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2020 (5) TMI 183 - AT - Income TaxDeduction u/s 54F - time frame of depositing in capital gains account scheme - assessee has filed her return of income on 14.12.2011 within time limit prescribed under section 139(4) - HELD THAT - In the instant case, where the amount was deposited in capital gain accounts scheme before filing of return U/s 139(4) of the Act, respectfully following the decision of SHRI SHANKAR LAL SAINI 2018 (1) TMI 1000 - RAJASTHAN HIGH COURT the same be eligible for deduction u/s 54F of the Act. In the result, the matter is decided in favour of the assessee and against the Revenue and the sole ground of appeal is allowed.
Issues Involved:
1. Whether the assessee's claim for deduction under Section 54F of the Income Tax Act was valid despite the procedural error in depositing the capital gains. Issue-wise Detailed Analysis: 1. Procedural Error in Depositing Capital Gains: The primary issue was whether the assessee's claim for deduction under Section 54F was valid despite depositing the capital gains into the Capital Gains Account Scheme (CGAS) after the due date for filing the return under Section 139(1) but before the extended due date under Section 139(4). The assessee sold plots and received consideration on 18 and 19 January 2011. To avail the benefit of Section 54F, the assessee initially placed the funds in an FDR with the Bank of Rajasthan on 20 January 2011. Upon realizing the requirement to deposit under CGAS, the assessee encashed the FDR and deposited the amount into CGAS with Canara Bank on 3 December 2011. The assessee filed the return on 14 December 2011, within the extended due date under Section 139(4). 2. Denial of Deduction by AO and CIT(A): The Assessing Officer (AO) disallowed the deduction under Section 54F, stating that the deposit into CGAS was made after the due date of filing the return under Section 139(1). The CIT(A) upheld this decision. 3. Arguments by the Assessee: The assessee argued that: - The funds were solely used for purchasing residential property and not for any other purpose. - The procedural mistake was bona fide and corrected promptly. - The intent and purpose of Section 54F were met as the funds were ultimately used for the intended purpose. - The deduction should be allowed as per the precedent set by the jurisdictional tribunal in similar cases, such as Goverdhan Singh Shekhawat Vs. ITO. 4. Precedents and Judicial Interpretations: The assessee cited various judicial pronouncements supporting a liberal interpretation of incentive provisions: - The Jaipur Bench of ITAT in Goverdhan Singh Shekhawat Vs. ITO held that compliance with the essence and spirit of opening and maintaining a separate capital gain account suffices for exemption under Section 54F. - The Supreme Court in Sanjeev Lal emphasized purposive interpretation for exemption provisions. - The Rajasthan High Court in Shankar Lal Saini held that deposits made in CGAS before filing the return under Section 139(4) are allowable for deduction under Section 54F. 5. Revenue's Counterarguments: The Revenue argued that: - The deposit into CGAS was made after the due date under Section 139(1). - The subsequent purchase of the residential property was not within the prescribed period of 2 years from the date of transfer. 6. Tribunal's Findings: The Tribunal considered the rival submissions and material on record. It noted: - The assessee deposited the sale consideration into FDRs and later into CGAS before filing the return under Section 139(4). - The funds were used solely for purchasing the residential property. - The legislative intent of Section 54F was met as the funds were utilized for the intended purpose. The Tribunal referred to the Rajasthan High Court's decision in Shankar Lal Saini, which allowed deductions for deposits made before filing the return under Section 139(4). The Tribunal concluded that the assessee's actions complied with the provisions of Section 54F(4). Conclusion: The Tribunal allowed the appeal, holding that the assessee's claim for deduction under Section 54F was valid as the procedural error was bona fide and corrected promptly, and the legislative intent of the provision was met. The appeal was decided in favor of the assessee, allowing the deduction under Section 54F.
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