2019 (3) TMI 384 - AT - Income Tax

Claim of deduction of long term capital gain claimed u/s 54 - Due date of return u/s 139(1)is 31.07.2013 - Return actually filed on 25.01.2014 - Claimed amount utilized up to 25.01.2014 is allowable - No deposit in capital gain account scheme account - HELD THAT - When the return of income was filed by the assessee the entire amount which was subject to capital gain tax has not been utilized for the purpose of construction of new house nor were the unutilized amount deposited in the notified bank account in term of section 54F(4) before filing of return of income. The assessing officer has taken into account all amounts utilized for construction of the house, as the dates noted above and therefore in the present facts the decision in the case of Humayun Suleman Merchant 2016 (9) TMI 70 - BOMBAY HIGH COURT squarely applies the facts of the present case. - Decided in favour of assessee.

Summary

Issues:
Disallowance of deduction of long term capital gain under section 54 of the Income Tax Act for non-utilization or deposit in the Capital Gain Account Scheme before filing the return of income.

Analysis:
The appeal arose from the Commissioner of Income Tax (Appeals) confirming the disallowance of the claim of deduction of long term capital gain under section 54 of the Act due to non-utilization or deposit in the Capital Gain Account Scheme before filing the return of income. The Assessing Officer noted that the assessee had claimed exemption of a specific amount under section 54 of the Act but had not utilized the capital gain for purchasing new assets, instead advancing it to a company. The AO emphasized that for availing exemption under section 54F, the return of income under section 139(1) should have been filed within the specified time, and unutilized capital gain should have been deposited in a specified scheme before filing the return. The CIT(A) upheld the AO's decision, leading to the appeal before the Tribunal.

The assessee contended that the exemption should be allowed as the first payment was made before the due date under section 139(1), and subsequent payments were made before the due date under section 139(4) and before the actual return filing date. The assessee also argued that complete details were provided to the Assessing Officer and were part of the documents submitted to the CIT(A). The Tribunal examined the detailed chart submitted by the assessee, referencing decisions of the Bombay High Court and ITAT in similar cases. The Tribunal considered the dates of return filing, due dates, and payment amounts to determine compliance with section 54F.

The Tribunal referred to the decision of the Bombay High Court in a similar case, emphasizing that if the amount is utilized before the last day of filing the return of income under section 139, the provisions of section 54(2) would not apply. The Tribunal analyzed the specific dates and payments made by the assessee, concluding that the entire capital gain had not been utilized for constructing a new house or deposited in the specified account before filing the return of income. Relying on the Bombay High Court decision, the Tribunal directed the Assessing Officer to recompute the deduction under section 54 of the Act, allowing the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to reevaluate the claim of deduction under section 54 of the Income Tax Act based on the compliance with the provisions regarding utilization and deposit of capital gain before filing the return of income.