2019 (10) TMI 1025 - AT - Income Tax

Exemption u/s 54F - quantum of deduction allowable under section 54F - dispute is regarding the amount of payment made for purchase of the residential flat (new asset) before the due date of the filing of return of income - contention of the assessee is that the due date of the filing of the return of income should be reckoned as under section 139(4) of the Act, whereas according to the Revenue, the due date of the filing of the return of income should be as per section 139(1) - HELD THAT - In the case of the assessee, due date of the filing of return of income in terms of section 139(1) of the Act is 31/07/2012 and due date for filing return of income in terms of section 139(4) of the Act is 31/03/2014 (i.e. one year from the end of relevant assessment year or completion of assessment, whichever is earlier). As far as payment made for purchase of new asset before 31/07/2012 is concerned AO has also accepted in remand proceeding allowability of the sum of ₹ 50,36,422/- and thus, we hold that this amount is undisputedly allowable for considering deduction under section 54F of the Act. Regarding the payment made by the assessee before 31/03/2014, Hon ble High Court of Rajasthan in the case of Shankar Lal Saini 2018 (1) TMI 1000 - RAJASTHAN HIGH COURT held that, where assessee, an individual deposited unutilized sale consideration in capital gains scheme within the due date of filing of belated tax return under section 139(4), the capital gains relief under section 54F of the Act would be allowable The payment made by the assessee towards purchase of residential house up to the due date of filing of the return of income prescribed under section 139(4) of the Act i.e. 31/03/2014 is allowable for considering deduction under section 54F of the Act. Respectfully, following the above decisions, we accordingly direct the Assessing Officer to consider amount utilized by the assessee for purchase of the house till 31/03/2014(which includes the payment of ₹ 50,36,422/- made up to 31/07/2012) for deduction under section 54F of the Act. - Decided partly in favour of assessee

Summary

Issues Involved:
1. Disallowance of claim under section 54F of the Income-tax Act.
2. Consideration of payment made towards purchase of a residential flat before the due date of filing the income tax return.
3. Rejection of the assessee's submission regarding payments made before the due date under section 139(4) of the Act.

Issue-wise Detailed Analysis:

1. Disallowance of Claim under Section 54F:
The assessee challenged the action of the Assessing Officer (AO) in disallowing the claim under section 54F of the Income-tax Act. The AO noticed the sale of a plot of land and computed the capital gain at ?88,59,734/-. The assessee claimed a deduction under section 54F amounting to ?90,02,000/- against the capital gain, declaring a net capital gain of nil. The AO allowed a deduction of ?36,87,458/- based on the amount paid for the new asset before the due date of filing the return of income under section 139(1).

2. Consideration of Payment Made Before Due Date:
The assessee argued that the payment of ?50,36,422/- was made before 31/07/2012, as verified by the AO in the remand proceeding. The AO accepted this amount in the remand proceeding, but the CIT(A) did not consider it for deduction under section 54F. The Tribunal held that the payment of ?50,36,422/- made before 31/07/2012 is undisputedly allowable for deduction under section 54F.

3. Rejection of Submission Regarding Payments Made Before Due Date Under Section 139(4):
The assessee contended that the due date for filing the return of income should be considered as per section 139(4), i.e., 31/03/2014, and relied on decisions from the Punjab and Haryana High Court and Karnataka High Court, which supported this view. The CIT(A) rejected this argument, stating that the CBDT Circular No. 471 was not applicable. The Tribunal, however, cited various judgments, including those from the Rajasthan High Court and Karnataka High Court, which held that the due date under section 139(4) should be considered for the purpose of section 54F. The Tribunal directed the AO to consider the amount utilized by the assessee for the purchase of the house till 31/03/2014 for deduction under section 54F.

Conclusion:
The Tribunal concluded that the payment of ?50,36,422/- made before 31/07/2012 is allowable for deduction under section 54F. Additionally, payments made up to 31/03/2014 should be considered for deduction under section 54F, following the decisions of higher courts. The appeal of the assessee was partly allowed. The order was pronounced on 6th August 2019.