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2022 (1) TMI 1196 - AT - Income TaxDeduction u/s 54 - Belated filing of return u/s 139(4) - amount of capital gain invested for new asset purchased or construction of new asset within the time prescribed - whether the deduction under Section 54 can be claimed to the extent of amount of capital gain invested for new asset purchased or construction of new asset within the time prescribed under Section 54F(4) of the Act, till the filing of the Income Tax Return under Section 139(4)? - HELD THAT - Hon'ble Punjab Haryana High Court in the case of CIT Vs. Jagriti Aggarwal 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT dealt with an identical issue and while relying upon Hon'ble Gauhati High Court judgment in the case of CIT Vs. Rajesh Kumar Jalan 2006 (8) TMI 126 - GAUHATI HIGH COURT held and justified the utilization of the capital gain for purchase of property before the extended due date under Section 139(4). It is clear that the deduction under section 54F of the Act can be claimed to the extent of amount of capital gain utilized till the filing of the return under Section 139(4) of the Act. As in the instant case, the ld. Commissioner allowed the deduction under Section 54 of the Act to the extent only which was invested/utilized by the Assessee till the due date of filing the return under Section 139(1) of the Act and therefore, respectfully following the mandates of the Hon'ble High Courts, we are inclined to allow the deduction under Section 54F of the Act to the extent of amount of capital gain invested/utilized till the filing of the return by the Assessee on 29th March, 2014 under Section 139(4) - Decided in favour of assessee.
Issues Involved:
1. Whether the deduction under Section 54 of the Income Tax Act, 1961 can be claimed for the amount invested in a new residential house beyond the due date of filing the return under Section 139(1) but within the extended period under Section 139(4). 2. Whether the Assessee is entitled to the deduction under Section 54 for investments made in a new residential house within the extended period of filing the return. 3. The validity of the Assessing Officer's computation and disallowance of the Assessee's claim. 4. The correctness of the Ld. Commissioner's partial acceptance of the Assessee's claim. Detailed Analysis: Issue 1: Deduction under Section 54 of the Act The Assessee sold a flat and claimed a deduction under Section 54 for the capital gains by investing in a new flat. The Assessing Officer denied this claim on the grounds that the Assessee neither deposited the capital gain amount in the capital gain scheme account nor utilized it before the due date of filing the return under Section 139(1). The AO also observed that the Assessee's claim lacked credible evidence of actual investment in the new flat. Issue 2: Entitlement to Deduction for Investments Made Within Extended Period The Assessee contended that the investment in the new flat was made up to the date of filing the belated return under Section 139(4). The Ld. Commissioner partly accepted this claim, allowing the deduction only for the amount invested up to the due date of filing the return under Section 139(1). The Ld. Commissioner cited several case laws to support the decision, stating that only the amount invested before the due date under Section 139(1) qualifies for deduction. Issue 3: Validity of AO's Computation and Disallowance The AO computed the long-term capital gain at ?71,78,207 and disallowed the Assessee's claim, adding this amount to the Assessee's income. The Ld. Commissioner upheld the AO's computation but allowed partial relief by recognizing the investment made up to the due date under Section 139(1). Issue 4: Correctness of Ld. Commissioner's Partial Acceptance The Assessee appealed against the Ld. Commissioner's decision, arguing that the deduction should be allowed for the entire amount invested up to the date of filing the belated return under Section 139(4). The Tribunal referred to various High Court judgments, including CIT Vs. Jagriti Aggarwal and CIT Vs. Rajesh Kumar Jalan, which held that the extended period under Section 139(4) should be considered for claiming deductions under Section 54. The Tribunal concluded that the Assessee is entitled to the deduction for the amount invested until the filing of the return under Section 139(4). Conclusion: The Tribunal allowed the Assessee's appeal, granting the deduction under Section 54 for the amount of capital gain utilized until the filing of the return under Section 139(4). The Tribunal emphasized that the extended due date under Section 139(4) should be considered for claiming the deduction, aligning with the judgments of various High Courts. Order: The appeal filed by the Assessee is allowed, and the order was pronounced in the open court on 19/01/2022.
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