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of <h1>Court rules transfer between accounts under Capital Gains Scheme doesn't need Assessing Officer clearance.</h1> The Court ruled in favor of the petitioners, stating that the transfer request from term deposit account B to savings account A under the Capital Gains ... Benefit of exemption under section 54 - petitioners herein have deposited a sum of Rs. 40,22,000 with the first respondent-bank under the Capital Gains Accounts Scheme, 1988, to get the benefit of exemption under section 54 with regard to the sale of their immovable properties. the petitioners have deposited the amount in term deposit – subsequently, petitioners made a request to the first respondent-bank to transfer the funds from their term deposit by opening a savings account - insisted that the petitioners should get approval of the concerned Assessing Officer for such transfer of funds from one account to another. - transfer of the account cannot be equated to the closure of the account even where the entire amount is withdrawn. Hence, the first respondent-bank is not justified in insisting upon clearance from the Assessing Officer as a condition precedent for considering the request of the petitioners for transfer of deposit from account B to account A. Issues:Transfer of funds from term deposit account B to savings account A under Capital Gains Accounts Scheme, 1988 without clearance from Assessing Officer in Form No. G.Analysis:The petitioners deposited Rs. 40,22,000 under the Capital Gains Accounts Scheme, 1988, seeking exemption under section 54 of the Income Tax Act, 1961. They deposited the amount in term deposit account B and requested to transfer funds to savings account A without clearance from the Assessing Officer. The first respondent-bank insisted on Form No. G clearance for the transfer, leading to the writ petition.The Capital Gains Accounts Scheme, 1988, allows for two types of accounts - account A for savings deposit and account B for term deposit. Withdrawals from account A can be made from time to time, while withdrawals from account B are permitted only after the deposit period ends, except for specified transfers and withdrawals. The petitioners sought to transfer their deposit from account B to account A, following the procedure outlined in paragraphs 7 and 9 of the Scheme.The first respondent-bank argued that closure of account B requires clearance in Form No. G from the Assessing Officer, citing paragraph 13 of the Scheme. However, the Court differentiated between transfer and closure of accounts, emphasizing that transfer does not equate to closure. The transfer under paragraph 7 involves moving funds between accounts within the same bank, whereas closure under paragraph 13 signifies the end of the account in the bank.The Court ruled in favor of the petitioners, stating that the transfer request from account B to account A should not be equated with closure of the account, even if the entire amount is withdrawn. Therefore, the first respondent-bank was unjustified in demanding clearance from the Assessing Officer for the transfer. The Court directed the bank to consider the transfer request without the need for Form No. G clearance and to process the request promptly, preferably within two weeks.In conclusion, the judgment clarifies the distinction between account transfer and closure under the Capital Gains Accounts Scheme, 1988, emphasizing that clearance from the Assessing Officer is not required for transfers between accounts within the same bank.
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