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2018 (4) TMI 74 - AT - Income TaxClaim for exemption u/s.54F for investment made in a residential house not allowed while computing capital gains - whether assessee completed the construction before 31.03.2008? - whether the construction was carried out within the time limit available u/s.139 of the Act? - Held that - If a person has not furnished the return of the previous year within the time allowed under subsection (1), i.e., before the 31st day of July of the assessment year, the assessee can file return before the expiry of one year from the end of the relevant assessment year. In the case before us, the valuation report filed by the assessee clearly show that he had completed the construction of the new residential house by March, 2008. That apart, assessee had also furnished before the ld. Commissioner of Income Tax (Appeals) electricity bills, dated 04.10.2007 and 07.12.2007. Assessee having completed the construction before 31.03.2008, in my opinion judgment of Hon ble Punjab and Haryana High Court in the case of Ms. Nagriti Agarwal (2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT) will come to its aid. The date of actual filing of return by the assessee is irrelevant for construing the time limits within which the investments have to be made for availing exemption u/s.54F of the Act. Since the assessee had invested in the new residential house within the time limits specified under the Act, the question of depositing the consideration received on the sale of the property in an account under the Capital Gains Account Scheme also does not arise. Therefore assessee was eligible for claiming exemption u/s.54F - Decided in favour of assessee
Issues:
Claim for exemption u/s.54F of the Income Tax Act not allowed while computing capital gains. Analysis: The appellant, an assessee, sold a property and computed long term capital gains. The assessee claimed exemption u/s.54F for the entire capital gains based on an investment made in a new residential house. However, the Assessing Officer held that the conditions for exemption were not satisfied as the assessee did not invest the net consideration in a residential house within the specified time frame or deposit the sums not used in the special capital gains scheme account. The return was also filed after a notice u/s.148 was issued, leading to the denial of the exemption. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, emphasizing the requirements of Section 54F regarding the utilization of sale proceeds for acquisition or construction of a residential property within the stipulated time frame or depositing the sale proceeds in the Capital Gain Scheme. The failure to meet these conditions led to the denial of exemption. The appellant's appeal was dismissed. During the hearing, the appellant did not appear, and the Departmental Representative supported the lower authorities' orders. It was argued that the completion of construction of the new residential house within the specified time limit was not proven, as evidenced by the lack of electricity bills. However, the appellant had produced a valuation report and other documents supporting the construction timeline. Upon review, it was noted that substantial construction of the new residence had been completed within the required time frame, as evidenced by electricity bills and other documents. The completion of construction before the deadline specified under Section 139(4) satisfied the conditions for exemption u/s.54F. The judgment of the Hon'ble Punjab and Haryana High Court supported the appellant's eligibility for claiming exemption. Consequently, the Assessing Officer was directed to grant the exemption, and the orders of the lower authorities were set aside. In conclusion, the appeal of the assessee was allowed, and the judgment was pronounced on January 4, 2018, in Chennai.
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