TaxTMI 
TaxTMI 
1984 (5) TMI 92
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty as on 1-1-1964 is fixed at Rs. 45,000. At the time of hearing and also by letter dated 16-3-1982 filed on 17-3-1982, the assessee's representative claimed exemption under section 54E on the plea that the assessee deposited amounts aggregating to Rs. 59,200 in banks. This is not admissible to the assessee. The exemption is available to those deposits which were made after 27-4-1978. According to section 54E(1), the assessee has to deposit the sale proceeds (whole or part) within six months from the date of transfer. According to section 54E(1A), it is clear that the deposits made after 27-4-1978 only qualify for exemption subject to two conditions, viz. (a) the assessee has to furnish along with the deposit a declaration in writing to the bank to the effect that the assessee will not take any loan or advance on the security of such deposit during a period of three years from the date of which the deposit is made, and (b) the assessee has to furnish along with the return of income for the assessment year relevant to the previous year, a copy of the declaration referred to in clause (a) duly attested by an officer not below the rank of sub-agent of such bank. In the present case,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in six months of the transfer and this would not include deposits made prior to the transfer dates. For all these reasons, he submitted that the assessee was not entitled to relief. 5. The learned counsel for the assessee had also relied on a circular of the Board No. 359 [F. No. 207/8/82-ITA-II], dated 10-5-1983. According to the learned counsel, this circular fully supported the stand he was taking and in terms of the circular relief should be allowed. The learned departmental representative submitted that this circular was not in existence in the assessment year 1979-80 and, hence, was not applicable to the assessment as made. 6. I have carefully considered the rival submissions. The facts as stated in the assessment order are that the assessee sold certain properties for Rs. 73,500 on 22-7-1978. The value as on 1-1-1964 was fixed at Rs. 45,000 and the capital gain is Rs. 28,500. None of the aforesaid figures are in dispute. However, to decide the issues canvassed, it is necessary that certain further facts have to be stated. These facts which are available in the statement of facts filed before the AAC and a copy of which has been furnished by the learned counsel are that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has, within a period of six months after the date of such transfer, invested or deposited the whole or any part of the net consideration in any sepcified asset (such specified asset being hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,---- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the new asset bears to the net consideration shall not be charged under section 45 ; Explanation 1 : For the purposes of this sub-section, 'specified asset' means---- (a) in a case where the original asset is transferred before the 1st day of March, 1979, any of the following assets, namely :--- (vi) deposits for a period of not less than three years with the State Bank of India established under the State Bank of India Act, 1955....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of three years from the date on which the deposit is made ; (b) the assessee furnishes, along with the return of income for the assessment year relevant to the previous year in which the transfer of the original asset was effected or within such further time as may be allowed by the Income-tax Officer, a copy of the declaration referred to in clause (a) duly attested by an officer not below the rank of sub-agent, agent or manager of such bank or an officer of corresponding rank of such co-operative society. " The applicability of this provision has to be construed with reference to the actual date of deposit. If the deposit was made after 27-4-1978, then to secure the exemption under section 54E, the assessee had to give a declaration in writing to the bank that no loan or advance would be taken against the security of the deposit and a copy of the declaration had to be furnished to the ITO. In the present case the date on which each of the deposits was made falls prior to the date 27-4-1978 and, therefore, the provisions of section 54E(1A) do not come into play. The Board's Circular No. 359, dated 10-5-1983 was not in existence in the assessment year 1979-80, according to the le....