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2024 (7) TMI 1283 - AT - Income TaxLTCG - Deductions claimed u/s 54B - whether the capital gain was utilized for the purchase of new asset before the date of furnishing return of income u/s 139? - HELD THAT - In the present case we are concerned with the utilization of capital gains by purchase of new asset for which the legislature has referred to Section 139 of the Act and not 139(1) of the Act which is referred to for deposit in capital gain scheme. Thus a reasonable view may be taken to say that Section 139 would cover extended time limit provided u/s 139(4) of the Act in case of purchase of new agricultural land. Thus when an assessee furnishes return subsequent to due date of filing return u/s 139(1) but within the extended time limit u/s 139(4) the benefit of investment made up to the date of furnishing of return of income prior to filing return u/s 139(4) cannot be denied. In the instant case assessee has paid to the seller Sri Laxmanbhai Hamirbhai Rabari on 29.03.2017 and filed the return of income on 29.03.2017. Accordingly we hold that the capital gains utilized towards purchase of new asset before furnishing of return of income u/s 139(4) will be deemed to be sufficient compliance of Section 54B(2) of the Act. Ground raised by the assessee is allowed.
Issues:
1. Disallowance of deduction under section 54B of the Income-tax Act, 1961. 2. Interpretation of the time limit for purchase of new asset under Section 54B. 3. Compliance with the provisions of Section 139 for claiming deduction under Section 54B. Analysis: 1. The case involved an appeal by the assessee against the disallowance of a deduction of Rs. 14,91,361 under section 54B of the Income-tax Act, 1961. The Assessing Officer (AO) disallowed the deduction as the assessee had not utilized the sale consideration for the purchase of agricultural land within the specified time limit. The AO added the amount to the income of the assessee. The Commissioner of Income-tax (Appeals) upheld the AO's decision, stating that the purchase of land was beyond the time limit allowed by Section 54B. The assessee then appealed to the Tribunal challenging this decision. 2. The key issue revolved around the interpretation of the time limit for purchasing a new asset under Section 54B. The assessee argued that the expression used in Section 54B(2) did not specifically mention Section 139(1) but referred to Section 139 in general. The assessee contended that since the investment was made before filing the return of income, the deduction should be allowed. The Tribunal examined the language of Section 54B and concluded that the capital gain must be utilized for the purchase of the new asset before the due date of filing the return of income under Section 139 of the Act. The Tribunal considered the extended time limit under Section 139(4) for filing the return and held that the investment made before filing the return under Section 139(4) should be considered for claiming the deduction under Section 54B. 3. In analyzing the compliance with the provisions of Section 139 for claiming the deduction under Section 54B, the Tribunal emphasized the distinction between utilizing the capital gain for the purchase of a new asset and depositing the unutilized amount in the Capital Gains Account Scheme, 1988. The Tribunal held that in this case, where the assessee had made the investment before filing the return of income under Section 139(4), the deduction under Section 54B should be allowed. The Tribunal referred to relevant case laws supporting the assessee's claim and allowed the appeal, stating that the capital gains utilized before filing the return under Section 139(4) should be deemed compliant with Section 54B(2) of the Act. In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing the importance of considering the extended time limit under Section 139(4) for claiming deductions under Section 54B of the Income-tax Act, 1961.
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