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TMI Blog2018 (7) TMI 1752X X X X Extracts X X X X X X X X Extracts X X X X ..... n individual, for the assessment year 2007-2008, filed return of income on 14. 04. 2010 in response to notice issued u/s 148 of the I. T. Act declaring total income of Rs. 1,92,10,040. The assessee along with his brother was holding 79. 72 cents of land. The said land jointly held by the assessee and his brother, was sold for a total consideration of Rs. 15 crore, of which the assessee's share was Rs. 7. 5 crore (sale on 16. 03. 2007). The index cost of the acquisition of the said land was Rs. 1,38,262 and the gains amounting to Rs. 7,48,61,738 was claimed as exempt in the following manner:- (i) U/s 54EC by investing amounts in capital gains bonds Rs. 50,00,000 (ii) Amount reinvested in 196. 144 cents of land on 15. 06. 2007 for construction of house u/s 54F. Rs. 3,79,95,060 (iii) Amount utilized for construction of house (house construction completed on 15. 03. 2010) - u/s 54F (out of this Rs. 40,00,000/- was invested in Capital Gains Account Scheme on 07. 01. 2008) Rs. 81,41,120 3. 2 While completing the assessment u/s 143(3) r. w. s. 147 of the I. T. Act, the Assessing Officer allowed deduction u/s 54EC of the I. T. Act, but disallowed the entire claim of deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee with section 54F( 4) in the light of the Supreme Court's decision in Prakash Nath Khanna vs CIT [2C04] 266 ITR l(SC). In his order the CIT (A) has considered the first issue only and has not dealt with the latter issue. 2. The CIT(A) has failed to appreciate that as per sub section (4) to section 54F, if the sale consideration is not appropriated for the purchase of a house before the due date of filing the return, the same has to be deposited in a Capital Gains Accounts Scheme of a Bank before the date of filing the return u/s 139(1) and must be utilized as per this scheme; also the proof of such deposit must be filed with the return of income. 3. The CIT(A) has not appreciated that section 54F begins with the clause "Subject to the provisions of sub section (4)". Therefore subsection (4) is integral to the interpreting section 54F. The CIT(A) has not appreciated that the assessee has not complied with section 54F(4). The transaction took place on 16. 03. 2007. The assessee deposited only Rs. 40 lakhs in the capital accounts scheme that too on 07. 01. 2008. (Long after the due date for filing the return of income, which was 31. 07. 2007). Again the constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 54F of the Act on the reason that the return filed within the extended time limit available of filing of return of income u/s. 139(4) cannot be considered. 8. 1 The Karnataka High Court in the case of CIT vs. Fathima Bai (32 DTR 243), the Guwahati High Court in the case of CIT vs. Rajesh Kumar Jalan (206 CTR 361) held that the due date for the assessee to invest the amount of capital gains in purchase/construction of new residential asset or investment in capital gains scheme u/s. 54F of the Act refers to the "extended due date" u/s. 139(4) of the Act. So far as the time limit for assessee to invest in construction of residential building, the time limit available u/s. 139(4) is to be considered to that extent we are agreeing with the contention of the Ld. AR. However, during the intermediary period, i. e. , after the sale of capital asset till the date of investment, the amount has to be deposited in an account in any such bank or institution as may be specified in and utilized in accordance with any scheme of Central Government notified in official gazette framed in this behalf and the assessee shall file proof for such deposit. The Assessing Officer in this case has rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of new residential building within three years from the date of transfer of original asset to claim deduction u/s. 54F of the Act. Provisions of section 54F are beneficial provisions and are to be considered liberally. 8. 4 In view of the above discussion, we are inclined to remit the issue to the file of the Assessing Officer to examine the fulfillment of the conditions u/s. 54F of the Act through intermediary period, i. e. , from the date of transfer of the capital asset to the date of actual investment in construction of residential building. Accordingly the issue of allowability of deduction u/s. 54F is remitted to the file of the Assessing Officer with the direction to the assessee to prove the investment in the residential building as prescribed u/s. 54F of the Act before the due date of filing of return of income u/s. 139(4) of the I. T. Act, i. e. , 31/03/2007. Accordingly, this issue is remitted to the file of the Assessing Officer for fresh consideration after giving adequate opportunity of hearing to the assessee. The appeal of the Revenue is partly allowed for statistical purposes. " 6. In view of the order of the Cochin Bench of the Tribunal (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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