2016 (11) TMI 1709 - AT - Income Tax

Deduction u/s 54F - as observed that the assessee claimed that the entire sale consideration was deposited in the Nationalized Bank as well as in capital gain account however no documentary evidence was submitted to the AO - as contended by the assessee that since the investment is made before the due date of filing of return under section 139(4) of the Act and also before the date of filing of return on 21.02.2013 the assessee is eligible for deduction u/s 54B 54F even if he has not deposited the amount in capital gain account - HELD THAT - The Coordinate Bench of the Tribunal while deciding the identical issue in the case of Nand Lal Sharma 2015 (6) TMI 482 - ITAT JAIPUR as relying on ASHOK KAPASIAWALA VERSUS THE ITO WARD-7 (1) SURAT 2015 (10) TMI 2045 - ITAT AHMEDABAD ASHOK KAPASIAWALA VERSUS THE ITO WARD-7 (1) SURAT 2015 (10) TMI 2045 - ITAT AHMEDABAD SMT. VRINDA P. ISSAC 2012 (8) TMI 608 - KARNATAKA HIGH COURT as decided in favour of assessee.

Summary

Issues:
1. Disallowance of deduction u/s 54B and 54F in computing capital gain on sale of agricultural land.
2. Applicability of deduction u/s 54F on expenditure incurred on construction of house on agricultural land.

Analysis:

Issue 1: Disallowance of deduction u/s 54B and 54F:
The appeal was against the order of CIT (A) confirming the disallowance of deduction u/s 54B and 54F in computing capital gain on the sale of agricultural land. The AO had declined the deduction on the grounds of non-deposit of net sale consideration in the capital gain account. The assessee argued that investment made before the due date of filing the return under section 139(4) entitles them to the deduction, even without depositing the amount in the capital gain account. The Tribunal considered various judgments and allowed the claim of the assessee, setting aside the order of CIT (A).

Issue 2: Applicability of deduction u/s 54F on construction expenditure:
The CIT (A) had erred in holding that deduction u/s 54F is not available on the expenditure incurred on the construction of a house on agricultural land. The assessee contended that the judgment of the Hon'ble Apex Court in a different case was wrongly applied by CIT (A). The Tribunal, after hearing both parties and reviewing the facts, allowed the claim of the assessee, citing decisions of Coordinate Benches and High Courts in favor of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, overturning the order of CIT (A) and confirming the entitlement to deductions u/s 54B and 54F. The judgment emphasized the importance of timely investments and considered precedents to support the assessee's position.