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2018 (11) TMI 1054 - AT - Income TaxRejection of exemption u/s 54F - investment before the date specified u/s 139(4) - non deposit the said amount in capital gain account scheme before the due date prescribed u/s 139(1) - investment of sale consideration in construction of a residential house within three years from the date of transfer - Held that - It is not in dispute that the assessee in the instant case had invested net sale consideration for purchase of new residential flat before the date specified u/s 139(4) of the Act. We find that issue under dispute is squarely covered in favour of the assessee by the Co-ordinate Bench decision of this Tribunal in the case of Sunayana Devi vs. ITO 2017 (9) TMI 961 - ITAT KOLKATA wherein as relying on Hon ble Karnataka High Court in the case of CIT, Bangalore vs K.Ramachandra Rao 2015 (4) TMI 620 - KARNATAKA HIGH COURT held that if the assessee invests the entire consideration in construction of the residential house within three years from the date of transfer he cannot be denied deduction u/s 54F of the Act on the ground that he did not deposit the said amount in capital gain account scheme before the due date prescribed u/s 139(1) of the Act. As the assessee invested the sale consideration in construction of a residential house within three years from the date of transfer, we are of the view that the assessee should be given the benefit of deduction u/s 54F - decided in favour of assessee.
Issues Involved:
1. Delay in filing the appeal. 2. Justification of the rejection of exemption claimed under Section 54F of the Income Tax Act, 1961. Detailed Analysis: 1. Delay in Filing the Appeal: At the outset, the Tribunal noted a delay of one day in filing the appeal by the assessee. The reasons provided by the assessee for the delay were found to be convincing. Consequently, the Tribunal condoned the delay and admitted the appeal for adjudication. 2. Justification of the Rejection of Exemption Claimed under Section 54F: The core issue was whether the CIT(A) was justified in upholding the rejection of the exemption claimed by the assessee under Section 54F of the Income Tax Act, 1961. Facts: - The assessee filed a return of income for the assessment year 2013-14, declaring a total income of ?23,05,590. - The assessee entered into an agreement to purchase a flat for ?2,37,46,500 and claimed an exemption under Section 54F for the long-term capital gain derived from the sale of shares amounting to ?1,45,42,091. - The AO observed that the assessee had not deposited the sale proceeds in the capital gain account scheme before the due date of filing the return under Section 139(1) and denied the exemption. Assessee’s Argument: - The assessee argued that the entire long-term capital gain was invested in the purchase of a new residential flat before the due date specified under Section 139(4). - The assessee relied on the Supreme Court decision in Xavier J Pulickal vs. DCIT, arguing that the ultimate purpose of reinvestment in residential property had been complied with. Tribunal’s Findings: - The Tribunal noted that the assessee had indeed invested the net sale consideration in the purchase of a new residential flat before the date specified under Section 139(4). - The Tribunal referred to the Co-ordinate Bench decision in Sunayana Devi vs. ITO, which held that the absence of deposit in the capital gains account scheme should not deny the exemption if the investment in the new residential property was made within the stipulated period. - It was emphasized that Section 54F(4) requires the unutilized net consideration to be deposited in a specified bank account before the due date for filing the return under Section 139(1). However, if the assessee has invested the sale proceeds in a new residential property within the period specified under Section 54F(1), the exemption should not be denied. Conclusion: - The Tribunal held that the assessee is entitled to the exemption under Section 54F as the investment in the new residential property was made within the stipulated period. - The Tribunal allowed the appeal, granting the exemption under Section 54F. Judgment: The appeal of the assessee was allowed, and the order pronounced in the Court on 20.11.2018.
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