Section 54 exemption depends on substantive compliance; procedural deposit lapse alone cannot defeat relief, subject to factual verification.

Section 54 exemption on long-term capital gains cannot be denied merely because the balance sale consideration was not deposited in the specified account before filing the return, where the substantive conditions for relief are otherwise satisfied and the deposit requirement is treated as procedural. The Tribunal noted that the assessee claimed the remaining amount was paid within the prescribed period, so the truth of that factual assertion required verification. The matter was therefore remitted to the Assessing Officer to examine whether the balance payment was made within the stipulated time, with partial relief granted to the assessee.

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Issues: Whether deduction under section 54 could be denied merely because the balance amount was not deposited in the specified account before filing of the return, and whether the factual claim of subsequent payment required verification.

Analysis: The assessee had claimed exemption in respect of long-term capital gains on sale of house property. The lower authority restricted the deduction to the amount spent up to the date of filing of the return and disallowed the balance for want of deposit in the specified account. The Tribunal noted that the cited precedent treated such deposit requirement as procedural and held that exemption under section 54 should not be denied where the substantive conditions are otherwise satisfied. Since the assessee asserted that the balance payment was made within the stipulated period, the Tribunal found that the factual veracity of that claim had to be examined by the Assessing Officer.

Conclusion: The matter was remitted to the Assessing Officer for verification of whether the balance amount was paid within the prescribed period, and the assessee obtained partial relief.

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