2022 (1) TMI 610 - HC - Income Tax

Exemption u/s 54F - Refusal to issue No Objection Certificate for enabling the petitioner / assessee to withdraw amount from Capital Gains Accounts - Petitioner has already paid the advance tax which is more than the amount of Capital Gain tax that may be required to pay - HELD THAT - As petitioner as drawn our attention to the indemnity bond, the petitioner has furnished in favour of the Assistant Commissioner of Income Tax on 23.10.2021 - tax which the petitioner is required to pay on a regular basis is not more than ₹ 58 lakhs and the payment of the said amount towards Capital Gain Tax should not be doubted and there is nothing under the law to preclude the Assessing Officer to allow the remaining amount , which has remained with the Department, as the petitioner is no longer going to claim the benefit under the provisions of Capital Gain Scheme Accounts - as relying on the decision of Padma Swaminathan 2017 (3) TMI 1878 - MADRAS HIGH COURT Notice for final disposal returnable on 30.11.2021.

Summary

Issues:
Challenge to rejection of request for issuance of no objection certificate regarding advance tax payment exceeding Capital Gain tax amount.

Analysis:
The petitioner challenged the respondent's order rejecting the request for a no objection certificate, despite having paid advance tax exceeding the potential Capital Gain tax amount. The petitioner, a one-fourth owner of a land parcel sold in December 2018, gained ?4.75 crores from the sale. To claim exemption under section 54F of the Income Tax Act, the amount was deposited with the Bank of India as per the Capital Gains Scheme Accounts, 1988. The return of income for AY 2019-20 showed a deduction claim under section 54F at ?4.65 crores as Nil while computing taxable Capital Gain.

The prayer sought by the petitioner included quashing the impugned order, directing the issuance of a 'No Objection Certificate,' staying tax recovery for AY 2018-19, and providing any other appropriate relief deemed just. The petitioner's advocate highlighted the indemnity bond furnished to the Assistant Commissioner of Income Tax and argued that the remaining amount with the Department should be allowed since the petitioner no longer intended to claim benefits under the Capital Gain Scheme Accounts. Reference was made to a decision by the Karnataka High Court in Padma Swaminathan vs. Income Tax Officer, supporting the petitioner's stance.

The Court heard the petitioner's advocate and scheduled a final disposal notice for 30.11.2021. Additionally, direct service via Speed Post was permitted alongside the regular mode of service.