TaxTMI 
TaxTMI 
2016 (12) TMI 559
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....lowance of deduction claimed by the assessee under Section 54 of the Income-tax Act, 1961 (in short 'the Act') while computing capital gain. 3. Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the assessee has sold a residential flat at Santhome High Road, Chennai on 09.03.2011 for a total consideration of Rs. 1,09,00,000/-. The assessee admitted the long term capital gain at Rs. 64,84,686/-. The assessee explained before the Assessing Officer that a sum of Rs. 99,00,000/- was invested before the date of filing of return under Section 139(1) of the Act and claimed the exemption of the entire long term capital gain of Rs. 64,84,686/- under Section 54 of the Act. The Ld. D.R. further submitted that the Asses....
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....eted as on 31.07.2011, therefore, the assessee has to necessarily deposit the money in the Capital Gains Account. On a query from the Bench, when the assessee has advanced the money to the builder, namely, M/s Total Environment Building Systems Pvt. Ltd., for purchase of flat, where will the assessee get money for making deposit in the Capital Gains Account? The Ld. D.R. clarified that it is the mandate of the Legislature to deposit the money in the Capital Gains Account in case the same was not used to purchase or construct a residential house. The Ld. D.R. further submitted that purchase or construction of house does not include the house which was in the process of construction. Therefore, according to the Ld. D.R., the Assessing Officer....
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....e/construction of a residential flat would amount to utilization of capital gain by the assessee for the purpose of purchasing or constructing a new asset. In view of this judgment of Apex Court, according to the Ld. representative, the assessee is eligible for exemption under Section 54 of the Act. 7. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee sold a residential flat on 09.03.2011 for a total consideration of Rs. 1,09,00,000/-. The assessee admittedly earned Rs. 64,84,686/- as capital gain, which is not in dispute. The dispute is with regard to claim of the assessee under Section 54 of the Act. We have carefully gone through the provisions of Se....
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....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 or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, sh....
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....et took place or which is not utilised for purchase or construction of a new asset before the date of filing of return of income under Section 139(1) of the Act, shall be deposited in the specified Capital Gains Account. Therefore, what is required to be seen is whether the assessee has appropriated or utilised the capital gain for purchase or construction of a residential house. 9. In the case before us, the capital gain is Rs. 64,84,686/-. It is not in dispute that the assessee has paid a sum of Rs. 83,00,000/- as on 31.07.2011, being the due date for filing return of income, to M/s Total Environment Building Systems Pvt. Ltd. for purchase of a flat. The question arises for consideration is whether the payment made by the assessee towa....
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.... paid for the purpose of purchase and/or acquisition of the aforesaid assets would certainly amount to utilization by the assessee of the capital gains made by him for the purpose of purchasing and/or acquiring the aforesaid assets. We find therefore that on this ground also, the assessee is liable to succeed." 10. We have also carefully gone through the provisions of Section 54G of the Act. Section 54G(2) of the Act makes the assessee for claiming exemption under Section 54G to appropriate the capital gain or to utilize the same within the due date for filing of return of income under Section 139(1) of the Act, the unutilized portion should be deposited in the Capital Gains Account. Section 54G(2) of the Act is pari materia same as Sect....