2019 (1) TMI 875 - AT - Income Tax

Denial of Exemption in Capital Gains Appeals Upheld - Importance of Timely Reinvestment

The judgment pertains to appeals regarding the computation of income from long term capital gains and denial of exemption under section 54B of the Income ... Computation of income from long term capital gains in the hands of the assessee - denial of exemption u/s 54B - agriculture land - reinvestment in another agricultural land within a period of two years, but failure to deposit in the capital gains scheme account - Held that:- In Humayun Suleman Merchant Vs. CCIT [2016 (11) TMI 606 - BOMBAY HIGH COURT] turn relies on the decision of CIT Vs. Rajesh Kumar Jalan (2006 (8) TMI 126 - GAUHATI HIGH COURT) which laid down the proposition that amounts subject to capital gains on sale of capital asset for the purpose of exemption, had to be utilized before the date of filing the return of income and since the same was not utilized for the purpose of investment in construction of the new house nor was deposited in the capital gains scheme account; hence, the assessee was held to be not entitled to the claim of deduction under section 54F of the Act. It may be pointed out that in the aforesaid case, the said deduction was restricted to the investment in the new asset at ₹ 35 lakhs. Relevant findings of the Hon’ble High Court are reproduced by the CIT(A) the appellate order which are being referred to but not being reproduced for the sake of brevity. The said proposition laid down in the case of Shri Vilas Balram Patil [2017 (12) TMI 1656 - ITAT PUNE] the claim of deduction under section 54 of the Act was denied to the assessee as he had not deposited the amount in the capital gains scheme account by the due date of filing the return of income. Thus hold that the assessee is not entitled to claim of deduction under section 54B of the Act as the assessee has failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income. Since this issue is settled by the Hon’ble jurisdictional High Court, hence, the matter is being decided ex parte the assessee. Grounds of appeal raised by the assessee are thus dismissed. Issues:- Computation of income from long term capital gains- Denial of exemption under section 54B of the Income Tax Act 1961Detailed Analysis:1. The judgment pertains to six appeals filed by different assessees against orders of the Commissioner of Income Tax (Appeals) related to assessment year 2012-13 under section 143(3) r.w.s.147 of the Income Tax Act 1961. The appeals collectively address the computation of income from long term capital gains and the denial of exemption under section 54B of the Act.2. The primary issue raised in all the appeals is the computation of income from long term capital gains and the denial of exemption under section 54B. The appeals were heard together and disposed of collectively for convenience. The case of Uddhav Krishna Bankar is specifically referred to for detailing the facts and issues.3. In one of the appeals (ITA No.617/PUN/2018), the assessee contested the assessment of income and addition of long term capital gains, denial of exemption under section 54B, charging of interest under sections 234A, 234B, and 234C, initiation of penalty proceedings under section 271(1), and sought just and equitable relief.4. Despite the assessee not appearing for the hearing, the issue raised in the appeal was found to be covered by a previous order of the Bombay High Court and a decision of the Pune Bench of the Tribunal. The case involved the sale of land and subsequent investment in agricultural land, with the denial of exemption under section 54B due to non-compliance with statutory requirements.5. The Assessing Officer noted that the assessee did not offer capital gains arising from the sale of land for the financial year 2011-12. The subsequent assessment and denial of exemption under section 54B were based on the failure to deposit the sale proceeds in the capital gains scheme account within the stipulated time frame.6. The CIT(A) upheld the Assessing Officer's decision, citing non-compliance with section 54B(2) of the Act regarding the reinvestment of sale proceeds in agricultural land within the specified period. The assessee's late investment in new land post the due date of filing the return of income led to the disallowance of the exemption claim.7. The judgment emphasized the importance of adhering to statutory timelines and requirements under section 54B for claiming exemptions related to capital gains. The decision was based on precedents set by the Bombay High Court and the Pune Bench of the Tribunal, leading to the dismissal of the appeals and denial of the exemption claims under section 54B for all the assessees involved.8. In conclusion, the judgment highlights the significance of timely compliance with statutory provisions, especially concerning the reinvestment of sale proceeds in specified accounts for claiming exemptions under the Income Tax Act. The denial of exemption under section 54B was upheld based on established legal interpretations and precedents, ultimately resulting in the dismissal of all appeals.