2024 (7) TMI 1183 - AT - Income Tax

LTCG - denial of exemption u/s 54F - appellant has utilized all the consideration received from the sale of Land for the construction of the residential house before the filling of the return u/s 139 - HELD THAT - As on the basis of material available on record, we are of the considered view that the assessee has not been able to establish that it has satisfied any of the conditions stipulated in Section 54F of the Act for the claim of exemption with respect to capital gains made on sale of property. Neither has the assessee deposited the unutilised/un-appropriated portion of capital gains made on sale of property in the specified capital gains account before the due date of filing of return u/s 139(1) of the Act and nor has the assessee been able to establish that the construction of the new property was completed by the assessee within the period of 3 years from the date of sale of property as mandated by Section 54F. In addition to the above, CIT(Appeals) has also observed that the assessee has not been able to establish that the assessee did not own more than one property as on the date of the sale of such property, against which exemption u/s 54F of the Act has been sought to be claimed. Appeal of the assessee is dismissed.

Issues:
- Disallowance of exemption under Section 54F of the Income Tax Act.

Detailed Analysis:
1. The appellant filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals) regarding the disallowance of exemption under Section 54F of the Income Tax Act for a specific amount. The appellant claimed to have utilized the consideration received from the sale of land for constructing a residential house before filing the return under Section 139 of the Act, seeking exemption under Section 54F.

2. The Assessing Officer (AO) found that the appellant failed to deposit the unutilized capital gains in a specified bank account before the due date of filing the return, as required by Section 54F. Additionally, the AO noted that the construction of the new property was not completed within 3 years from the date of sale of the property. The AO also found that the appellant did not provide evidence to prove ownership of only one property at the time of the sale.

3. The Ld. Commissioner of Income Tax (Appeals) dismissed the appeal, emphasizing that the appellant did not invest the capital gains in a new property before the due date of filing the return or deposit the unutilized amount in a special capital gains account as mandated by Section 54F. The Ld. CIT(A) highlighted the failure to provide evidence of timely completion of construction within 3 years from the sale date.

4. The Appellate Tribunal noted the absence of the appellant during the hearing and the failure to establish compliance with the conditions specified in Section 54F. The Tribunal concurred with the Ld. CIT(A) that the appellant did not meet the requirements for claiming exemption under Section 54F, as the unutilized capital gains were not deposited in the specified account before the due date of filing the return, and the construction of the new property was not completed within the stipulated timeframe.

5. The Tribunal upheld the decision of the Ld. CIT(A) and dismissed the appeal, concluding that the appellant failed to fulfill the conditions outlined in Section 54F for claiming exemption on the capital gains from the sale of the property. The appellant's non-compliance with the statutory provisions regarding depositing unutilized funds and completing construction within the specified period led to the dismissal of the appeal.

This detailed analysis covers the issues involved in the legal judgment comprehensively, outlining the arguments presented, the findings of the authorities, and the final decision rendered by the Appellate Tribunal.

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