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2022 (1) TMI 1044 - AT - Income TaxDisallowing the claim of exemption u/s 54-F - Belated filing of ITR - investment in NHAI Bonds - AO disallowed the exemption by taking view that held that capital gain was not deposited by assessee before due date of filing return of income under section 139(1) - HELD THAT - We find that there is no dispute that the assessee sold his asset on 26.02.2010 and purchased of NHAI Bonds of ₹ 10 lakh on 26.03.2010 and ₹ 15 lakh on 11.08.2010, the assessee filed return of income under section 139(4) on 31.03.2011. Further, the assessee purchased of new residential house on 22.09.2011 and appropriated entire capital gain. As in CIT Vs Rajesh Kumar Jalan 2006 (8) TMI 126 - GAUHATI HIGH COURT in the context of section 54 held that a plain reading of sub-section (2) of section 54, it is clear that only section 139 is mentioned in section 54(2) in the context that the unutilised portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the income-tax under section 139. Section 139 cannot mean only section 139(1) but it means all sub-sections of section 139. Under subsection (4) of section 139, any person who has not furnished a return within the time allowed to him under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Such being the situation, it was the case of the assessee that he could fulfil the requirement under section 54 for exemption of the capital gain from being charged to income-tax on the sale of property used for residence, could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier, under sub-section (4) of section 139. When the assessee has deposited ₹ 15 lakhs of capital gain in purchasing the Bond of NHAI before due date of filing of return of income under section 139(4), his claim for exemption under section 54 F was not to be disallowed. Hence, we direct the AO to allow the entire capital gain earned by the assessee as exempted under section 54F. - Decided in favour of assessee.
Issues Involved:
1. Validity of reopening the case under Section 147 of the Income Tax Act. 2. Disallowance of the claim of exemption under Section 54-F of the Income Tax Act. 3. Non-adjudication of all grounds of appeal by the CIT(A). Detailed Analysis: 1. Validity of Reopening the Case under Section 147: The assessee challenged the reopening of the case under Section 147, arguing that there was no failure on their part to disclose fully and truly all material facts necessary for the assessment. The reopening was based on AIR information indicating that the assessee sold property for ?51,37,500 and acquired bonds worth ?5 lakh, which the Assessing Officer believed led to an escaped assessment of ?56,37,500. The assessee contended that they were a co-owner and only received ?25,68,750, not ?51,37,500, and had purchased NHAI bonds worth ?10 lakh, not ?5 lakh. The Assessing Officer did not dispose of the objections raised by the assessee regarding the reopening. The CIT(A) did not adjudicate on the validity of the reopening despite the detailed submissions by the assessee. 2. Disallowance of the Claim of Exemption under Section 54-F: The assessee claimed exemption under Section 54-F, arguing that they had deposited the entire capital gains in a capital gains account and purchased NHAI bonds before filing the return of income under Section 139(4). The Assessing Officer disallowed ?14,94,166 of the exemption, asserting that this amount was not deposited before the due date under Section 139(1). The CIT(A) upheld this view, stating that the investment in the new asset was beyond the due date under Section 139(4). The Tribunal, however, referred to the decisions of the Hon'ble Gauhati High Court in CIT vs. Rajesh Kumar Jalan and the Hon'ble Punjab & Haryana High Court in CIT vs. Jagtar Singh Chawla, which held that Section 139 includes all its subsections, and the extended due date under Section 139(4) should be considered for claiming exemption under Section 54-F. Since the assessee had invested the capital gains in purchasing NHAI bonds and a new residential house within the extended period, the Tribunal directed the Assessing Officer to allow the entire capital gain as exempt under Section 54-F. 3. Non-adjudication of All Grounds of Appeal by the CIT(A): The assessee raised a specific ground challenging the validity of the reopening under Section 147, which was not adjudicated by the CIT(A) despite detailed submissions. However, since the Tribunal allowed relief to the assessee on the merits of the case, the adjudication on the validity of reopening became academic and was not further pursued. Conclusion: The Tribunal allowed the assessee's appeal, directing the Assessing Officer to allow the entire capital gain as exempt under Section 54-F, and noted that the issue of the validity of reopening became academic due to the relief granted on merits. The order was pronounced in the open court on 18/01/2022.
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