2017 (3) TMI 1878 - HC - Income Tax

Exemption u/s 54F - Refusal to issue No Objection Certificate for enabling the petitioner / assessee to withdraw amount from Capital Gains Accounts - HELD THAT - Admittedly, there are eight accounts with the maturity value as tabulated above. It is also not in dispute that the tax liability under dispute would cover the total amount in deposit, in respect of three account numbers in serial Nos. 3, 4 and 7 of the above referred accounts. Considering the fact that the petitioner has come forward with a request only in respect of other five accounts and willing to go before the respondent for considering the matter afresh in respect of those three accounts The interest of the Revenue will not be prejudiced in any manner, if the respondent is directed to issue No Objection Certificate in respect of remaining five the petitioner is protecting the interest of the Revenue by not getting the No Objection Certificate , for the present, in respect of the other three Accounts are concerned pending a decision to be made afresh by the respondent, after hearing the petitioner. WP allowed in part.

Summary

Issues:
Refusal to issue No Objection Certificate for withdrawing amount from Capital Gains Accounts.

Detailed Analysis:

1. Background: The petitioner, a housewife, sought to withdraw funds from Capital Gains Accounts to purchase a new house. Her husband had settled a property in her favor, and the property was subsequently sold, resulting in capital gains.

2. Tax Assessment: The husband filed income tax returns for the assessment year 2016-17, declaring the capital gains arising from both his and the petitioner's shares. He paid the tax, including the petitioner's share, and claimed exemptions under sections 54 and 54EC.

3. Application for No Objection Certificate: The petitioner applied for a No Objection Certificate to withdraw funds from the Capital Gains Accounts for a new house investment. However, the respondent refused to issue the certificate unless the petitioner paid the capital gains tax again.

4. Legal Arguments: The petitioner's counsel argued against the need for the petitioner to pay tax again, as it had already been paid by the husband for both shares. The counsel requested a personal hearing for the petitioner to present her case and demonstrate why the demand was incorrect.

5. Request for Partial Relief: The petitioner's counsel proposed that the petitioner be allowed to withdraw funds from five out of the eight Capital Gains Accounts, while retaining the remaining three accounts to cover the tax demand.

6. Court's Decision: The court acknowledged that the tax liability covered the total amount in deposit for three specific accounts. It directed the respondent to issue a No Objection Certificate for the remaining five accounts, allowing the petitioner to withdraw funds from those accounts. The petitioner was also given the opportunity to present objections and contentions for the remaining three accounts.

7. Final Orders: The court ordered the respondent to issue the No Objection Certificate for the specified accounts within two weeks. The petitioner was instructed to present objections for the remaining accounts within the same period. The respondent was directed to hear the petitioner's objections and pass a fresh order within four weeks. No costs were awarded in the case.

This detailed analysis summarizes the legal judgment, highlighting the key issues, arguments presented, and the court's decision in a comprehensive manner.