Tribunal grants deduction under Section 54 for capital gain utilized by extended due date

The Tribunal allowed the Assessee's appeal, granting the deduction under Section 54 for the amount of capital gain utilized until the filing of the return under Section 139(4). The Tribunal emphasized that the extended due date under Section 139(4) should be considered for claiming the deduction, aligning with the judgments of various High Courts. The appeal filed by the Assessee was allowed on 19/01/2022.

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Issues Involved:
1. Whether the deduction under Section 54 of the Income Tax Act, 1961 can be claimed for the amount invested in a new residential house beyond the due date of filing the return under Section 139(1) but within the extended period under Section 139(4).
2. Whether the Assessee is entitled to the deduction under Section 54 for investments made in a new residential house within the extended period of filing the return.
3. The validity of the Assessing Officer's computation and disallowance of the Assessee's claim.
4. The correctness of the Ld. Commissioner's partial acceptance of the Assessee's claim.

Detailed Analysis:

Issue 1: Deduction under Section 54 of the Act
The Assessee sold a flat and claimed a deduction under Section 54 for the capital gains by investing in a new flat. The Assessing Officer denied this claim on the grounds that the Assessee neither deposited the capital gain amount in the capital gain scheme account nor utilized it before the due date of filing the return under Section 139(1). The AO also observed that the Assessee's claim lacked credible evidence of actual investment in the new flat.

Issue 2: Entitlement to Deduction for Investments Made Within Extended Period
The Assessee contended that the investment in the new flat was made up to the date of filing the belated return under Section 139(4). The Ld. Commissioner partly accepted this claim, allowing the deduction only for the amount invested up to the due date of filing the return under Section 139(1). The Ld. Commissioner cited several case laws to support the decision, stating that only the amount invested before the due date under Section 139(1) qualifies for deduction.

Issue 3: Validity of AO's Computation and Disallowance
The AO computed the long-term capital gain at Rs. 71,78,207 and disallowed the Assessee's claim, adding this amount to the Assessee's income. The Ld. Commissioner upheld the AO's computation but allowed partial relief by recognizing the investment made up to the due date under Section 139(1).

Issue 4: Correctness of Ld. Commissioner's Partial Acceptance
The Assessee appealed against the Ld. Commissioner's decision, arguing that the deduction should be allowed for the entire amount invested up to the date of filing the belated return under Section 139(4). The Tribunal referred to various High Court judgments, including CIT Vs. Jagriti Aggarwal and CIT Vs. Rajesh Kumar Jalan, which held that the extended period under Section 139(4) should be considered for claiming deductions under Section 54. The Tribunal concluded that the Assessee is entitled to the deduction for the amount invested until the filing of the return under Section 139(4).

Conclusion:
The Tribunal allowed the Assessee's appeal, granting the deduction under Section 54 for the amount of capital gain utilized until the filing of the return under Section 139(4). The Tribunal emphasized that the extended due date under Section 139(4) should be considered for claiming the deduction, aligning with the judgments of various High Courts.

Order:
The appeal filed by the Assessee is allowed, and the order was pronounced in the open court on 19/01/2022.

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