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2012 (7) TMI 460 - AT - Income TaxLong term capital gain - exemption / deduction u/s 54 - Alternate claim out of two investment in residential properties - for construction of a residential property and for an apartment - due to reasons beyond the control of the builder, the construction would not be completed before the time limit to construct a residential house - assessee had taken the possession of the immovabale property at Park View Apartments within three years from the date of sale of the residential property - in the case of ACIT vs. Smt. Sapna Dimri, the exemption u/s 54 of the Act has been allowed under almost similar circumstances in favour of the assessee while following various precedent - decided in favor of assessee.
Issues Involved:
1. Whether the assessee is entitled to claim deduction under Section 54 of the Income Tax Act, 1961, for the payment made after the due date for filing the income tax return under Section 139(1). 2. Interpretation of the due date for investment under Section 54, whether it refers to the due date under Section 139(1) or the extended period under Section 139(4). Issue-wise Detailed Analysis: 1. Entitlement to Deduction under Section 54 for Payment Made after Due Date: The assessee sold a residential property in Bangalore and generated long-term capital gains. He invested in two residential properties: one in Bangalore and another in Gurgaon. Initially, the assessee claimed a deduction for the Bangalore property, but later, due to construction delays, he sought the deduction for the Gurgaon property. The Assessing Officer restricted the claim to Rs.1,76,33,244/- instead of Rs.1,90,95,606/-, disallowing Rs.14,62,362/- paid after the due date for filing the return under Section 139(1). The assessee contended that the entire amount was utilized before 31.03.2008, and the last payment was made on 19.06.2007, within the extended period under Section 139(4). The CIT(A) upheld the Assessing Officer's decision, leading to the present appeal. 2. Interpretation of Due Date under Section 54: The crux of the matter revolves around whether the "due date" for investment under Section 54 refers to the due date under Section 139(1) or includes the extended period under Section 139(4). The assessee argued that Section 54 refers to the entire Section 139, including the extended period under Section 139(4). This interpretation was supported by the Gauhati High Court in CIT vs. Rajesh Kumar Jalan and the Punjab & Haryana High Court in CIT vs. Jagrati Aggarwal, which held that the due date under Section 139(1) is subject to the extended period under Section 139(4). Judgment: The Tribunal considered the precedents and the arguments presented. It noted that various courts and ITAT Benches have ruled in favor of the assessee in similar circumstances. Specifically, the ITAT Delhi Bench in the case of ACIT vs. Smt. Sapna Dimri held that the due date for investment under Section 54 includes the extended period under Section 139(4). The Tribunal found no contrary decisions presented by the Revenue. Consequently, it accepted the assessee's appeal, directing the Assessing Officer to delete the disallowance of Rs.14,62,362/- and allow the full deduction of Rs.1,90,95,606/- under Section 54. Conclusion: The appeal filed by the assessee was allowed, and the Assessing Officer was directed to delete the impugned addition, confirming that the due date for investment under Section 54 includes the extended period under Section 139(4).
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