2016 (7) TMI 1000 - AT - Income Tax

Benefit u/s.54F denied - AO denied the exemption u/s.54F on the reason that the return filed within the extended time limit available of filing of return of income u/s.139(4) cannot be considered - Held that - we are inclined to remit the issue to the file of AO to examine the fulfillment of the conditions u/s.54F of the Act through intermediary period that is from the date of sale of capital asset to the date of actual investment in residential house. Accordingly, the issue is remitted to the file of AO for fresh consideration after giving adequate opportunity of hearing to the assessee. - Decided partly in favour of assessee for statistical purposes.

Summary

Issues:
Non-granting of exemption u/s.54F due to the late filing of the return.

Analysis:
The appeal was against the denial of exemption u/s.54F of the Act due to the late filing of the return by the assessee u/s.139(4). The assessee sold properties and claimed exemption u/s.54F on investment in a flat. The AO contended that since the return was filed belatedly, the assessee was not entitled to the exemption. The Ld.CIT(A) upheld this decision, leading to the appeal.

The ld.A.R argued that filing a return u/s.139(4) does not disentitle the assessee from claiming exemption u/s.54F. They contended that the due date for filing the return should be considered for granting the exemption. The Tribunal noted that the Karnataka High Court and Gauhati High Court held that the due date for investment under u/s.54F refers to the 'extended due date' u/s.139(4). The Tribunal agreed that the time limit for investment should be considered based on u/s.139(4).

The Tribunal observed that the AO had outrightly rejected the claim without considering other conditions of Sec.54F. The ld.A.R argued that even if the assessee did not deposit in the capital gains account scheme, they would be entitled to deduction u/s.54. The Tribunal referred to a Karnataka High Court decision emphasizing the importance of depositing the capital gains in a notified account if not invested in a property within the stipulated period. The Tribunal decided to remit the issue back to the AO to examine the conditions of Sec.54F from the sale of the asset to the actual investment date.

In conclusion, the appeal was partly allowed for statistical purposes, and the issue was remitted to the AO for fresh consideration after providing the assessee with a fair hearing opportunity.