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TMI Blog2022 (11) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was selected for complete scrutiny and statutory notices were issued. The assessment order came to be passed on 22.12.2018 by making a disallowance of Rs. 5,70,95,075/-. The Ld. AO was of the opinion that the assessee has failed to deposit the sale consideration in CGAS before the due date of filing of income under section 139 (1) of the Act and added back the same to assessee's total income as Long Term Capital Gain. Aggrieved by the assessment order dated 22.12.2018, the assessee has preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 19.01.2019 allowed the appeal of the assessee. 4. Aggrieved by the order dated 19.01.2019, passed by the CIT (A) the revenue has preferred the present appeal on the grounds mentioned above. 5. The Ld. DR vehemently submitted that the assessee has not fulfilled the conditions laid down under section 54(2) of the Income Tax Act and there was a delay of 31 days in depositing the amount in the capital gain account but the Ld. CIT(A) has committed an error in deleting the addition of Rs. 5,07,95,075/- under section 54(1) of the Income Tax Act. 6. Per contra Ld. Counsel for the assessee contended that section 54(1) is man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department deny the benefit to the assessee under section 54 of the Act or not? The intention of the legislature in section 54 of the Act is very much clear that an assessee who receives the sale consideration has to invest in the new house within specified time framed. Merely because the assesssee has not able to deposit or deposited with a delay of 31 days in the capital gain account he cannot be denied with the benefit of section 54(1) of the Act. 11. The above view has been fortified by the judgment of Hon'ble High Court of Karnataka in the case of CIT Vs. Ramachandra Rao 56 taxmann.com 163 (Karnataka), wherein the very same substantial question of law has been decided in favour of the assessee. The relevant portion are as under:- "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 Section 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection 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 section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of subsection (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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 54F(1) provides, 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 and the assessee 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 a residential house, the capital gain shall be dealt with in accordance with the said provision. This is subject to the provisions of Sub Section (4). Sub Section (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 Section 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 Section 139(1) of the Act in an account in any such bank or institution as specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the benefit to the assessee and there is no error committed by them which calls for interference. 4. Re. Question No.2 : As is clear from Sub Section (4) in the event of the assessee not investing the capital gains either in purchasing the residential house or in constructing a residential house within the period stipulated in Section 54F(1), if the assessee wants the benefit of Section 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 Section 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. 5. For the aforesaid reasons both the substantial questions of law are answered in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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