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TMI Blog2018 (3) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction was ongoing and construction materials were lying at the site. According to the ld. Authorised Representative, the time limit for completion of construction of a residential house, for preferring a claim u/s.54F of the Act, expired only on 15.03.2017 since the transfer of equity shares giving rise to the capital gains was effected on 14.03.2014. As per the ld. Authorised Representative, ld. Assessing Officer took a view that assessee had not deposited the unutilized portion of sale consideration in an account under Capital Gains Accounts Scheme, before 31.07.2014, which was the due date for filing of return for the impugned assessment year u/s.139(1) of the Act. Contention of the ld. Authorised Representative was that the ld. Assessing Officer allowed such claim only to the extent of withdrawals made by the assessee from her bank accounts which were appropriated for the purchase of the land upto 31.07.2014. As per the ld. Authorised Representative, such withdrawals aggregated to Rs. 40,00,000/- and ld. Assessing Officer took a view that balance of Rs. 41,00,000/- out of the total consideration of Rs. 81,00,000/- received on sale of shares, was not eligible for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the return but before the three year period stipulated u/s.54F(1) of the Act and had not deposited the unutilized sale consideration in a bank account under Capital Gains Accounts Scheme. Their lordships held that once construction of a new residential house was completed within the three years period, failure of the assessee in not depositing the unutilized sale consideration in a bank account under Capital Gains Accounts Scheme, during the interregnum was not fatal to a claim u/s.54F(1) of the Act. Paras 3 to 5 of the judgment is reproduced hereunder:- 3.''The two substantial questions of law which arise for consideration in these batch of appeals are as under : "(1) Whether the assessee is entitled to the benefit conferred under s. 54F when the sale consideration is utilized for construction of a residential house on a site which is owned by him within one year from the date of transfer ? (2) When the assessee invests the entire sale consideration in construction of a residential house within three years from the date of transfer can he be denied exemption under s. 54F on the ground that he did not deposit the said amount in capital gains account scheme before the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with such transfer. (2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under s. 45 on the basis of the cost of such new asset as provided in cl. (a), or, as the case may be, cl. (b), of sub-s. (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under s. 45 on the basis of the cost of such new asset as provided in cl. (a) or, as the case may be, cl. (b), of sub-s. (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook place, purchased or has within a period of three years after that date constructed a residential house, the capital gain shall be dealt with in accordance with the said provision. This is subject to the provisions of sub-s. (4). Sub-s. (4) stipulates if the amount of net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which transfer of the original asset took place or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under s. 139 of the Act shall be deposited by him before furnishing such return in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under s. 139(1) of the Act in an account in any such bank or institution as specified and utilized in accordance with any scheme which the Central Government may, by notification in the Official Gazette frame in this behalf. Sub-s. (4) is attracted only to a case where the sale consideration is not utilized either for purchase or for construction of a residential house. It has no application to a case whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54F(1), if the assessee wants the benefit of s. 54F, then he should deposit the said capital gains in an account which is duly notified by the Central Government. In other words, if he want of claim exemption from payment of income-tax by retaining the cash, then the said amount is to be invested in the said account. If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, then s. 54F(4) is not at all attracted and therefore, the contention that the assessee has not deposited the amount in the bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct''. We are therefore of the opinion that assessee was eligible for claiming exemption u/s.54F of the Act for the full amount utilized by it for construction of a new residential house within three year period allowed u/s.54F(1) of the Act. However, whether assessee had completed the residential house within the said period and how much was invested by the assessee within the said period for such residential house, requires verificati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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