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TMI Blog2022 (9) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... months later i.e. on 3.5.2014. It is not disputed that after depositing the sale consideration in his capital gain account scheme in May 2012, by June, 2013 the assessee had finalized the property for purchase and entered into an agreement to purchase the same also, which transaction was finally executed on 3.5.2014. This establishes his true intention of investing in the new property all along. MOU for purchase of property clearly mentions that the occupants of the building in which a flat was purchased by the assessee had agreed to form and register a cooperative housing society which was still pending as on date of entering the MOU. That it was only in December, 2014, that the society was formed, and the Vendor was allotted share certificates, thus making his title to the property clear. And immediately thereafter, within three months of the formation of the society, the assessee got possession of his property and the entire consideration was also paid. These facts are not disputed by the Revenue. There is no iota of doubt that the delay in registration of the new property was for reasons beyond his control. We are in complete agreement with the assessee that the denial ..... 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 erroneous ground that the assessee has utilised the amount of sales consideration deposited in capital gain account in purchase of the residential property after a period of 2 years. 3. We have heard both the parties. The date line of events leading to earning of capital gain and denial of deduction under section 54F of the Act on the same were filed by the assessee before us by way of a detail as under: Sr. No. Date Particulars 1. 01.12.2011 Assessee sold a land situated at Bangaluru for a total consideration of Rs. 1,52,04,000/-. 2. 29.03.2012 Assessee deposited the sale consideration in capital gain account. 3. 15.06.2013 Assessee executed Memorandum of Understanding for the purchase of/residential flat) for a total consideration of Rs. 1,87,25,000/- and paid Rs.10,000/- immediately upon the execution of Memorandum of Understanding of the purchase of flat. 4. 01.02.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention to para 4.1 of the assessment order wherein the AO, while rejecting assesses claim of depositing the gain before due date of filing of return, on 29.3.2012, noted the fact that the capital gain account scheme of the assessee being opened on 17.5.2012, the assessee could have deposited the amount of consideration in the capital gain scheme only on 17.5.2012 and not before that. The contention of the assessee was that even going by the department s case, since the amount was deposited before the due date of filing of the return of income, the assessee was entitled to exemption under section 54F of the Act. ii) That even otherwise the facts demonstrate that the assessee intention all along was to immediately invest the net consideration in a new residential house . This he stated was evident from the fact that the assessee had parked the entire consideration immediately, on receipt of the same on sale of his property, in capital gain account scheme in Bank and as soon as a good property was available to him, had entered into a MOU for purchase of the property on 15.6.2013 , within a year and half of sale, having paid Rs.10,000/- upon execution of the MOU. The ld.counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince the Society, in which residential house was situated, was not registered, and therefore, occupants of the society had agreed to form and register a Cooperative Society i.e. Vithalkunj which was ultimately registered on 1.2.2014, and immediately thereafter the assessee made payment of entire sale consideration of the property of Rs.1,87,25,000/- on 02-04-2014 and invested entire net consideration received on sale of his own property amounting to Rs.1,52,04,000/-, and sale deed of new property purchased was immediately thereafter registered and executed on 3.5.2013. In this regard, the ld.counsel for the assessee stated that MOU entered into for the purchase of the property mentioned at clause (F) that the occupants of the building viz. Vithalkunj had agreed to form a registered cooperative society. The clause (F) of the MOU reads as under: Clause F:- occupants of the building of Vithal Kunj have agreed to form and register a co-operative Housing society VIZ, Vithal kunj building CHSL (proposed) under the provision of Maharashtra CO-Operative Society Limited , However still the society is not formed and registered . 7. The ldcounsel for the assessee contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of filing of return of income ,in case assessee is unable to invest the consideration in a new property by then. 10. To adjudicate the issue we consider it necessary to reproduce provisions of section 54F of the Act as under: 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the 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 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 return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of subsection (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on remaining, assesses can claim exemption by depositing the unutilised amount in a capital gain account scheme of Banks by the due date of filing return of income of the year in which the gain accrues, subject to its actual utilization for the stated purpose within the stipulated time, failing which the exemption earlier granted on deemed utilization shall be taxed in the year of completion of the maximum period given for utilization, i.e three year period. In the impugned case the facts demonstrate the assessee as having fulfilled the condition for claiming exemption in the impugned year by depositing the amount of net consideration in the capital gain account scheme of Bank before the due date of filing of return of income. The due date for filing of the return of income undisputedly was 31.07.2012. The assessee s claim is that he had deposited net consideration in the capital gain account on 29.3.2012 and has demonstrated the same by filing his copy of bank account, from where withdrawal of the consideration for deposits in the capital gain scheme is reflected. Copy of the same was filed before us at page no.21 of the PB. The Revenue s case is that since capital gain acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icates, thus making his title to the property clear. And immediately thereafter, within three months of the formation of the society, the assessee got possession of his property and the entire consideration was also paid. These facts are not disputed by the Revenue. 14. Considering the above facts, there is no iota of doubt that the delay in registration of the new property was for reasons beyond his control. Therefore, we are in complete agreement with the assessee that the denial of exemption u/s 54 F in the present case is for a mere technical default in not getting the new property registered in his name within the stipulated time period of two years, as specified under section 54F of the Act, the consequent delay being minor delay of 5 months that too for reasons beyond the control of the assessee. The intention of the assessee all along was to invest in the new property well within the stipulated time and the delay was for reasons beyond his control and was too immaterial. The reliance by the Ld.DR on the decision of the Hon ble High Court of Bombay in the case of Rasiklal M Parikh (supra) is distinguishable on facts where the assesses reliance on an agreement to sel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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