2016 (5) TMI 1373 - AT - Income Tax

Denial of exemption u/s.54F - nom deposit in capital gains account scheme before due date u/sec. 139(1) - Held that - As decided in the case of CIT vs. R.L. Sood (1999 (9) TMI 27 - DELHI High Court) were the date of agreement to purchase should be taken as the date of purchase. On applying the ratio to current circumstances, the assessee entered into agreement with builder for undivided share of land and construction agreement on 03.02.2011 which is very much before provisions of Sec. 139(4) of the Act. In the case of Jagtar Singh Chawla of Punjab 2013 (4) TMI 499 - PUNJAB AND HARYANA HIGH COURT the assessee has paid substantial amount for purchase of residential property before the extended due date of filing of return and the assessee was eligible for exemption and not liable to pay any capital gain tax. Considering the factual aspects, genuiness of transactions and beneficial and liberal aspects of the provisions and the judicial decisions relied by the assessee. We are of the opinion that assessee complied the conditions and is eligible for exemption u/s.54F of the Act. We set aside the order of CIT(Appeals) and direct AO to grant exemption u/s.54F of the Act on the remaining construction cost which was invested in the residential property before due date u/s.139(4) of the Act and allow the grounds of the assessee.

Summary

Issues:
- Denial of exemption u/s.54F for non-deposit in capital gains account scheme before due date u/sec. 139(1) of the Act.

Analysis:
1. The assessee appealed against the Commissioner of Income Tax (Appeals) order confirming the Assessing Officer's findings on denial of exemption u/s.54F of the Act due to non-deposit of &8377; 36,00,000 before the due date u/sec. 139(1) of the Act.

2. The assessee, an individual, sold land and claimed exemption u/s.54F for investing in residential property. The Assessing Officer calculated long term capital gains based on guideline value, restricting exemption to &8377; 30,00,000. The Commissioner of Income Tax (Appeals) upheld this decision.

3. In the Tribunal, the assessee argued compliance with Sec. 54F conditions, investing before the extended due date u/s.139(4) of the Act. The Departmental Representative contended non-utilization of sale consideration before due date.

4. The Tribunal analyzed the investments, noting the assessee invested &8377; 66,64,457 before the extended due date. Considering Sec. 54F provisions liberally, the Tribunal found the assessee eligible for exemption. Citing judicial decisions, the Tribunal emphasized the date of agreement as crucial and ruled in favor of the assessee.

5. The Tribunal set aside the Commissioner of Income Tax (Appeals) order, directing the Assessing Officer to grant exemption on the remaining construction cost invested before the due date u/s.139(4) of the Act.

6. Ultimately, the Tribunal allowed the appeal of the assessee, emphasizing compliance with Sec. 54F conditions and eligibility for exemption.

7. The order was pronounced on May 6, 2016, at Chennai.