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2020 (12) TMI 982 - AT - Income TaxExemption u/s 54 - Assessee has not invested an amount which should have been invested in capital gain account scheme - HELD THAT - In the present case, the assessee filed the return of income for the assessment year 2014-15 on 13.6.2014 before the due date of filing return u/s 139(1) of the Act. However, by that time, he has not utilized the amount of ₹ 2,59,03,849/- in construction of new residential house or deposited the same in capital gain account scheme as notified by the Central Government. In other words, unutilized capital gain should have been deposited in capital gain account before due date of filing of return u/s 139(1) of the Act. Now the contention of the Ld. A.R. is that even if the assessee deposited unutilized portion of capital gain after the due date provided u/s 139(1) of the Act, assessee is entitled for deduction u/s 54 of the Act. This argument cannot be upheld. To avail benefit u/s 54 of the Act, unutilized portion of capital gains shall be deposited by assessee in capital gain account scheme before due date of filing of return of income u/s 139(1) of the Act as prescribed u/s 54(2) of the Act. We are of the view that in the case of assessee the deduction claimed should be examined in the parameters of section 54F - We make it clear that assessee shall furnish necessary evidences of construction or purchase of new residential property in Chicago, USA. A.O. has to examine the same and decide the issue in the light of the order cited - We are of the opinion that it is appropriate to remit the issue to examine the claim of the assessee and decide in accordance with law. Appeal of the assessee is partly allowed for statistical purposes.
Issues Involved:
1. Entitlement to exemption under Section 54 of the Income-tax Act, 1961. 2. Compliance with the requirement of depositing unutilized capital gains in the Capital Gains Account Scheme. 3. Consideration of extended due date under Section 139(4) for investment in new residential property. 4. Eligibility for exemption for investment in residential property located outside India. Issue-wise Detailed Analysis: 1. Entitlement to exemption under Section 54 of the Income-tax Act, 1961: The assessee claimed exemption under Section 54 for a sum of ?7,59,92,601/- invested in a new residential house within the due date under Section 139(1). However, the balance capital gain of ?2,59,03,899/- was not utilized for construction or deposited in the Capital Gains Account Scheme. The assessee argued that the delay was due to tax withheld by the buyer and sought condonation under Section 119(2). 2. Compliance with the requirement of depositing unutilized capital gains in the Capital Gains Account Scheme: The lower authorities denied the exemption, stating that the unutilized capital gains should have been deposited in the Capital Gains Account Scheme before the due date of filing the return under Section 139(1). The Tribunal upheld this view, emphasizing that Section 54(2) mandates the deposit of unutilized capital gains in the scheme before the due date under Section 139(1) to avail the exemption. 3. Consideration of extended due date under Section 139(4) for investment in new residential property: The assessee contended that the due date mentioned in Section 54 should be interpreted as the extended due date under Section 139(4). However, the Tribunal clarified that the exemption under Section 54 is conditional upon compliance with Section 54(2), which explicitly requires the deposit of unutilized capital gains before the due date under Section 139(1). Consequently, the argument for considering the extended due date under Section 139(4) was rejected. 4. Eligibility for exemption for investment in residential property located outside India: The assessee alternatively argued for exemption for a residential property purchased in Chicago, USA, within the stipulated time under Section 139(4). The Tribunal referred to the coordinate bench's decision in IT(IT)A No.15/Bang/2019, which allowed exemption under Section 54F for properties purchased outside India, provided the conditions of Section 54F are met. The Tribunal agreed with this proposition and directed the Assessing Officer to examine the evidence of construction or purchase of the new residential property in Chicago and decide the issue in light of the relevant judicial precedents. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, remitting the issue back to the Assessing Officer to verify the evidence of the new residential property in Chicago and to decide the claim for exemption under Section 54F in accordance with the law. The order emphasized compliance with Section 54(2) and the necessity of depositing unutilized capital gains in the Capital Gains Account Scheme before the due date under Section 139(1).
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