TaxTMI 
TaxTMI 
2016 (3) TMI 823
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....,343/- u/s 50C by adopting the DLC rate. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 11,70,343/-. (3) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs. 37,000/- by rejecting the claim of indexation u/s 48 of the I.T. Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 37,000/-. ITA No. 908/JP/13 (1) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in not allowing the claim of deduction u/s 54B of the I.T. Act, 1961 at Rs. 87,25,000/-. The action of the CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by following the relief. (2) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of Rs. 5,67,595/- u/s 50C b....
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....sil Laxmangarh, District Alwar from Shri Jagdish Singh on 10.07.2011 for Rs. 1,09,40,000/-. The payment of Rs. 50 lacs was made at the time of agreement and balance payment of Rs. 59,40,000/- was made on 16.08.2011. The deduction u/s 54F is claimed on purchase of house located at Plot No. 101, Chetan Enclave, Old Jaipur Road, Alwar on 06.02.2012 for purchase consideration of Rs. 21,50,000/- plus stamp duty and expenses of Rs. 1,19,000/- totaling to Rs. 22,69,000/-. The AO disallowed the assessee's claim of deduction u/s 54B and 54F by holding that the assessee has not deposited the amount of sales consideration in capital gain account scheme and has not purchased the agricultural land/house before the due date of filing of original return i.e. 31.07.2010. 2.3 Being aggrieved, the assessee carried the matter in appeal before ld. CIT(A) where it contended that the provisions of IT Act do not specifically provide for making an investment in the purchase of new asset before the due date of furnishing of return of income. The assesee has complied with the provisions of law by purchasing the agricultural land/house within 2 years from the date of the transfer and also furnished ....
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....n in a separate bank account as provided under capital gains account scheme. 2.4 During the course of hearing, the ld. AR has submitted that: The sub-section (2) of section 54B reads as under: "The amount of the capital gain which is not utilised by the assessee for the purchase of new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return (such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139) in an amount of any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit, and, for the purposes of sub-section (1), the amount, if any, already utilized by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset." From the above, it can be noted that sub-section (1) of section 139 is mentioned only with regard to t....
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....o income tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil, or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain, (2) The amount of the capital gain which is not utilized by the assessee for the purchase of the new asset before the date of furnishing the return of income under secti....
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.... utilized by the taxpayer for acquisition of the new asset before the date for furnishing the return of income, it shall be deposited by him on or before the due date of furnishing the return of income , under section 139(1) in an account with the bank or institution and utilized in accordance with a scheme framed by the Central Government in this regard. The amount already utilized together with the amounts of deposit shall be deemed to be the amount utilized for the acquisition of the new asset. If the amount deposited is not utilized fully for acquiring the new asset within the period stipulated, the capital gain relatable to the unutilized amount shall be treated as the capital gain of the previous year in which the period specified in these provisions expires. In such cases, the threshold deduction of ten thousand rupees as well as the deduction under section 53 will not be admissible. Further, the taxpayer shall be entitled to withdraw such amount in accordance with this scheme. This scheme will be applicable in relation to the new section 54G also." 2.8 A combined reading of section 54B along with the explanatory notes contained in CBDT circular no 495 makes the provision....
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....any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub section (1) of section 139 • in an account in any such bank or institution as may be specified in, and • utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette frame in this behalf and • such return shall be accompanied by proof of such deposit, and, • for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase new asset together with the amount so deposited shall be deemed to be the cost of the new asset. • Provided that if the amount deposited under this sub-section is not utilized wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then • the amount not so utilized shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and • the asessee shall be entitled to withdraw such amount in accordance with the scheme afores....
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....e under section 139(1) of the Act and the return shall be accompanied by proof of such deposit. As a necessary corollary, it thus envisages a situation that a return of income is filed within the due date under section 139(1) and based on the proof of such deposit which is submitted along with the return of income, the assessee shall be eligible for deduction. 2.11 The next issue that arises for consideration is where the asseessee utilises the capital gains towards purchase of the new asset within a period of two years from the date of transfer of the original asset but at the same time, doesn't file the return of income under section 139(1) but files the return belatedly under section 139(4) within a period of two years from the close of the financial year, would the provisions of section 54B(2) be applicable and the assessee required to comply with its provisions in order to be eligible for deduction under section 54B of the Act. As we have stated above, the provisions of section 54B(2) doesn't dilute this initial condition as specified in section 54B(1) and continues to provide that in order to be eligible for deduction, the utilisation of capital gains should be within t....
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....oesn't comply with the second condition as prescribed under section 54B(2) of the Act, would the appellant be held ineligible for deduction under section 54B of the Act. Here, we have to look at the issue from two perspectives. Firstly, we draw reference to the explanatory notes to the Finance Act 2007 which provides that the original assessment needs rectification whenever the taxpayer fails to acquire the corresponding new asset within the prescribed period of 2 years and with a view to dispense with rectification of assessments, the amendments has been made to section 54, 54B, 54D and 54F which provides for a new scheme for deposit of amounts meant for reinvestment in the new asset. The legislative intention behind the introduction of subsection 2 to section 54B was therefore to obviate the need for rectification of assessment orders where the assessee fails to purchase the assets within prescribed time limit of 2 years. It was therefore provided that where the assessee deposits the funds in the specified capital gains scheme, the funds so deposited in the specified capital gains scheme were taken into consideration for allowing the deduction and were deemed to be the cost of ne....
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....verifying the satisfaction of necessary condition by the appellant as prescribed under section 54B(1) and 54F(1) of the Act respectively. The ground no. 1 of the assessee is thus allowed. 3. Regarding ground No.2, the same is not pressed during the course of hearing. Hence the same is dismissed as not pressed. 4. Regarding ground No.3, the AO observed that assessee has not filed the original return within the due date and thus the revised return filed is treated as void-ab-initio and cannot be accepted. Therefore, he disallowed the deduction of Rs. 37,000/- claimed u/s 48 of the IT Act. 4.1 The CIT(A) confirmed the action of the AO by holding that the original return of income has been filed by the appellant only on 30.03.2012 as against the due date of 31.07.2010 for filing return of income. No claim u/s 48 was made in this return of income filed. Thereafter, a revised return has been filed on 20.07.2012 by the appellant in which the income from long term capital gain of Rs. 4,67,235/- has been declared along with income from other sources of Rs. 1,67,500/-(this amount was declared in the original return also) and agricultural income of Rs. 95,000/-(this amount was declar....