9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 597 - AT - Income TaxDenial of deduction u/s 54F - claim was denied on the reason that the assessee has not deposited the net sale consideration in Capital Gain Scheme Account which is a clear violation provisions of Section 54F(4) - claim of the deduction u/s 54F was denied by AO on the reason that the assessee has not deposited the net sale consideration in Capital Gain Scheme Account which is a clear violation provisions of Section 54F(4) - HELD THAT - As relying on K. RAMACHANDRA RAO 2015 (4) TMI 620 - KARNATAKA HIGH COURT if he want of claim exemption from payment of income tax by retaining the cash, then the said amount is to be invested in the said account. If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, then Section 54F(4) is not at all attracted and therefore the contention that the assessee has not deposited the amount in the Bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct Section 54F is beneficial provision and should be interpreted liberally and the Assessing Officer has to see the end utilization of net sale consideration in the way prescribed in Section 54F of the Act, the assessee is entitled for exemption Under Section 54F of the Act. With this observation, we remit the issue to the file of Assessing Officer for fresh consideration.
Issues:
Denial of deduction under Section 54F of the Income Tax Act, 1961. Analysis: The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2013-14, specifically challenging the denial of deduction under Section 54F of the Act. The Assessing Officer rejected the deduction claim as the net sale consideration was not deposited in the Capital Gain Scheme Account, which is required by Section 54F(4) of the Act. The CIT (Appeals) upheld the Assessing Officer's decision, stating that the net sale consideration was not deposited during the construction period of the residential house. The assessee argued that the investment in the new residential house within the stipulated time should suffice, even if the amount was not kept in the Capital Gain Scheme Account. The case involved a dispute over the interpretation and application of Section 54F of the Act. The Authorized Representative contended that the end utilization of the net sale consideration in constructing the new residential house should be the focus rather than strict adherence to depositing the amount in the Capital Gain Scheme Account. Several judgments were cited to support this argument, emphasizing the importance of timely investment in a new residential property over the deposit requirement. On the contrary, the Departmental Representative stressed the statutory requirement under Section 54F(4) that necessitates the deposit of the net sale consideration in the prescribed scheme to claim exemption. Failure to comply with these conditions, as per the Department, would disentitle the assessee from the benefit of Section 54F. Upon hearing both parties and examining the facts, the Tribunal deliberated on the essence of Section 54F, emphasizing the need for the assessee to invest the sale consideration within the specified period to qualify for the deduction. The Tribunal referred to a relevant judgment by the Hon'ble Karnataka High Court, which clarified that if the investment in the construction or purchase of the property is made within the stipulated time, the requirement to deposit the amount in the Capital Gain Scheme Account does not apply. The Tribunal interpreted Section 54F as a beneficial provision that should be construed liberally, focusing on the actual utilization of the net sale consideration as prescribed in the Act. Consequently, the Tribunal remitted the issue back to the Assessing Officer for a fresh review, allowing the appeal partly for statistical purposes. In conclusion, the judgment addressed the denial of deduction under Section 54F of the Income Tax Act, emphasizing the importance of timely investment in a new residential property and the liberal interpretation of the provision to ensure the end utilization of the net sale consideration as mandated by the Act.
|
