Jugal Kishore, A.M. ORDER These two appeals, one by assessee and other by Revenue, arise out of same order of CIT(A), Siliguri dt. 24th July, 2007 pertaining to asst. yr. 2001-02. For sake of convenience, both these appeals are disposed of by this consolidated order. 2. In appeal filed by Revenue, first three grounds which are on same issue, read as under : "(1) Whether on facts and circumstances of case, learned CIT(A) was justified in deleting addition of Rs. 31,96,258 made on account of unexplained cash credit by accepting claim of assessee that assessee had received 8,000 bonus shares of Nestle as gift from Sri Jiwan Ran Marda and Sri Sushil Marda when shares were never transferred from demat account of so-called donors to demat account of assessee Sri Lalit Marda. (2) Whether on facts and circumstances of case, learned CIT(A) was justified in accepting that long-term capital gains arose to assessee out of sale of 6,300 bonus shares of Nestle received as gift from Sri Sushil Marda and Jiwan Ram Marda when in fact 6,300 bonus shares of Nestle were transferred from demat account of Sri Jiwan Ram Marda and Sri Sushil Marda directly to demat account of broker and not from demat account of Lalit Marda to demat account of share broker. (3) Whether on facts and circumstances of case, learned CIT(A) was justified in deleting addition of Rs. 8,61,900 which was made by treating remaining 1,700 bonus shares of Nestle as concealed investment of assessee, by accepting claim of assessee that shares were received by him as gift from Sri Jiwan Ram Marda and Sri Sushil Marda." 3 . All aforesaid three grounds relate to single issue of deletion of addition in respect of 8,000 bonus shares of Nestle India Ltd. (Nestle) received by assessee as gift from Sri Jiwan Ram Marda and Sri Sushil Marda. facts in this regard are that during assessment year under consideration, assessee received gift of 4,000 shares of Nestle each from his Brother Sri Sushil Marda and father Sri Jiwan Ram Marda. Out of these 8,000 shares, assessee sold 6,300 shares for consideration of Rs. 31,96,258 and balance 1,700 shares remained in his hand at closing of year. These 1,700 shares were reflected in balance sheet of assessee as investment in shares. In computation of income, assessee has shown entire sale proceeds of 6,300 shares of Nestle as long-term capital gain as cost of these bonus shares was nil. When asked, assessee explained before AO that these 8,000 shares were received by donors as bonus shares. Copies of WT returns, assessment orders along with list of shares as on 31st March, 1992 of donors, flow chart showing movement of shares of Nestle, etc. were submitted before AO. AO made reference to Nestle to verify whether these shares were transferred in name of assessee. Nestle informed that none of these shares were transferred in name of assessee. On basis of said information, AO formed opinion that shares were never transferred in name of assessee. explanation given by assessee in respect of said report from Nestle was rejected by AO. Accordingly, receipt of these shares as gifts was not accepted by AO as genuine and consequently, long-term capital gain of Rs. 31,96,258 arising from sale of 6,300 shares, as claimed by assessee, was also not accepted. He considered this amount as income of assessee from other sources and added same to total income of assessee under s. 68 of Act. Further, value of 1,700 shares remaining in hands of assessee as on 31st March, 2001 was calculated by AO at Rs. 8,61,900 by applying market value at rate of Rs. 507 per share and added same to income of assessee as undisclosed investment. On perusal of assessment order, we find that main grounds considered by AO for coming to his conclusion that shares of Nestle were not gifted by donors are as follows : shares gifted by Sri Sushil Marda (brother) and Sri Jiwan Ram Marda (father) were not transferred to assessee during relevant assessment year. donor Sri Sushil Marda was not holding sufficient No. of shares to gift same to assessee. No evidence was produced showing broker has paid consideration to assessee. 4. assessee objected to said additions before CIT(A) and filed written submission along with supporting documents. After considering submissions of assessee and perusing order of AO, CIT(A) deleted additions of Rs. 31,96,258 made under s. 68 and Rs. 8,61,900 made as investment out of undisclosed fund with following observations : "I have carefully considered submission of learned Authorised Representatives and also perused order of learned AO. There is no dispute that amount shown to have been credited in accounts of appellant, was nothing but sale proceeds of shares. only issue raised by learned AO was source of shares claimed to have been sold by appellant. From paper book submitted by Authorised Representatives, it is clear that certain shares have been transferred by three family members of appellant in form of gift. But instead of transferring shares to account of assessee, those were transferred to demat account with broker to sale those and transferred proceeds to bank account of appellant. Because of this, shares were not found registered in name of appellant before those were sold. Thus, in my opinion, it cannot be said that source of amount credited in account of assessee remain unexplained. only question before AO was to verify same from accounts of individual donors, i.e., whether they were actual holders of shares and after gift was made, whether their accounts were reduced by same number of shares. From paper books submitted by Authorised Representative, it is clear that individual donors were owners of those shares. Thus, source of shares cannot be stated to be unexplained. So addition made by learned AO cannot be sustained. same is deleted. Similarly amount of Rs. 8,61,900 being value of 1,700 shares is also deleted." Hence this appeal by Department. 5. learned Departmental Representative relied on order of AO. He submitted that it is true that Sri Jiwan Ram Marda and Sri Sushil Marda were holding shares of Nestle. But there is no proof that they have gifted shares of Nestle, that too out of bonus shares allotted to them, to assessee to extent of 4,000 shares by each of them. assessee s argument is that as per flow chart, movement of shares is proved. assessee tried to prove this movement of shares as gift. But for valid gift, there should be gift deed duly executed by donor and accepted by donee. Further, so-called donors did not handover shares directly to assessee but chose to transfer same to broker and broker after effecting sale of those shares, deposited money to assessee s bank account. learned Departmental Representatives, therefore, expressed doubt about claim of gift by saying that if donors would have bona fide intention of making gift of some shares to one of their family members, they could have adopted normal and accepted way for valid and genuine gift instead of preferring cumbersome way. This itself proves that there was actually no gift of shares, as claimed by assessee. wealth-tax assessment orders and other evidences produced by assessee may be evidence for proving that these two persons were holding Nestle shares. But these evidence cannot form part of evidence in support of gift. He further submitted that after gift effected by those two persons to assessee, assessee would become absolute holder of those gifted shares and naturally, therefore, in company s record there would be recording as such. But in this case Nestle has categorically confirmed that none of these shares were transferred in name of assessee during year under appeal and many of shares were actually transferred in years 1997-98 and 1998-99. All these facts go to establish that there was no valid and genuine gift. As there was no gift, assessee s claim of long-term capital gain on sale of shares was nothing but his concealed income. AO has rightly added same under s. 68 of Act. He further submitted that for same reasons investment shown in balance sheet of assessee for unsold 1,700 shares of Nestle has rightly been added to income of assessee as unexplained investment and CIT(A) was not justified in deleting these additions. 6 . Before us, assessee s learned counsel argued case at length. His arguments are summarized as below : (i) That 8,000 shares in question of Nestle were received by donors, viz., Sri Sushil Marda (brother) and Sri Jiwan Ram Marda (father) as bonus shares. Copies of WT returns, assessment orders along with list of shares as on 31st March, 1992 of donors were submitted before AO. Since no WT returns were filed by donor thereafter, assessee furnished flow chart showing movement of shares of Nestle relating to donors in accordance with balance sheet. Copy of flow chart is also filed at page No. 17 of paper book. T h e flow chart clearly shows that donors have reduced their respective number of shares in books of account on account of gift given. On counterpart, assessee has increased his No. of shares held in respect of Nestle by shares received from said donors as gift. This corroborates unanimous transaction of gift between parties. Merely on observation by AO that equivalent number of shares were not transferred from donors to assessee s account, ignoring sufficient evidences produced by assessee to prove genuineness of transaction, addition cannot be made by disbelieving gift, more so when donors have given delivery of shares to broker account of assessee against sale of gifted shares by them. In support of above submission, reliance was placed on case of CIT vs. Smt. S. Parvathavarthini Ammal (1996) 131 CTR (Ker) 433 : (1996) 219 ITR 661 (Ker). (ii) That conclusion was drawn by AO on basis of reply dt. 20th Feb., 2004 received by him from Nestle in response to notice under s. 133(6) wherein it has been stated that these shares were not transferred in name of Lalit Marda during financial year 2000-01. So far as issue of transfer is concerned, person may not be registered owner in books of company but same cannot deprive him to hold gifted shares more particularly when due effect has been given in books of donors. It has been held in plethora of cases that non-recording of transfer in books of company cannot invalidate gift in any way. In support of his submission, reliance was placed on Sheila Devi Chamria vs. Tara Chand Saraogi (1987) 163 ITR 406 (Cal). (iii) That since shares were in demat form, question of physical delivery does not arise. But transfer of shares by donors directly to account of broker of assessee against sale by him substantiates claim of assessee. It was further pointed out that that while drawing conclusion, AO considered part of reply received from Nestle to suit his conclusion. Nestle in its reply has categorically stated that once shares are dematerialized, company does not have tract of share transfer. After dematerialization shares are converted in electronic mode and depository acts on all transfer through their agents. Copy of said letter of Nestle has been placed in paper book at pp. 55 and 56. learned counsel, therefore, submitted that in view of comments of Nestle, AO acted arbitrarily in having placed reliance on selected portion of reply and hence his conclusion that transaction of said gift was not genuine on such wrong interpretation of reply should not be entertained. (iv) Referring to wealth-tax returns filed up to asst. yr. 1992-93 and statement of shares as on 31st March, 1992 of assessee and his family members placed at pp. 18 to 33 of paper book, learned counsel submitted that assessee and his family members were having substantial investments in shares of various companies including shares of Nestle since long-time and same was reflected in their individual returns of wealth for asst. yr. 1992-93, i.e., up to year they were liable to make returns of wealth. Thereafter there was further accretion thereto by way of bonus shares. (v) In regard to allegation of AO about difference between shareholding as per balance sheet and demat account, it was contended that assessee and his relatives were continuously enjoying credit facility mainly with City Bank. Substantial part of such shares was pledged with bankers as security for credit facility allowed by bankers to assessee and different family members irrespective of beneficial ownership. shares, beneficially owned by one person, were, on different times, transferred in name of another person belonging to same family as per requirement in order to comply with banking norms for allowing credit limit due to fall in value of security at different point of time, whereas in balance sheet of respective persons, beneficial holding of shares was shown. This was main reason of difference between shareholding as per balance sheet and demat account. In other words, one person s shares were included in another s demat account. Under circumstances, equivalent transfer of gifted shares from donors account to assessee s account becomes immaterial. (vi) Referring to demat account of assessee, copies of which are placed at pp. 77 to 108 of paper book, learned counsel submitted that shares of other beneficial family members including donors were transferred to demat account of assessee in earlier years, though in balance sheet only beneficial holding was mentioned. In this connection, he has explained, position by following chart which is showing closing balance of Nestle shares as on 31st March, 2000 of 19,851 shares, whereas as per income- tax record he was owner of only 1,000 shares : Demat Account No. Balance as on 31-3-2000 10000 23 8 1768 10001066 1600 10001082 4200 10001945 5900 10002577 3000 10224776 3383 Total 19851 It was contended by learned counsel that for same reason, dividend was received by assessee/other family members though he/other family members was/were not beneficial owner of share as per income-tax records. above fact will be corroborated by dividend warrants wherein numbers of shares were differed as compared to wealth-tax records. Copies of tax deduction certificate showing No. of shares has been enclosed at pp. 52 to 54 of paper book. above position has been explained by assessee s learned counsel in following comparative chart showing comparison of beneficial holding of Nestle as per wealth-tax return and No. of shares on which dividend was received for year ended 31st March, 1992 : Name of As per WT As per dividend holder return warrant Jiwanram 27376 21712 Marda Sushil Marda 33309 1133 Lalit Marda 15 23 1 50156 assessee transferred dividend on shares to its beneficial owner at year end. In dividend statement for asst. yr. 1993-94, it can be seen that out of aggregate dividend received by assessee, following were transferred to donors. Rs. Total dividend received by assessee 317034.35 Rs. Transferred to Jiwanram Marda 12637.50 Rs. Transferred to Sushil Marda 80377.00 Net dividend shown in return by assessee Rs. after deducting bank charges 217525.51 learned counsel submitted that it would be evident on basis of above details that during asst. yr. 1993-94 shares of Jiwanram Marda and Sushil Marda, donors were transferred/registered in name of assessee s per records of company. same practice was also followed in subsequent years. It is pertinent to note that no objection was raised by Department while making assessment for asst. yr. 1993-94 under s. 143(3). Copy of assessment order has been placed at pp. 34 and 35 of paper book. (vi) On basis of details, learned counsel submitted that non- recording of transfer in books of company cannot invalidate gift in any way. He also placed reliance on following decisions : (a) CWT vs. Babulal Jatia (Decd.) (1982) 29 CTR (Cal) 61 : (1982) 137 ITR 540 (Cal); (b) P.A.C. Ratnaswamy Nadar & Sons vs. CIT (1962) 46 ITR 1148 (Mad); (c) CED vs. C.R. Ramachandra Gounder (1973) 88 ITR 448 (SC); (d) CIT/CED vs. N.R. Ramarathan (1973) 91 ITR 1 (SC). (vii) Regarding sale of Nestle shares by assessee, learned counsel submitted that assessee sold 6,300 shares out of said gifted 8,000 shares to his broker namely, Wallford Financial Services Ltd. donors after execution of deed of gift transferred gifted shares to account of broker of assessee i.e., Wallford Financial Services Ltd. Since assessee was beneficial owner of gifted shares and bills have been raised by broker in name of assessee only, sale proceeds of shares were rightly credited to account of assessee. Copies of bills and bank statements evidencing sale transactions have been given at pp. 109 to 124 of paper book. Thus, transfer of shares by donors to broker account of assessee against shares sold by him was valid gift. (viii) That allegation of AO that Sushil Marda, one of donors was not holding sufficient number of shares is devoid of any merit. From flow chart of shareholding of donors, it clearly reveals that donors were beneficial holder of sufficient quantity of shares. He was holding 26,742 shares as on 31st March, 2000, out of which 3,131 shares were lying in his demat account and balance shares were donated in name of other family members including assessee for availing credit facility from bank. shares lying in his demat accounts as on 31st March, 2000 and transfer made therefrom during asst. yr. 2001-02 are as under : Balance Account Date as on 31-3- Transfer Transferee No. of transfer 2000 Wallfort 19- 10000220 300 300 Fin. Services 7-2000 Ltd. 10009591 300 1-6- 2000 1000 19- Wallfort 10009698 1831 500 10009698 1831 500 7-2000 Fin. Service Ltd. 281 25- 9-2000 10001103 700 Total 3131 2081 It is to be noted that there were 19,851 shares of Nestle in demat account of assessee as on 31st March, 2000 which includes 1,768 shares transferred by Sushil Marda as on 20th Jan., 2000. (ix) AO added sale proceeds as cash credit under s. 68 of IT Act. learned counsel submitted that in given facts s. 68 has no role to play since source and nature of such credit has been duly explained before A O . Corroborating evidences like bills copy, bank statement etc. were also furnished. 7 . Regarding addition of Rs. 8,61,900 being estimated value of 1,700 Nestle shares held by assessee as on 31st March, 2001 which was treated as undisclosed investment by AO, it is submitted by learned counsel that : (a) provision of s. 69 has no role to play in instant case as impugned investment has been duly disclosed in books of account maintained by assessee and assessee offered sufficient explanation regarding nature and source of said shares. (b) As explained above, assessee is holding 1,700 shares out of total gift of 8,000 shares. learned counsel concluded by saying that CIT(A) rightly allowed relief by deleting Rs. 31,96,258 being sale proceeds of 6,300 shares of Nestle treated by AO as unexplained cash credit and Rs. 8,61,900 being market value of 1,700 shares of same company treated by AO as undisclosed investment. 8. We have heard rival contentions of parties and gone through orders of authorities below. We have also perused papers placed in paper book, which contains 161 pages. first dispute was whether gift of 8,000 shares of Nestle received by assessee at rate of 4,000 shares each from Sri Jiwan Ram Marda (father) and Sri Sushil Marda (brother) was genuine and valid gift. According to assessee, donors out of their bonus shares received from Nestle had gifted 800 shares to him. In accounts of assessee and computation filed along with return, assessee had shown that out of this gifted Nestle shares, he had sold during year under appeal 6,300 shares at price of Rs. 31,96,258 which in entirety was shown as long- term capital gain as cost of these bonus shares was nil remaining 1,700 shares were shown in balance sheet of assessee as investment in shares. AO treated sale proceeds of 6,300 shares of Rs. 31,96,258 as assessee s unexplained cash credit and added same to total income under s. 68 of Act. For balance 1,700 shares, AO treated value of these shares amounting to Rs. 8,61,900 as concealed investment by invoking provisions of s. 69 of Act. 8.1 AO did not accept gift as valid and genuine gift mainly on grounds that (i) shares of Nestle claimed to have been gifted at rate of 4,000 shares each by Sri Jiwan Ram Marda and Sushil Marda were not transferred to assessee during assessment year under appeal (ii) Sri Sushil Marda was not holding sufficient number of Nestle shares out of which he could have effected gift of 4,000 shares to assessee; and (iii) assessee could not produce any evidence to establish that broker had paid consideration to assessee. It appears, doubt of AO about gift of Nestle shares and sale thereof by assessee was due to information received from M/s Nestle India Ltd., saying that during previous year relevant to assessment year under appeal, no such shares were transferred, in name of assessee. It is not in dispute that shares have been credited in account of assessee. It is also not in dispute that amount credited in assessee s account was out of sale of Nestle shares. From copy of flow chart of movement of shares in respect of these two donors, placed at p. 17 of paper book for period 1st April, 1992 to 31st March, 2001, in which details of Nestle share holding owner-wise, sale and gift made by each of them and opening and closing balance have been incorporated, it is seen that after effecting sale as well as gift made by them on several dates, said persons have reduced their respective share holding and arrived at closing balance. said chart also depicts receipt of bonus shares from Nestle on different dates. From papers submitted in paper book, it is evident that certain shares had been transferred in demat account with broker for sale and proceeds were directly transferred in bank account of assessee. It was for this reason that shares were not found registered in name of assessee before sale. We find substantial force in submission of assessee that person may not be registered owner in books of company but same cannot deprive him to hold gifted shares more particularly when due effect has been given in books of donors. assessee s learned counsel relied on decision of Hon ble Calcutta High Court in case of Sheila Devi Chamria (supra). It has been held in that case as under : "a gift of shares is complete as soon as shares are handed over to donee along with blank transfer form duly signed by donor. non- recording of transfer in books of company does not invalidate gift in any way. Although donee will not be regarded as shareholder by company until transfer is recorded in books of company, none less, in eye of law, it is donee who is owner of shares." On facts of case, ratio of aforesaid decision is squarely applicable to case of assessee. donors have confirmed that they had gifted shares to assessee not in physical form but by way of transferring same to demat account of broker of assessee and in turn sale proceeds of those gifted shares were credited in assessee s bank account. In view of above, there remains no doubt about gift made by said donors to assessee. 8.2 Now coming to issue whether donors were having shares of Nestle out of which they could have made gifts to assessee, assessee filed before us copies of wealth-tax assessments for several years of Sri Jiwan Ram Marda and Sri Sushil Marda. On perusal of same and statement of share holding by these persons, it is seen that these two persons were having investments in large number of shares of different companies and there was accretion in their share holdings by way of bonus shares. It has been explained by assessee how inter-family exchange of shares used to take place for obtaining higher credit limit by pledging shares with bank. We have given above details of share holding in assessee s demat account. On perusal of same in contrast with balance sheet of assessee, it is seen that shares of other beneficial family members including donors were transferred to demat account of assessee in earlier years, though in balance sheet only beneficial holding was mentioned. As per sum-up closing balance of demat accounts of assessee, closing balance of Nestle was 19,851, whereas as per income-tax record of assessee, assessee was owner of 1,000 shares only. above fact is proved by fact of dividend receipt also. assessee transferred dividend on shares to beneficial owners at end of year. In paper book pp. 52 to 54, assessee has shown comparison of beneficial holding of Nestle shares as per WT return and number of shares on which dividend was received for year ended 31st March, 1992, which supports assessee s case. Therefore, in view of above, we hold that transfer of shares by said two family members to assessee s demat account with broker was valid and genuine gift. 8.3 AO raised point that Sri Sushil Marda was not holding sufficient number of shares to effect gift. In this regard, assessee s learned counsel has elaborately explained matter with comparative chart indicating shares lying in his demat account as on 31st March, 2000 and transfer made therefrom during year under appeal. On perusal of same we do not find any valid reason to hold that Sri Sushil Marda did not have sufficient number of shares for making gift to assessee. In view of above discussions, we hold that assessee received gift of 8,000 shares of Nestle from Sri Jiwan Ram Marda and Sri Sushil Marda. 8.4 Out of these 8,000 bonus shares, assessee sold 6,300 shares at consideration of Rs. 31,96,258 through broker and claimed entire proceeds as long-term capital gain. sale was not disputed. However, as AO did not accept gift, he treated entire sale proceeds as unexplained cash credit under s. 68 of Act. We have already upheld source of shares which assessee received as gift. identity of donors is also not in dispute. In view of above provisions of s. 68 are not attracted in this case of assessee. In view of above detailed discussion, we hold that CIT(A) has rightly deleted addition and we do not find any infirmity in it to interfere. deletion of addition of Rs. 31,96,258 is, therefore, sustained. 8.5 As stated above, out of total 8,000 Nestle shares received as gift by assessee, assessee sold 6,300 shares and claimed long-term capital gain. In regard to balance 1,700 shares, assessee had shown same in his balance sheet for relevant assessment year as investment. AO calculated cost of investment of these shares at Rs. 8,61,900 by applying market value at rate of Rs. 507 per share and added same to income of assessee as undisclosed investment. For reasons discussed above in regard to 6,300 shares, we find no reason to interfere with decision of CIT(A) in deleting this addition also. We uphold same and direct AO to act accordingly. 9. Ground No. 4 of Department and only in assessee s appeal pertain to deduction under s. 54F of Act. facts of case are that assessee had invested sum of Rs. 25,10,000 in purchase of new residential house property during asst. yr. 2000-01. He had obtained housing loan of Rs. 12 lakhs in same year for this purpose. Accordingly, assessee claimed deduction under s. 54F of Rs. 8,29,289 in asst. yr. 2000-01 and balance amount of Rs. 16,80,711 in assessment year under appeal, i.e., asst. yr. 2001-02. assessee filed copy of sale deed along with copy of map before AO in support of claim of purchasing residential house property. He disallowed exemption claimed under s. 54F on grounds that assessee could not produce original map demarcating area purchased by assessee and that purchasing part of residential house is not eligible for exemption under s. 54F. 9.1 On appeal, CIT(A) directed AO to allow only Rs. 4,80,711 as deduction under s. 54F during year under appeal and disallowed balance claim of Rs. 12 lakhs with following observations : "I have carefully considered submission of learned Authorised Representative but found that same is not tenable. scheme of ss. 54 and 54F are different. heading of s. 54 reads profit on sale of property used for residence whereas, hearing of s. 54F reads capital gain on transfer of certain capital assets not to be charged in case of investment in residential house . Thus, heading of s. 54F made it clear that investment of capital gain is pre-condition for claiming deduction under s. 54F. capital gain arises on transfer of old asset has to be invested in new asset within stipulated period. Even if, same was not invested at time of purchase of property, but to be invested whenever capital gain is arised. Sub-s. (4) of s. 54F further clarified position. Thus, decision cited by learned Authorised Representative is not applicable in this case as (i) decision relates to s. 54 not under s. 54F. language and subject of these two sections are different, and (ii) this is not decision of jurisdictional of High Court. Therefore, in this case, balance sheet of assessee, made it clear that Rs. 12,00,000 was invested by assessee out of loan taken from bank, for which he has already claimed benefit under s. 24(1)(vi) all along. This loan was shown as outstanding in subsequent years too. Therefore, arithmetically, it can be concluded that out of Rs. 25,10,000, assessee had invested Rs. 12,00,000 out of bank loan. And for remaining Rs. 13,10,000, he has claimed Rs. 8,29,289 as deduction in asst. yr. 2000-01. Thus, for assessment year under consideration, assessee is, at best, can claim deduction of Rs. 4,80,711 only in this year. AO is thus directed to allow only Rs. 4,80,711 as deduction under s. 54F of Act." Being aggrieved by said direction of CIT(A), Department is in appeal against relief of Rs. 4,80,711 and assessee is in appeal against addition sustained to extent of Rs. 12,00,000. 10. assessee s learned counsel submitted that it is admitted fact that assessee purchased residential house property in financial year relevant to asst. yr. 2000-01 for Rs. 25,10,000 and claimed deduction under s. 54F for Rs. 8,29,289 in that year. Balance amount of Rs. 16,80,711 was claimed as deduction under s. 54F in assessment year under appeal. assessee filed copy of sale deed along with copy of map before AO in support of claim of purchasing residential house property. He disallowed exemption claimed under s. 54F on grounds that assessee could not produce original map demarcating area purchased by him and that purchasing part of residential house is not eligible for exemption under s. 54F. It was explained before us that since original copy of deed along with map was kept with bank for availing credit facility, original deed could not be produced before AO. However, original copy of said deed was produced before CIT(A). He further submitted that assessee purchased part of residential house and for other part, ownership remained with Dr. Smt. Nirmal Garg. Before AO assessee gave item-wise details of portion of ownership of building. He, therefore, submitted that ownership regarding portion in building was clearly defined and demarked in site plan attached to that sale deed. AO without considering same disallowed claim of assessee. According to learned counsel, since assessee has purchased portion of residential house property, he is entitled to exemption under s. 54F of Act. In support of his contention, learned counsel relied on following decisions : (i) CIT vs. Chandanben Maganlal (2000) 162 CTR (Guj) 542 : (2002) 120 Taxman 38 (Guj); (ii) Smt. Kalwanti D. Alreja vs. ITO (1996) 54 TTJ (Bom) 593; (iii) Shiv Narain Chaudhari vs. CWT 1977 CTR (All) 149. learned counsel further submitted that though CIT(A) has rightly allowed exemption under s. 54F for Rs. 8,29,289 in earlier asst. yr. 2000-01, but he fell in error in not granting exemption of balance sum of Rs. 12 lakhs (Rs. 25,10,000 - Rs. 8,29,289) for same property on ground that assessee took loan of Rs. 12 lakhs from bank for purchasing property, although subsequently same has been repaid. He relied on decision in case of ITO vs. K.C. Gopalan (2000) 162 CTR (Ker) 566 : (1999) 107 Taxman 591 (Ker). Though this decision relates to exemption under s. 54, but ratio is equally applicable in case of assessee. In this case, Court has categorically held that assessee was entitled to exemption under s. 54 even though for construction of new house, amount that was received by way of sale of his old property, as such, was not utilized. CIT(A) did not accept submission of assessee by saying that language and subject of these two sections are different and decision referred to by assessee is not decision of jurisdictional High Court. Accordingly, exemption to extent of loan taken i.e., Rs. 12,00,000 was not allowed by CIT(A). 10.1 learned Departmental Representative, on other hand, relied on order of AO. 11. We have heard rival contentions of parties and perused material placed before us. undisputed facts are that assessee had purchased portion of house property for total consideration of Rs. 25,10,000 during previous year relevant to asst. yr. 2000-01 and claimed proportionate exemption under s. 54F of Rs. 8,29,289 and for balance amount of Rs. 16,80,711, exemption was claimed in year under appeal. AO disallowed entire claim of exemption. CIT(A) after deducting amount of bank loan of Rs. 12,00,000 from total value of house property of Rs. 25,10,000 held that assessee was eligible for exemption under s. 54F on amount of Rs. 13,10,000. He, therefore, held that as assessee has already claimed exemption of Rs. 8,29,289 in earlier assessment year, assessee shall be entitled to exemption only for balance amount of Rs. 4,80,711 (Rs. 13,10,000 - Rs. 8,29,289). Sec. 54F speaks of capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. It reads as under : "(1) Subject to provisions of sub-s. (4), where, in case of assessee being individual or HUF, capital gain arises from transfer of any long-term capital asset, not being residential house (hereafter in this section referred to as original asset), and assessee has, within period of one year before two years after date on which transfer took place purchased, or has within period of three years, after that date constructed, residential house (hereafter in this section referred to as new asset), capital gain shall be dealt with in accordance with following provisions of this section, that is to say, (a) if cost of new asset is not less than net consideration in respect of original asset, whole of such capital gain shall not be charged under s. 45; (b) if cost of new asset is less than net consideration in respect of original asset, so much of capital gain as bears to whole of capital gain same proportion as cost of new asset bears to net consideration, shall not be charged under s. 45." On reading of aforesaid section, it is evident that for claiming exemption under this section, following conditions are to be fulfilled : (a) assessee should be individual or HUF; (b) Capital gain should arise from transfer of long-term capital gain; (c) assessee within period of 1 year prior to or two years after date of transfer of original asset, purchased residential house property or within 3 years from date of transfer of original asset constructs residential house property. Subject to fulfilment of above pre-conditions, if investment is more than net consideration, full capital gain is exempt, otherwise proportionate capital gain is exempt. said section does not say that net consideration has to be reinvested. assessee s learned counsel argued that it is not possible at all in case where residential property is purchased within 1 year prior to transfer of original asset. In our opinion, whether it is taxing statute or any other statute, it has to be construed reasonably. effort should always be given to ascertain intention of Parliament from words employed, as far as possible; interpretation which leads to absurdity should be avoided. Net consideration is referred only for comparison purpose in order to compute amount of exemption allowable under s. 54F. Hon ble Supreme Court in case of K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC) held as under : "A strictly literal reading of statutory provision ignores several vital considerations which must always be borne in mind while interpreting such provision. task of interpretation of statutory enactment is not mechanical task. It is more than mere reading of mathematical formulae because few words possess precision of mathematical symbols. It is attempt to discover intent of legislature from language used by it and it must always be remembered that language is at best imperfect instrument for expression of human though and as pointed out by Lord Denning, it would be idle to expect every statutory provision to be drafted with divine prescience and perfect clarity ." Further, Hon ble apex Court in case of CIT vs. Vegetable Products Ltd. 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC) has held as under : "If language is plain, fact that consequence of giving effect to it may lead to some absurd result is not factor to be taken into account in interpreting provision. It is for legislature to step in and remove absurdity. On other hand, if two reasonable constructions of taxing provision are possible, that construction which favours assessee must be adopted. This is well-accepted rule of construction." 11.1 Further, on reading of ss. 54 and 54F, it is apparent that both these sections are based on same premise. Purpose of both section is to allow exemption on long-term capital gain. difference is only that in s. 54 long- term capital gain should have arisen from transfer of residential house property and amount of capital gain should be referred for calculation of amount of exemption whereas in case of s. 54F, long-term capital gain should have arisen from long-term capital asset other than residential house property and net consideration is referred for purpose of calculation of s. 54F. Hence, decision pronounced in relation to s. 54 is squarely applicable for s. 54F if base is common. In that view of matter, so far as issue of partial purchase of residential house property is concerned decision pronounced in relation to s. 54 can be very much applied. Therefore, case of present assessee is squarely covered by case of K.C. Gopalan (supra) wherein it was held that Law does not insist that sale consideration obtained by assessee itself should be utilized for purchase or construction of new house property. assessee is entitled to exemption under s. 54 even though for construction of new house, amount that was received by way of sale of his old property as such was not utilized. Keeping in view facts and circumstances of case, construction of ss. 54 and 54F and judicial pronouncements referred to above, we hold that CIT(A) was not justified in sustaining addition of Rs. 12,00,000 on ground that net consideration was not invested in purchasing of house property. claim of assessee that he should be allowed exemption of Rs. 16,80,711 in year under appeal is thus allowed. ground raised by Department is, therefore, dismissed and that of assessee is allowed. We direct accordingly. 12. In result, appeal by Revenue is dismissed and that by assessee is allowed. *** LALIT MARDA v. ASSISTANT C OMMISSIONER OF INCOME TAX