the word used1S“constructed”completionotconstruction issina quarequirement andin absence thereof, the deduction cannotbe claimed and therefore, the Tribunalhas committed error. He also relied uponthe decision of the Apex Court in case ofGiridhar Yadalam vs. Commissioner of.Wealth|Tax.reported(2016)65.Taxman.com148(SC) andcontendedthat, similar word was interpreted by theApex Court and was found that theconstructionoughtTO|havebeencompleted. T |In|hissubmission,|sincetheconstruction was not completed in the present|case, the Tribunal ought not to have allowed|the appeal and the matter may deserve|consideration. 8.|In the first aspects, we are not impressedby the submission that, since tax amount was lessand the matter having been not carried before theApex Court, the efficacy of the decision of this Courtin Sambandham Udayakumar case referred suprawould be lost so far as applying principles a bindingprecedent is concerned. When a co-ordinate Benchof this Court has already taken a view in normalcircumstances, the departure therefrom is notpermissible unless there are strong and validreasons or the Apex Court has taken a differentVIEW. 9. Attempt to rely upon the decision of the|Apex Court in case of Giridhar G.Yadalam is illfounded because in the said case before the ApexCourt, the question arose for making distinctionbetween the land and building for the purpose ofwealth tax and for the purpose of exemption. Further,thelanguage1n-the.section 1S|“Construction is done with the approval of theauthority’. Further, in clause (b) language was.“Such a building has been constructed”. As perclause (a), the requirement was “the land is.occupied’ by any building. It is on account of saidlanguages, meaning of the word “constructed” cameup for consideration before the Apex Court.Whereas, in the present case, the relevant aspect isthat, utilization of the capital gain in construction ofa residential house. Such being the basic difference,we do not find that the said decision in case of.Giridhar G.Yadalam referred supra would be of anyhelp to the learned counsel for the Revenue. | 10. The resultant situation would be that,|issue stands covered by the decision of a co-ordinateBenchOt|thisCourt.in.Ca SCOt|sambandham Udayakumar (supra). When the issue is already covered by the decision of this Court, wedo not find that any substantial question of lawwould arise for consideration as sought to becanvassed in the present appeal. 10. The resultant situation would be that,|issue stands covered by the decision of a co-ordinateBenchOt|thisCourt.in.Ca SCOt|sambandham Udayakumar (supra). When the issue is already covered by the decision of this Court, wedo not find that any substantial question of lawwould arise for consideration as sought to becanvassed in the present appeal. 11. Under the circumstances, the present|appeal is dismissed. ok/- Sd/-.JUDGE| Sd/-.JUDGE|