2018 (8) TMI 1809 - AT - Income Tax

Condonation of delay on adverse medical conditions being faced by assessee s spouse. Although, the supporting documents, as placed before us are general in nature yet keeping in view the observation in Collector, Land Acquisition Vs. Mst. Katiji Others 1987 (2) TMI 61 - SUPREME COURT and keeping in view the fact that the assessee was an artist, we condone the same. Denial of deduction u/s 54 - denial of claim as investment beyond two years and non-furnishing of documentary evidences before lower authorities to support the investment - HELD THAT - We find that the assessee earned certain capital gains during impugned AY and deposited the same in Long Term Capital Gain Account with PNB on 28/09/2010 i.e. before due date of filing of return of income for impugned AY. The material on record reveal that the assessee s accounts were subjected to Audit and the due date of filing of return of income in his case, as extended by CBDT vide Order No.402/92/2006-MC (42 of 2010) dated 28/09/2010 was 15/10/2010. In such a case, the amount so deposited by him, in terms of provisions of Section 54(2), is deemed to be the cost of new asset and accordingly the assessee was entitled for deduction of the same during impugned AY. Proceeding further, we find that the case of the revenue is that the assessee did not utilize the amount so deposited for making investment in new House property within the stipulated time period. However, upon perusal of proviso to Section 54, we find that if the amount so deposited is not utilized in the prescribed manner, the same shall be charged u/s 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires. Upon due consideration of factual matrix, we find that the deduction u/s 54 for the impugned AY could not be denied to the assessee since all the conditions as envisaged therein was fulfilled by the assessee. - Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Denial of deduction under section 54 of the Income Tax Act, 1961.

Condonation of Delay:
The appeal was filed with a delay of 469 days, and the assessee sought condonation citing adverse medical conditions faced by the spouse. The Departmental Representative opposed the condonation, stating insufficient cause for the delay. The Tribunal, considering the circumstances and relying on legal precedents, including the Collector, Land Acquisition case, decided to condone the delay.

Denial of Deduction under Section 54:
The assessee claimed deduction under section 54 for the amount deposited in the Long Term Capital Gain Account, which was later utilized for the purchase of a new property. The Assessing Officer denied the deduction on the grounds that the investment was made beyond two years from the date of transfer and lacked documentary evidence. The Commissioner of Income Tax (Appeals) upheld this decision.

Upon review, the Tribunal noted that the assessee deposited the capital gains in the specified account before the due date of filing the return of income. As per Section 54(2), this amount is deemed to be the cost of the new asset, making the assessee eligible for the deduction. The Tribunal also highlighted the provisions of Section 54(1) regarding the conditions for claiming the deduction.

The Revenue argued that the amount deposited was not utilized within the stipulated time period. However, the Tribunal clarified that as per the proviso to Section 54, if the amount deposited is not utilized for the new asset within the specified time, it shall be charged as income in the year the period expires. Since the conditions under Section 54 were met by the assessee, the Tribunal allowed the appeal, granting the deduction under Section 54 for the Assessment Year in question.

In conclusion, the Tribunal allowed the appeal, granting the deduction under Section 54 to the assessee for the impugned Assessment Year.