2017 (3) TMI 145 - AT - Income Tax

Eligibility of exemption u/s 54G - deposit of unutilized capital gain that was deposited in a specified account as laid down in Sec.54G(2) on 30.3.2010 by the Assessee - Held that - As decided in case of CIT vs Jagriti Agarwal 2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT Sec.139(4) which is akin to Sec.139(5) of the Act in the present case, was part of Sec.139(1) and therefore if deposit of unutilized capital gain is made within the time limit made in Sec.139(4) of the Act, the deduction cannot be denied to an Assessee. The ratio laid down by the Hon ble Punjab & Harayana High Court will hold good in the context of a revised return filed u/s.139(5) of the Act as well. Hence the deposit made by the Assessee in the present case has to be held to be within the time limit specified in Sec.54G(2) of the Act and therefore the Assessee is entitled to exemption u/s.54G of the Act. Period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of actual receipt of the consideration, because if the assessee receives part payment as on the date of transfer and receives part payment after six months then it would lead to an impossible situation by asking assessee to invest money in specified asset before actual receipt of the same. We are of the view even on this basis the order of the CIT(A) deserves to be upheld. - Decided against revenue

Issues Involved:
1. Eligibility of the assessee for exemption under Section 54G of the Income Tax Act, 1961.
2. Timeliness of the deposit of unutilized capital gains for claiming exemption under Section 54G(2) of the Income Tax Act.
3. Interpretation of the time limit for making the deposit under Section 54G(2) in relation to Section 139 of the Income Tax Act.

Detailed Analysis:

1. Eligibility of the Assessee for Exemption under Section 54G:
The primary issue in this case revolves around the eligibility of the assessee to claim exemption under Section 54G of the Income Tax Act, 1961, for a sum of ?10 crores. Section 54G provides for the exemption of capital gains arising from the transfer of assets in cases of shifting an industrial undertaking from an urban area to a non-urban area. The assessee sold its land and building at Bhandup, Mumbai, and sought to claim exemption under Section 54G for the capital gains arising from this sale.

2. Timeliness of the Deposit of Unutilized Capital Gains:
The dispute centers on whether the deposit of ?10 crores made by the assessee into a specified account on 30.03.2010 qualifies for exemption under Section 54G(2). The Assessing Officer (AO) denied the exemption, arguing that the deposit was made beyond the due date specified in Section 139(1) of the Act, which was 30.09.2009. However, the assessee argued that the time limit should include the extended period allowed for filing a revised return under Section 139(5), which in this case was 31.03.2011.

3. Interpretation of the Time Limit for Making the Deposit:
The interpretation of the time limit for making the deposit under Section 54G(2) is crucial. The first part of Section 54G(2) allows for the deposit to be made up to the time limit for filing the return of income under Section 139, which includes both Section 139(1) and Section 139(5). The second part, however, specifies that the deposit must be made "not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of Section 139."

The CIT(A) and the tribunal both agreed with the assessee's interpretation that the time limit under Section 54G(2) should include the extended period for filing a revised return under Section 139(5). This interpretation was supported by precedent cases, including the decisions of the ITAT Kolkata Bench in Chanchal Kumar Sircar v. Income Tax Officer and the ITAT Pune Bench in Mahesh Nemichandra Ganeshwade v. Income Tax Officer. These cases established that the period for making the deposit should be reckoned from the date of actual receipt of the sale consideration.

Conclusion:
The tribunal upheld the CIT(A)'s decision, agreeing that the deposit made by the assessee on 30.03.2010 was within the time limit specified in Section 54G(2) when considering the extended period under Section 139(5). Consequently, the assessee was entitled to the exemption under Section 54G for the deposit of ?10 crores. The appeal by the revenue was dismissed, affirming the CIT(A)'s order allowing the exemption.

Order Pronouncement:
The order was pronounced in the open court on 01.03.2017, dismissing the appeal by the revenue and upholding the assessee's claim for exemption under Section 54G.

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