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2022 (10) TMI 544 - AT - Income TaxExemption u/s 54 - investment towards the purchase of new residential property - As submitted exemption needs to be allowed if the amount is invested on or before the due date of filing of return under section 139(4) - HELD THAT - As relying on ratio laid down by in the matter of Xavier J. Pulikkal v. Dy. CIT 2014 (4) TMI 211 - KERALA HIGH COURT it can be safely be concluded that the assessee in the case before us is entitled to claim exemption under section 54 to the extent she had invested towards the purchase of new residential property under consideration upto the date of filing of belated return under section 139(4) i.e. 31.03.2014. In the case before us assessee purchased new property well before the deadline given in section 139(4) i.e. 30.04.2013 for Rs. 1,66,74,200/-. Which we find is much in excess of LTCG of Rs. 1,19,45,236/-. We therefore, in terms of our aforesaid observations set-aside the order of the CIT(A) and vacate the disallowance of the assessee s claim of exemption under section 54 of Rs. 1,19,45,236/- as was sustained by him. Appeal filed by the assessee is allowed.
Issues Involved:
1. Denial of benefit under Section 54 of the Income Tax Act, 1961. 2. Interpretation of Section 54 regarding the timeline for investment and compliance with the Capital Gains Account Scheme. 3. Judicial precedent and liberal construction of beneficial provisions. Detailed Analysis: 1. Denial of Benefit Under Section 54 of the Income Tax Act, 1961: The primary issue in this case was the denial of the benefit under Section 54 of the Income Tax Act, 1961, to the appellant. The Assessing Officer (AO) disallowed the claim on the grounds that the appellant failed to deposit the amount in the Capital Gains Account Scheme (CGAS) and did not purchase the new house property before the due date of filing the return under Section 139(1). The appellant argued that Section 54 is a beneficial provision and should be construed liberally to advance the object of giving the benefit to the taxpayer. 2. Interpretation of Section 54 Regarding the Timeline for Investment and Compliance with the Capital Gains Account Scheme: The AO and the Commissioner of Income Tax (Appeals) [CIT(A)] interpreted Section 54 strictly, focusing on the requirement to deposit unutilized capital gains in the CGAS before the due date under Section 139(1). The appellant, however, relied on various judicial precedents to argue that the term "due date" under Section 139 should include the extended dates under Section 139(4) and 139(5). The Tribunal noted that Section 54(2) provides for two dates: the due date under Section 139 and the due date under Section 139(1), and emphasized that "Section 139" includes all subsections, not just 139(1). 3. Judicial Precedent and Liberal Construction of Beneficial Provisions: The appellant cited multiple rulings from various High Courts and Tribunals to support the claim that the exemption under Section 54 should be available until the due date of filing the return under Section 139(4). Notably, the Tribunal referred to the Supreme Court's decision in Xavier J. Pulikkal v. Dy. CIT, which supported the broader interpretation of Section 54, allowing the benefit of exemption if the investment is made before the due date under Section 139(4). Conclusion: The Tribunal concluded that the appellant is entitled to the exemption under Section 54, as the investment in the new residential property was made before the due date of filing the return under Section 139(4). The Tribunal set aside the order of the CIT(A) and vacated the disallowance of the appellant's claim of exemption under Section 54, amounting to Rs. 1,19,45,236/-. The appeal filed by the appellant was allowed. Order: The appeal was allowed, and the order was pronounced in the open court on 12th October 2022.
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