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TMI Blog2019 (5) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... of his revised return of income u/s. 139(5) i.e. on 15.11.2014. As is discernible from the records, as the assessee had invested an amount of ₹ 2,49,94,008/- towards the purchase of the property under consideration up to 15.11.2014, i.e. the date of filing of the revised return of income u/s. 139(5) which we find is much in excess of LTCG of ₹ 1,44,51,461/- (after indexing) that had arisen on the sale of the aforementioned old residential flat, therefore, no part of the LTCG as rightly claimed by the assessee was liable to be brought to tax during the year under consideration. We thus in terms of our aforesaid observations set aside the order of the CIT(A) and vacate the disallowance of the assesses claim of exemption u/s. 54. - I.T.A. No.6814/Mum/2016 - - - Dated:- 12-3-2019 - SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER For The Assessee : Shri. Dharmesh Shah For The Revenue : Shri. D.G. Pansari ORDER PER RAVISH SOOD, JUDICIAL MEMBER : The present appeal filed by the assessee is directed against the order passed by the CIT(A)-46, Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential flat at Rushab Tower, Mumbai (hereinafter referred to as old residential flat ) for a consideration of ₹ 2.09 crore. It was observed by the AO that the entire Long term capital gain (for short LTCG ) on sale of the said old residential flat was claimed by the assessee as exempt u/s. 54 of the IT Act. As per the details made available on record, it was noticed by the A.O that the aforesaid claim of exemption u/s. 54 was raised by the assessee on the ground that he had purchased a new residential flat at Cresent Bay, L T Parel project, Mumbai (hereinafter referred to as New residential property ) for a consideration of ₹ 4,27,41,300/-. The A.O observed that the aforementioned new residential property was purchased by the assessee as per an agreement dated 29.12.2014 with the builder/developer, as per which the construction of the property was expected to be completed by September, 2017. The assessee on being called upon to furnish the details of the payments made towards purchase of the aforementioned residential property submitted the same as under:- Date Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05-0ct-13 47,01,543 1,74,333 48,75,876 4 2nd Podium Floor Slab 24-Dec-13 24-Dec-13 21,37,065 79,242 22,16,307 5 5th Podium Floor Slab 06-Feb-14 06-Feb-14 21,37,065 79,242 22,16,307 6 2nd Floor Slab 11-May-14 10-May-14 23,50,772 87,167 24,37,939 7 7th Floor Slab 12-Jul-14 12-Jul-14 23,50,772 87,167 24,37,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d made the requisite investment towards purchase of the new residential property, hence no adverse interferences as regards his entitlement towards claim of exemption u/s 54 was liable to be drawn on the said count. 5. The CIT(A) after deliberating at length on the contentions advanced by the assessee was persuaded to subscribe to the same. The CIT(A) finding favour with the claim of the assessee that as the completion of the construction which was expected to take place by September 2017 was beyond his control, therefore, observed that no adverse inference on the said ground was liable to be drawn while deciding his entitlement towards claim of exemption u/s. 54 of the I.T Act. The CIT(A) while concluding as hereinabove relied on the order of the ITAT, Mumbai in the case of Hasmukh N. Gala vs. ITO (ITA no. 7512/Mum/2013, dated 19.08.2015). As regards the quantification of the entitlement of the assessee towards claim of exemption u/s. 54, it was observed by the CIT(A) that the assessee up till the due date of filing of his return of income i.e. 31.07.2013 had invested an amount of ₹ 83,71,781/- only. On the basis of the aforesaid facts, the CIT(A) was of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of ₹ 10 lac each on 17.07.1996 and 26.10.1996 to the developer/builder, i.e. before the due date for filing of his return of income u/s. 139(1) i.e. 31.10.1996. On 01.11.1996 the assessee paid to the developer a further instalment of ₹ 15 lac for purchase of the aforementioned residential flat pursuant to the agreement dated 16.07.1996. As on 04.11.1996 the assessee filed his return of income for the assessment year 1996-97. The return of income filed by the assessee was beyond the due date envisaged under Sec. 139(1) for filing of the same. As on 30.03.2001, the A.O passed an assessment order determining the net consideration at ₹ 75.39 lac. The A.O allowed the proportionate exemption of ₹ 31.55 lac (out of ₹ 35 lac paid till the filing of the return of income ) from the capital gains in terms of section 54F. Insofar the balance consideration which was subsequently paid by the assessee for purchase of the aforementioned residential flat pursuant to the agreement dated 16.07.1996 was concerned, the same was brought to tax under the head capital gains on account of the failure of the assessee to utilise the said consideration for purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 83,71,781/- only towards purchase of the new residential property by the due date of filing of his return of income for the year i.e 31.07.2013, and had neither invested the balance amount of LTCG for the said purpose nor deposited same in the CGAS account with the specified bank by the due date of filing of the return of income as envisaged under Sec. 139(1) in his case, therefore, had restricted his claim for exemption upto to the amount of ₹ 83,71,781/-. 8. We have given a thoughtful consideration to the issue before us and are unable to persuade ourselves to subscribe to the view taken by the CIT(A). On a perusal of Sec. 54(2), it emerges that the assessee in order to claim exemption under Sec.54 remains under an obligation to appropriate the amount of the capital gain towards purchase of the new asset within a period of one year before or two years after the date on which the transfer of the original asset took place, or has within a period of three years after that date constructed, a residential house. Where the capital gain is not appropriated by the assessee towards purchase or construction of the residential property upto the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date on which the transfer took place, subject to a rider that he should have deposited the unutilised amount of capital gain in a CGAS account with a specified bank by not later than the due date applicable in his case for furnishing the return of income under sub-section (1) of Sec.139. We find that the case before us clearly falls within the sweep of the aforementioned first limb i.e sub-section (1) of Sec.54 of the IT Act. As the assessee in the case before us had utilized an amount of ₹ 2,49,94,088/-(i.e much in excess of amount of LTCG on sale of the residential property) up till the date of filing of its revised return of income u/s 139(5) on 15.11.2014, therefore, his claim of exemption u/s. 54 in respect of the investment made towards the purchase of the new residential property at Cresent Bay, L T Parel project, Mumbai up to the date of filing of the revised return of income u/s. 139(5) is found to be in order. 9. We may herein observe that as to whether an assessee would be eligible to claim exemption u/s. 54 to the extent he had invested in the new residential property up to the date on which he had filed a revised return of income had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee failed to deposit the amount in the capital gains account scheme and also failed to purchase house property before the due date of filing the return of income. The Commissioner (Appeals) held that the assessee had purchased the new residential property on January 02, 2007 and the due date according to section 139(4) was March 31st, 2007 and thus, the assessee had complied with the provisions of section 54 of the Act. This order was confirmed by the Tribunal. On appeal by the revenue, the Hon ble High Court held, dismissing the appeal, that the sale of the asset had taken place on January 13, 2006, falling in the previous year 2006- 07, the return could be filed before the end of the relevant assessment year 2007-08 i.e. March 31, 2007. Thus, subsection (4) of section 139 provides the extended period of limitation as an exception to subsection (1) of section 139 of the Act. Sub-section (4) was in relation to the time allowed to an assessee u/s sub-section (1) to file the return. Therefore, such provision was not an independent provision, but relates to the time contemplated under sub-section (1) of section 139. Therefore, sub-section (4) had to be read along with sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas the Ld. counsel of the assessee relies on the decision in Manjula J. Shah (supra) and the order of the Ld. CIT(A). 5.3 We have heard the rival submissions and perused the relevant materials on record. We find that the above issue has been decided by the Hon ble Bombay High Court in Manjula J. Shah (supra). In that case the assessee s daughter, the previous owner, originally acquired the capital asset (flat) on January 29, 1993, and the assessee acquired the flat under a gift deed dated January 02, 2003, without incurring any cost. The assessee sold the capital asset on June 30, 2003, for ₹ 1.10 crores. According to the AO, the asset was held by the assessee from February 01, 2003, and, therefore, the cost inflation index for 2002-03 would be applicable in determining the indexed cost of acquisition for the AY 2004-05. The Commissioner (Appeals) held that the LTCG had to be determined by computing the indexed cost of acquisition with reference to the cost inflation index for 1993-94 instead of the cost inflation index for the AY 2002-03 as held by the AO. This was confirmed by the Tribunal. On appeal, the Hon ble High Court held that: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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