2013 (11) TMI 675 - AT - Income Tax

Appellant wins appeal for deduction under section 54F - ITAT decision.

The ITAT allowed the appellant's appeal, overturning the decisions of the lower authorities. It held that the appellant is entitled to claim deduction ... Exemption u/s 54F - belated filing of return - Whether extended period as per section 139(4) has to be considered for the purpose of utilization of amount of capital gain for the purpose of claiming exemption u/s 54F of the Act – Held that:- Issue is squarely covered by the decision of Hon'ble Punjab and Haryana High Court in the case of CIT V/s Ms. Jagriti Aggarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT], wherein, their Lordships have held that provision of section 139(4) is not an independent provision, but is related to time contemplated under the provision of section 139(1) of the Act. Accordingly, section 139(4) had to be read along with sub-section (1) of section 139 and the due date for furnishing the return of income u/s 139(1) is subject to the extended period provided u/s 139(4). Hence, extended period u/s 139(4) has to be considered for the purpose of utilization of the capital gain amount – Following the above judgment, assessee is entitled to claim deduction u/s 54F of the Act for utilization of sale consideration for investment in new residential property within due date as stipulated u/s 139 of the Act – Decided in favor of Assessee. Issues:- Whether the extended period under section 139(4) should be considered for the utilization of capital gain amount to claim exemption under section 54F of the Income Tax Act.Analysis:1. The appellant filed an appeal against the order of the ld. CIT(A) for the assessment year 2009-10, challenging the rejection of the claim of deduction under section 54F. The appellant contended that the sale consideration was utilized within the due date stipulated under section 139(4) of the Act, while the authorities argued that the amount should have been utilized before the due date of filing the return under section 139(1).2. The appellant sold a property for Rs.70 lakhs, which was not disclosed in the original return but only in the revised return filed later. The appellant claimed exemption under section 54F for the entire gain on the purchase of a residential house. The Assessing Officer (AO) questioned whether the consideration received was utilized before the due date of filing the return under section 139(1) or deposited in the Capital Gain Scheme Account before the due date of filing the return. The AO found that the appellant did not meet these requirements and disallowed the exemption under section 54F.3. The appellant argued that the transaction was completed before the due date of filing the return under section 139(1) and that the capital gain for the property purchase was utilized before the extended due date under section 139(4). The appellant cited relevant court decisions to support their contention. However, both the AO and the CIT(A) upheld the disallowance of the exemption under section 54F, leading the appellant to appeal to the ITAT Mumbai.4. During the hearing, the appellant cited precedents where similar issues were decided in favor of the assessee. The Departmental Representative (DR) supported the lower authorities' orders and cited a case where exemption under section 54F was denied due to failure to utilize the net consideration before the due date of filing the return.5. The ITAT carefully considered the submissions and cited orders. The main issue was whether the extended period under section 139(4) should be taken into account for utilizing the capital gain amount to claim exemption under section 54F. Citing a decision of the Punjab and Haryana High Court, the ITAT held that the extended period under section 139(4) must be considered for this purpose. The ITAT also referred to a decision of the Guwahati High Court supporting the assessee's entitlement to exemption under section 54F if the conditions are fulfilled within the extended time of filing the return under section 139(4).6. Consequently, the ITAT allowed the appellant's appeal, overturning the decisions of the lower authorities. The ITAT held that the appellant is entitled to claim deduction under section 54F for utilizing the sale consideration for investment in a new residential property within the due date stipulated under section 139 of the Act.7. In conclusion, the ITAT allowed the appeal of the assessee, emphasizing the importance of considering the extended period under section 139(4) for claiming exemption under section 54F.