TaxTMI 
TaxTMI 
2009 (11) TMI 904
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....her things, in real estate business including construction and sale of flats. During the previous year relevant for the assessment year 1995-96, the assessee transferred 12.876 cents of land to the said Partnership firm treating it as his contribution to the capital of the firm. The firm in turn credited capital account of the respondent-assessee with Rs. 38,62,800 the full value of the land brought to the firm by the respondent-assessee as capital contribution. The assessee, thereafter availed loan from HDFC bank for the construction of the house and within three years from the date of transfer of land to the firm, he got new house constructed by another firm M/s. Desai Home in which also the assessee was a partner. In the Income-tax retur....
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....P. Balakrishnan appearing for the respondent-assessee. 2. There is no dispute that the transfer of the land by the assessee to the partnership firm towards his capital contribution to the firm is a transfer within the meaning of section 2(47) of the IT Act which is subject to long term capital gains under section 45(3) of the Act. In the return filed for the assessment year 1995-96, the assessee had in fact offered tax on capital gains on the very same transaction of contribution of the above land towards his capital contribution as managing partner. However, since assessee had availed loan from HDFC bank and constructed house within three years from the date of transfer of the land to the firm, the assessee claimed exemption of capital ga....
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....pose. In fact, the requirement of sub-section (4) of section 54F is that the assessee should produce along with the return, proof of deposit of the amount under the specified scheme in a Nationalised Bank. Admittedly, the assessee allowed the firm to which the property was transferred to retain and use it as a business asset and towards consideration he got only credit of land value in his capital account. In other words, sale consideration was not received by the assessee in cash or deposited the same in terms of clause 4 of section 54F with any Nationalised Bank or institution. Consequently the assessee did not have the sale proceeds available for investment in terms of scheme under section 54F(3) of the Act. In our view, in order to qual....