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2016 (10) TMI 1119

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....ing grounds raised in ITA No. 1249/Del/2013 (AY 2008-09):- 1. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming action of the AO of making addition of Rs. 1,42,1000/- as alleged capital gain. 2. On the facts and circumstances of the case and in law, the CIT(A) erred in deciding the appeal exparte. The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal. 4. The brief facts of the case are that the return of income was filed on 16.11.2007 declaring total income at Rs. 4,81,560/-. The return was processed uls 143(1) of the IT Act and case was selected for scrutiny. The assessee is a Director of M/s Effectron Luminex Ltd Holding 47.9% equity. In this case order u/s 250(6) of the IT Act was passed by the CIT(Appeal) on 24.11.2011. The appeal of the assessee was dismissed on the ground of late filing of appeal and on account of non compliance. Against the said order, the assessee filed an appeal before ITAT, the ITAT vide its order dated 27.4.2012 passed in ITA 745/DEL/2012 set aside the order of CIT(Appeal) and restored the issue before CIT(Appeal) for re-adjudication after ....

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....an of around 76 years could not keep track of the adjustment made by the builder. However, the made the substantive compliance of section 54 by making the required investment in the new house within the period specified u/.s 54 of the I.T. Act, 1961. In support of his contention, he filed the copies of the following decisions wherein the similar issue has been dealt with and decided in favour of the assessee. - ITO VS. SMT. SAPANA DIMRI (2012) 19 TAXMANN.COM 15 (DELHI) - CIT VS. JAGRITI AGGARWAL (2011) 15 TAXMANN.COM 146 (PUNJ. & HAR.) HIGH COURT. - KISHORE H. GALAIVA VS. ITO (2012) 24 TAXMANN.COM 11 (MUM) - CIT VS. RAJESH KUMAR JALAN (157 TAXMAN 398) (GAU) - K.S. RAMACHANDARAN VS. ITO (ITA NO. 941/MDS/2011) In view of the above, he requested that following the above precedents, the appeal of the assessee may be allowed. 8. On the contrary, Ld. DR relied upon the orders passed by the authorities below and stated that the lower authorities have passed well reasoned order which does not need any interference on our part, therefore, the appeal of the assessee may be dismissed. 9. We have heard both the parties and perused the relevant records available with us, especially the ....

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....efore or two years after the date on which the transfer took place purchased], or has within a period of three years after that date constructed, a residential house, then], instead of the capital gain being charged to 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 residential house] so purchased or constructed (hereafter in this section 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 or construction, as the case may be, 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 with....

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....hat in the case of J.V.Krishnarao vs DCIT (ITAT, Hyderabad),the ITAT Held that all that is required to be eligible for relief u/s 54F of the Act is compliance with the condition of investment within the specified time and deduction u/s 54F cannot be denied even if the deposit in capital gain account was out of borrowed fund and not out of capital gain. It was held that money has no color and all i.e. required is that investment be made in new house within the specified time. 9.5 In the case of K.S. Ramachandran vs ITO (ITAT, Chennai), the ITAT held that deduction u/s 54 was allowable even in a case where the amount of capital gain was not deposited in capital gain account but the amounts was utilized for the purchase of new house within the period specified u/s 54 even though the amount was invested after the due date of filing of return u/s 139(4) but before the period of 2/3 years as specified in section 54. 9.6 The requirement to invest in a bank account under the capital gain account scheme is a procedural requirement to ensure that investment is made in a residential house as claimed in the return of income. Merely because of technical breach / non-compliance the benefit due....

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....ll be entitled for exemption under sec. 54 of the Act to the extent the amount invested in the new property. Accordingly, we do not find any infirmity in the order of the CIT(A) allowing relief in respect of both the issues. 9.10 In the headnote of judgement in case of CIT v Jagriti Aggarwal(2011) 15 taxmann.com 146 (Punj. & Har.) the Hon'ble High Court has observed as under :- Section 54, read with section 139, of the Income-tax Act. 1961 - Capital gains - Profits on sale of property used for residence - Assessment year 2006-07 - Assessee sold her house property on 13-1-2006 while filed her return on 28-3-2007 claiming deduction under section 54 on ground that she had purchased another property jointly on 2-1-2007 for higher sum - Assessing Officer declined said claim -One of grounds was that assessee had failed to purchase house property before due date of filing return of income under section 139(1), i.e prior to 31-7-2006 - According to assessee, due date of filing return of income in her case was not as specified in section 13 9( 1) but as specified in section 139(4) i.e., 31-7-2007 - Whether due date for furnishing return of income as per section 139(1) is subject to extend....

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.... filing the return of income uls 139(4) till 31.3.2009 and therefore, the assessee was entitled to claim exemption uls 54(F). In the present case, the capital gain earned by the assessee was Rs. 9,98,411/- and the assessee had utilized a sum of Rs. 13.50 lakhs towards the construction of residential house by 5.7.2007 which was within the extended period of filing of the return u/s 139(4) till 31.3.2008 for the assessment year 2006-07. The assessee had thus utilized the amount which was more than capital gain earned towards construction of new residential house within extended period u/s 139 (4) and therefore the there was no default in not depositing the amount under the capital gain account scheme. Therefore, the claim made by assessee cannot be denied following the judgments cited (supra). 9.12. In the head note of judgment in the case of CIT v Raiesh Kumar Jalan (157 taxman 398)(Gau) the Hon'ble Court has observed as under:- Section 54 of the Income-tax Act, 1961 - Capital gains - Profit on sale of property used for residential purpose - Assessment year 1996-97 - Assessee sold his residential property on 21- 12-1995 and earned capital gain - Subsequently, in May, 1996, he purc....