2020 (9) TMI 69 - AT - Income Tax

Deduction u/s 54F - Capital Gains arose on transfer of assets - Year of assessment - A.Y. 2012-13 or in A.Y. 2013-14 - whether assessee has within a period of one year or after the date on which the transfer took place purchased or within a period of 3 years after the date constructed one residential house? - HELD THAT - In the present case, admittedly, the assessee neither purchase one residential house within the period of one year before the date of transfer or after two years of date of transfer nor constructed house within a period of three years. The only contention that the assessee was that the assessee made investments under the Capital Gain Scheme almost entire consideration under fixed deposits with the Syndicate Bank. Assessee transferred original asset on 26-08-2011 therefore in our opinion, the Capital Gain has to be assessed in the year under consideration i.e. A.Y. 2012-13. In order to get exemption u/s. 54F of the Act, the assessee must have purchased new asset one year before (26-08-2010) or two years after (26-08-2013) or constructed one residential house within a period of three years (26-08-2014). As rightly pointed by Shri Alok Malviya, ld. DR that the assessee did not utilize the sale consideration for purchase of flat or construction of one residential house. Therefore, the exemption as claimed by the assessee u/s. 54F of the Act is liable to be denied. Thus, in our opinion the order of CIT(A) is justified that the Capital Gains is to be assessed under the year under consideration, consequently, the assessee is not entitled to claim exemption u/s. 54F - Decided against assessee.

Summary

Issues Involved:
Determining the assessment year for Capital Gains arising from the transfer of assets.

Detailed Analysis:

Issue 1: Assessment Year for Capital Gains
The primary issue in this case is whether the Capital Gains arising from the transfer of assets should be assessed in the assessment year 2012-13 or 2013-14 based on the date of transfer and utilization of sale consideration for new asset acquisition.

Analysis:
The assessee sold inherited agricultural land, with the main contention being the timing of the transfer and utilization of sale proceeds. The Assessing Officer argued that since the transfer date was 26-08-2011, the Capital Gains should be assessed in A.Y. 2012-13. The assessee claimed that the major portion of the sale consideration was realized in 2012, justifying assessment in A.Y. 2013-14. However, the Assessing Officer found the assessee's submissions unsatisfactory, leading to the assessment of Long Term Capital Gain in A.Y. 2012-13. The CIT(A) upheld this decision, emphasizing the transfer date as conclusive evidence for Capital Gain realization.

Issue 2: Compliance with Section 54F for Exemption
Another aspect of contention was the compliance with Section 54F for exemption eligibility based on the purchase or construction of a new residential property within specified timelines.

Analysis:
The Assessing Officer highlighted that the assessee failed to utilize the sale consideration for new asset acquisition within the stipulated period, rendering them ineligible for exemption under Section 54F. The assessee's investments under the Capital Gain Scheme did not align with the prescribed timelines, leading to the denial of exemption. The Tribunal concurred, stating that the assessee did not meet the criteria for exemption as specified in Section 54F, ultimately upholding the denial of exemption and assessment of Capital Gains in the relevant year.

In conclusion, the Tribunal dismissed the appeal, affirming the assessment of Capital Gains in A.Y. 2012-13 and denying the exemption claimed under Section 54F due to non-compliance with the statutory requirements. The judgment underscores the importance of adhering to timelines and conditions stipulated in tax laws for claiming exemptions related to Capital Gains on asset transfers.