Tax Tribunal Allows Deduction for Payments Made Before Deadlines u/s 54F; Assessee's Appeal Partially Upheld.

The ITAT concluded that the payment of Rs. 50,36,422 made before 31/07/2012 is allowable for deduction under section 54F. Furthermore, payments made up to 31/03/2014 should also be considered for deduction under section 54F, aligning with higher court decisions. Consequently, the assessee's appeal was partly allowed.

---

---

Issues Involved:
1. Disallowance of claim under section 54F of the Income-tax Act.
2. Consideration of payment made towards purchase of a residential flat before the due date of filing the income tax return.
3. Rejection of the assessee's submission regarding payments made before the due date under section 139(4) of the Act.

Issue-wise Detailed Analysis:

1. Disallowance of Claim under Section 54F:
The assessee challenged the action of the Assessing Officer (AO) in disallowing the claim under section 54F of the Income-tax Act. The AO noticed the sale of a plot of land and computed the capital gain at Rs. 88,59,734/-. The assessee claimed a deduction under section 54F amounting to Rs. 90,02,000/- against the capital gain, declaring a net capital gain of nil. The AO allowed a deduction of Rs. 36,87,458/- based on the amount paid for the new asset before the due date of filing the return of income under section 139(1).

2. Consideration of Payment Made Before Due Date:
The assessee argued that the payment of Rs. 50,36,422/- was made before 31/07/2012, as verified by the AO in the remand proceeding. The AO accepted this amount in the remand proceeding, but the CIT(A) did not consider it for deduction under section 54F. The Tribunal held that the payment of Rs. 50,36,422/- made before 31/07/2012 is undisputedly allowable for deduction under section 54F.

3. Rejection of Submission Regarding Payments Made Before Due Date Under Section 139(4):
The assessee contended that the due date for filing the return of income should be considered as per section 139(4), i.e., 31/03/2014, and relied on decisions from the Punjab and Haryana High Court and Karnataka High Court, which supported this view. The CIT(A) rejected this argument, stating that the CBDT Circular No. 471 was not applicable. The Tribunal, however, cited various judgments, including those from the Rajasthan High Court and Karnataka High Court, which held that the due date under section 139(4) should be considered for the purpose of section 54F. The Tribunal directed the AO to consider the amount utilized by the assessee for the purchase of the house till 31/03/2014 for deduction under section 54F.

Conclusion:
The Tribunal concluded that the payment of Rs. 50,36,422/- made before 31/07/2012 is allowable for deduction under section 54F. Additionally, payments made up to 31/03/2014 should be considered for deduction under section 54F, following the decisions of higher courts. The appeal of the assessee was partly allowed. The order was pronounced on 6th August 2019.

---