2016 (10) TMI 180 - HC - Income Tax

Grant of extension of time to comply with the requirements of Section 54-F - year in which such deduction is claimed - failure to demonstrate compliance of Section 119 (2)(c)(ii) - Held that - The submission is based on the erroneous presumption that the words year in which such deduction is claimed mean the year in which the assessee seeks and is granted extension. The words in fact mean the year in which the assessee is eligible to tax, which in the case before us, is the Assessment Year 2012-13 as the sale was on 28.06.2011. A view to the contrary would entitle an assessee to postpone the payment of capital gain tax indefinitely by making the application at any time and even repeatedly, if required. The words mean the year in which the assessee may claim the benefit and not the year in which he chooses to claim the same. The relaxation in terms of Section 119 (2) (c) can be sought by the assessee at the time of claiming deduction and such claim can be made only within the time period, as prescribed under the Act for making such claim. There is nothing in Section 119 (2) of the Act which gives any power to the Board to extend the time to claim the deduction. While applying the afore principle, to the facts of the present case, the petitioner could have applied for relaxation for claiming the benefit under Section 54-F only within the time prescribed under that Section and that too, if before making such claim, he had complied with the required conditions to claim such deduction. That not being there in the present case, we are of the opinion that the Board rightly rejected the petitioner s application. Learned counsel for the Revenue has stated that the petitioner is a Hindu Undivided Family, whereas the revenue record appended with the petition shows that the owner of the land in question is a Karta of the Hindu Undivided Family in his individual capacity. In view of what we have held above, even if we assume the owner of the land to be the petitioner Hindu Undivided Family, no relief can be granted. On the issue of the petitioner having two houses, Mr. Mittal, learned counsel for the petitioner has explained that the petitioner does not own any house as alleged by the Revenue. However, we express no opinion on the same. - Decided against assessee.

Summary

Issues Involved:
1. Validity of the rejection of the petitioner's application for condonation of delay and extension of time under Section 54-F of the Income Tax Act, 1961.
2. Compliance with Section 119 (2)(c)(ii) of the Income Tax Act, 1961.
3. Ownership and capacity of the petitioner to claim the deduction.

Issue-wise Detailed Analysis:

1. Validity of the rejection of the petitioner's application for condonation of delay and extension of time under Section 54-F of the Income Tax Act, 1961:

The petitioner sought the quashing of the order dated 03.03.2015, which rejected their application for condonation of delay and extension of time to comply with Section 54-F of the Income Tax Act, 1961. The petitioner sold 04 kanals of land on 28.06.2011 and deposited the capital gains in a Fixed Deposit under the Capital Gains Tax Scheme, 1988. The petitioner intended to construct a residential house on the remaining 27 kanals 16 marlas but was precluded due to interim prohibitory orders from the courts. Consequently, the petitioner applied for an extension of time to construct the house, fearing the capital gains would be taxed. The Board rejected this application, stating non-compliance with Section 119 (2)(c)(ii) of the Act.

2. Compliance with Section 119 (2)(c)(ii) of the Income Tax Act, 1961:

The petitioner argued that Section 119 (2)(c)(ii) would not apply as they were not claiming a deduction but seeking an extension of time to claim the deduction beyond the prescribed period. The Revenue countered that the petitioner had failed to comply with Section 119 (2)(c)(ii), which requires the default to be due to circumstances beyond the control of the assessee and compliance with the requirements before the completion of the assessment for the relevant year. The court held that the petitioner could have constructed a residential house elsewhere and did not do so, thus failing to meet the conditions under Section 119 (2)(c)(ii). The court further clarified that the extension could not be granted indefinitely and must be within the stipulated period.

3. Ownership and capacity of the petitioner to claim the deduction:

The Revenue contended that the petition was filed by Shivinder Singh Brar, Karta HUF, whereas the revenue records showed the land was owned by Shivinder Singh Brar in his individual capacity. The court noted that even if the land was assumed to be owned by the petitioner Hindu Undivided Family, no relief could be granted due to non-compliance with the necessary conditions for claiming the deduction under Section 54-F. The court also mentioned that the petitioner did not own two houses as alleged by the Revenue but expressed no opinion on this matter.

Conclusion:

The court found no merit in the petition and dismissed it, upholding the Board's rejection of the petitioner's application for condonation of delay and extension of time under Section 54-F. The court emphasized that the petitioner failed to comply with the conditions stipulated under Section 119 (2)(c)(ii) and could have constructed a residential house elsewhere within the stipulated period.