2020 (7) TMI 630 - HC - Income Tax

54F exemption upheld after assessee purchased and took possession of new residence within three-year period

Commissioner of Income Tax, Chennai. Versus Smt. Umayal Annamalai

The HC upheld the Tribunal's grant of exemption under section 54F, rejecting the Revenue's challenge. The court found the Tribunal's factual findings, ... Exemption u/s 54F - capital gains earned by the assessee during the previous year - Whether tribunal was right and justified in granting exemption u/s 54F when the unutilised portion of the sale proceeds were not deposited in the capital gains account scheme before the due date for filing of return u/s 139(1)? - HELD THAT:- Revenue stake involved in the present case is much below the limit of rupees one crore for withdrawal of the appeal by the Revenue, since the present case involved some audit objection because of exemption in the said Circular, the learned counsel for the Revenue press the appeal on merits. After hearing both the learned counsel, we are satisfied that the finding of the facts arrived at by the learned Tribunal are perfectly in order and justified and correct on the basis of facts stated in the quoted paragraph 8 of the order. The assessee has clearly satisfied the conditions for availing the benefit of exemption under section 54F of the Act, as it has purchased new property and has taken the possession within the stipulated period of three years, as aforesaid. Thus, we do not find any perversity in the said findings of facts given by the learned Tribunal. Issues:1. Interpretation of exemption under Section 54F of the Income Tax Act.2. Compliance with conditions for availing exemption under Section 54F.3. Justification of the Tribunal's findings regarding exemption under Section 54F.Analysis:1. The appeal raised questions on whether the tribunal was correct in granting exemption under Section 54F when the unutilized sale proceeds were not deposited in the capital gains account scheme before the due date for filing the return. The tribunal interpreted the provisions of Section 54F to conclude that the assessee was entitled to exemption, disregarding previous decisions. The tribunal found that the assessee had invested before the due date of filing the belated return and had taken possession of the property within three years from the date of transfer of the original asset. The tribunal emphasized that the investment in residential property was a must, which the assessee proved with evidence and complied with before the lower authorities.2. The learned Commissioner of Income Tax (Appeals) extensively considered the legal provisions, submissions of the assessee, judicial decisions, factual aspects, genuineness of transactions, and beneficial aspects of the provisions. The Commissioner concluded that the assessee had satisfied the conditions for availing the benefit of exemption under Section 54F by purchasing and constructing a residential property within the stipulated period of three years from the date of transfer of the original asset. The tribunal upheld the Commissioner's decision, stating that the provisions of Section 54F are to be considered liberally in terms of the limitation period, and the assessee's compliance with the conditions warranted the exemption.3. The High Court, after hearing both counsels, affirmed the tribunal's findings, stating that the assessee had met the conditions for the exemption under Section 54F by purchasing a new property and taking possession within the specified three-year period. The Court found no perversity in the tribunal's factual findings and concluded that no substantial question of law arose in the appeal filed by the Revenue. Consequently, the Court dismissed the Revenue's appeal, emphasizing that it lacked merit, and no costs were awarded in the matter.