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TMI Blog2013 (11) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... is specifically mentioned for claiming deduction u/s 54 (2) as sec 139(1) and not as per sec 139(4) of the IT Act." 2. The DR submitted that the only issue involved in the present appeal of the Revenue is that the CIT(A) erred in law and on facts in directing the Assessing Officer to allow claim of deduction u/s 54 of the Act even though the assessee had not invested the entire capital gain within the due date of filing of return of income u/s 139(1) of the Act as mentioned in section 54 of the Act. 3. The DR submitted that the assessee, in the return of income filed had claimed deduction u/s 54 of the Act of Rs. 86,92,810/-. The Assessing Officer observed that out of total investment of Rs. 86,92,810/-, only an amount of Rs. 46,92,810/- was utilized before the due date of filing the return of income and the balance investment of Rs. 40 lakhs was made after the due of filing of return and therefore, should have been deposited in the specified schemes/deposits before the due date of filing of return of income. The Assessing Officer, therefore, considered the payment of Rs. 40 lakhs made on 24.8.2007 was without depositing in the specified schemes and hence not eligible for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of new house property before the due date of furnishing of return of income u/s 139 means the date as prescribed not only u/s 139(1) but also u/s 139(4) of the Act. The findings of the CIT(A) read as under: "I have considered the above submissions of the assessee as well as the contents of the assessment order. The assessee sold her residential property during the F.Y.2006-07 for a consideration of Rs.90,00,000/-. This is a residential property (referred to as "original asset" hereafter) and there is no dispute regarding this issue. In order to claim deduction a deduction u/s .54 of the Act, the assessee should invest in purchase / construction of a residential property us under: * purchased a residential house within a period of one year before the date on which the original (house) is sold, or * purchased a residential house within a period of two years after the date on which the original (house) is sold, or * constructed a residential house within a period of three years after the date on which the original (house) is sold. The relevant provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,92,810 The only dispute here is the eligibility of the payment of investment of Rs.40,00,000/- made on 24.08.2007 i.e. after the due date to file the return of income of 31.07.2007. As per the provisions of sec.54(2) of the Act, the requirement is that the amount is to be invested before the date of filing the return of income u/s.139 of the Act. Only the amount not so utilized has to be deposited in the specified modes for the purpose of investments on the later dates and such deposits in the specified modes have to be made before the due date of filing the return of income u/s .139(1) of the Act. The relevant provisions of sec.54(2) are as under: Sec.54 (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns filed u/s 139(1) or u/s 139(4). Both are valid returns and the date such filing of returns is to be reckoned for the purpose of sec.54(2) of the Act if the investments are made before the actual date of filing the return of income. In the instant case, the assessee made all the payments of investment in the new house (the last installment being on 24.08.2007) before filing the return of income on 30.11.2007 (the due date permitted u/s.139(4) is 31.03.2008). For this purpose, reliance is placed on the following judicial pronouncements: 1) CIT v. Ms. Jagriti Aggarwal (2011)(339 ITR 610)(P&H): Assessee sold her house property on 13-1-2006 while filed her return on 28-3-2007 claiming deduction. under section 54 on ground that she had purchased another property jointly on 2-1-2007 for higher sum - Assessing Officer declined said claim - One of grounds was that assessee had failed to purchase house property before due date of filing return of income under section 139(1), i.e., prior to 31-7-2006 - According to assessee, due date of filing return of income in her case was not as specified in section 139(1) but as specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome under section 139, means the date as prescribed not only u/s.139(1) but also u/s .139(4) of the Act. Thus, in the instant case, as the assessee invested (paid) the entire amount before filing the return of income (which may be u/s 139(4) of the Act), the assessee is eligible for deduction u/s .54 of the Act. Therefore, the Assessing Officer's observations that the amounts are not deposited in the specified modes is not relevant to the facts of the case. In view of the above discussions the assessee is eligible for deduction u/s 54 of the Act. The Taxable Long Term Capital Gains of the assessee on sale of the above property are as under: Total sale consideration Rs.90,00,000 Less: Indexed cost purchase Rs.4,54,576 Long Term Capital Gains Rs.85,45,424 Investment in new residential house Rs.6,92,810 Payments made prior to 31.7.2007 (i.e before the due date to file R/I) 46.92.810 Payments made on 24.8.2007 9i.e after the due date to file R/I) 40,00,000 Total investment in new residential house Rs.86,92,810 Deduction u/s 54 restricted to LTCG ..... 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