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TMI Blog2023 (1) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... idered view, when the assessee has satisfied all conditions including depositing unutilized portion of capital gain in capital gain deposit account scheme, then for minor technical breach, benefit of deduction u/s. 54 of the Act cannot be denied. This view is fortified by the decision of various High Courts including the decision of Hon ble Karnataka High Court in the case of CIT vs K Ramachandra Roa [ 2015 (4) TMI 620 - KARNATAKA HIGH COURT] held that when assessee utilizes entire sale consideration within three years from the date of transfer of land, he could not be denied exemption u/s. 54. In this case, there is no dispute with regard to the claim of the assessee, and is entitled for deduction, because the assessee has satisfied conditions prescribed therein u/s. 54 of the Act, and also deposited unutilized amount of capital gain in capital gain deposit account scheme in a nationalized bank. Though, there is a delay of 45 days, but the assessee has utilized full amount of capital gains for acquiring new residential house within three years from the date of transfer of original asset. Therefore, we are of the considered view, that the assessee is entitled for deduction u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 1,69,61,612/- in a capital gain deposit account scheme. The assessee had also claimed deduction u/s. 54EC of the Act for Rs. 50 lakhs towards investment in NHAI bonds. 4. During the course of assessment proceedings, the AO noticed that deduction claimed by the assessee u/s. 54 of the Act for a sum of Rs. 1,69,61,612/- is not eligible because, the assessee has failed to deposit unutilized amount of capital gains in capital gains deposit account scheme on or before due date of filing of return u/s. 139(1) of the Act. Therefore, rejected the claim of the assessee and disallowed deduction claimed u/s. 54 of the Act. 5. Being aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has filed a detailed written submission on the issue and contended that the assessee has satisfied conditions prescribed u/s. 54 of the Act, including depositing unutilized amount of capital gain into capital gain deposit account scheme in a nationalized bank. However, there is small delay in depositing unutilized amount in capital gains account deposit scheme, and for said technical breach deduction u/s. 54 of the Act cannot be deni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s achieved. To hold that the exemption should be forfeited for a technical breach does not appear to be the correct proposition particularly since the appellant pleads that he was not aware of the requirement to invest in the capital gains account scheme and also states that his objective was to invest in a residential house which is apparent from the fact that he has purchased a land and also constructed a house thereon. It is also seen that section 54E (since deleted} and sections 54EC and 54ED which require investment of the proceeds in specified assets, specifically provides that the exemption would be forfeited if the specified asset is given as a security for taking a loan. In section 54 we do not find any such provision and therefore in our considered view the purpose of section 54(2) is not to deprive the assessee of an exemption but only to avoid rectification. The ultimate object of the section having been satisfied namely to encourage construction houses, we are convinced that the utilization of the funds in constructing a residential house should be treated as sufficient compliance of section 54 and therefore hold that the appellant is entitled to the exemption u/ s.54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for filing return of income u/s. 139(1) of the Act. 8. The ld. Counsel for the assessee, on the other hand referring to various judicial precedence, including the decision of Karnataka High Court in the case of CIT vs K Ramachandra Rao [2015] 277 CTR 522 (Karnataka), submitted that if assessee invests full amount of capital gain derived from sale of original asset for acquiring new residential house within three years from the date of transfer of original asset, then merely for technical breach, deduction claimed u/s. 54 of the Act cannot be denied. The Ld. Counsel for the assessee further referring to the decision of ITAT, Chennai in the case of ACIT vs Justice T.S. Arunachalam in ITA No. 2455/Chny/2017 dated 30.01.2018 submitted that on identical set of facts, the Tribunal allowed relief to the assessee. Therefore, there is no reason to interfere with the order of the Ld CIT(A) and their order should be upheld. 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the assessee has sold a residential house and computed long term capital gain, after claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized amount of capital gains in capital gain deposit account scheme on 19.09.2016, with a delay of 45 days. The assessee has explained reasons for depositing unutilized amount of capital gains in capital gain deposit account scheme, and further claimed that ultimately he has invested entire amount of capital gain for acquiring new asset within three years from the date of transfer of original asset. 11. In our considered view, when the assessee has satisfied all conditions including depositing unutilized portion of capital gain in capital gain deposit account scheme, then for minor technical breach, benefit of deduction u/s. 54 of the Act cannot be denied. This view is fortified by the decision of various High Courts including the decision of Hon ble Karnataka High Court in the case of CIT vs K Ramachandra Roa, (supra), where on identical set of facts, the Hon ble High Court held that when assessee utilizes entire sale consideration within three years from the date of transfer of land, he could not be denied exemption u/s. 54 of the Act. The ITAT, Chennai bench in the case of ACIT vs Justice. T.S. Arunachalam (supra), has taken a similar view and held that for technical breach, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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