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TMI Blog2018 (1) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... maining payment was made when the builder has got clearance from the competent authority. No reason to disallow ₹ 11.43 lakhs paid by assessee towards booking of flat. Accordingly, AO is directed to allow the same as exempt u/s.54F. - Decided in favour of assessee. - ITA No.5036/Mum/2017 - - - Dated:- 22-1-2018 - Shri R.C. Sharma, AM For the Assessee : Shri A.P. Sinha For the Revenue : Ms. N. Hemalatha ORDER PER R.C.SHARMA (A.M) : This is an appeal filed by the assessee against the order of CIT(A)- 46, Mumbai dated 20/01/2017 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the IT Act wherein following grounds have been taken by the assessee:- 1-The Ld. C.I.T., (Appeals), Mumbai erred wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 54 of ₹ 32,52,854/- and the same was added to the total income of the assessee. 4. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before me. 5. I have considered rival contentions and carefully gone through the orders of the authorities below. From the record, I found that the assessee enjoyed income from. capital gain. The assessee sold a house property No. A/506, Juhu Irla Parimal,C.H.S. Andheri, Mumbai for a consideration of ₹ 51,00,000.00. The said property was purchased for a consideration of ₹ 14,00,000.00 vide agreement dated 18.2.2000. In the return of income the assessee had disclosed ₹ 32,52,854.00 as capital gain and the same has been cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived long term capital gain of ₹ 13,52,276/- on sale of flat. He invested ₹ 30,40,000/- in purchase of a new flat within the prescribed time limit i.e. within two years from the date of sale of original assets and claimed exemption u/s.54 of the Income-tax Act, 1961. The Assessing Officer did not allow the exemption because prior to investment in flat, the assessee deposited sale proceeds of original assets in FDR account and not in capital gain account scheme as envisaged u/s.54. On plain reading of Sec.54, the following salient emerges : (a) The section is applicable to individual or HUF only. (b) The capital gain should arise from transfer of a long-term capital asset. (c) Such long term capital asset (ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the due date of furnishing Return of Income u/s.139, the same shall be deposited with a scheduled bank or institution in 'Capital gain Account Scheme' before the due date of furnishing of Return of Income. For the purpose of this section, the investment made by the assessee in new house and investment made in the capital gain account scheme shall be deemed to be cost of new asset. 8. Sec.54 is an incentive provision which has been brought to statute book to encourage the assessees to invest in house for their own residence as well as their parents' residence. The purpose of the section is to encourage investment in new residential house within specified period and not to encourage investment under 'Capital Gain Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset. In other words, he satisfied the primary requirement of Sec.54(1) of the Income-tax Act, 1961. Although the failure of the assessee to deposit the sale proceeds in a Capital Gains Account Scheme, 1988 for intervening period was undoubtedly a technical default, he should not be penalized for the same because he satisfied the real intent as well as essence of the provisions by depositing the sale proceeds in FDR since beginning, not using it for any other purpose and investing the sale proceeds in acquisition of a new house within statutory period of 2 years. 10. As per our considered view Sec.54 is an incentive provisions and it should be interpreted and applied liberally as held by the honourable Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles with regard to the interpretation of statute pertaining to the tax laws, one can very well interpret the provisions of section 54 read with section 2(47) of the Act i.e., the definition of transfer , which would enable the appellants to get the benefit under section 54 of the Act. 12. Respectfully following the proposition of law laid down by Hon ble High Court and Supreme Court as stated above, we do not find any merit in the action of AO for declining assessee s claim of exemption u/s.54 of the IT Act. 8. It is clear from the above decision that amount invested in property as well as kept in bank account even though not in the capital gain tax account should be allowed as exemption deduction u/s.54F. Merely not keepi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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