TaxTMI 
TaxTMI 
2018 (1) TMI 1000
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....assessment was finalized under section 143(3) of the I.T. Act, 1961 (hereinafter referred to as the Act) vide order dated 20.03.2014. While framing the assessment, the AO declined the claim of deduction under sections 54B and 54F of the Act on the ground that assessee has not deposited the net sale consideration in the capital gain account. 4. Counsel for the appellant Mr. Singhi has taken us to the order of the AO wherein it has been observed as under:- 5.5 I have gone through the submissions made by the assessee but the reply filed by the assessee is not acceptable as assessee has failed to deposit the amount of net sale consideration or capital gain in capital gain account before due date of filing of return i.e. 31.07.2011 in the above case as per provisions of section 139(1) of the I.T. Act, 1961. Assessee claimed that sale consideration was deposited in nationalized bank as well as capital gain account. Perusal of the documents submitted by the assessee it is found that assessee has not filed any documentary evidence in this regard. Further, the assessee had claimed that value of construction of house Rs. 52,00,000/- including Rs. 5,00,000/- in agriculture land. T....
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.... 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 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 purpose of sub-section (1), the amount, if any already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset." In view of above provisions of I.T. Act it is clear that assessee has to deposit the net sale consideration amount which has not been utilized by the assessee before due date of filing of return in Capital Gain Account Scheme, 1988. Assessee has admitted the fact that he has failed to depsit the amount of Rs. 52,00,000/- in capital gain account before due date of filing of return u/s 139(1) of the I.T. Act. T....
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....is in respect of agricultural land for which assessee has already claimed deduction of Rs. 1.60 Crore. It was stated that the amount of Rs. 5 Lac was incurred on wire fencing of the agriculture land acquired by the assessee and small room thereon and this is part of the agriculture land itself. Even otherwise if part of the amount of Rs. 5,00,000/- is treated as incurred on house than in various cases it has been held that wording used in sec. 54F is "a residential house" which also permits the use of plural by virtue of sec. 13(2) of General Clauses Act and therefore where the assessee purchases more than one house than also deduction is available. (x) I have considered the above contention of the appellant very carefully. It has been held above that the deduction u/s 54F could no be allowed to the appellant and thus this contention became only academic. It is observed from the valuation report filed by the appellant that the total cost of construction in the house property at Plot No.480, New Dhani, Shanti Nagar, Near Karni Mata Mandir, was estimated at Rs. 47 Lac only and not Rs. 52 Lac as claimed by the appellant for claiming deduction u/s 54F of the Act. The contentio....
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.... there is some other construction available". Where to apply words literally would "defeat the obvious intention of the legislation and produce a wholly unreasonable result", we must "do some violence to the words" and so achieve that obvious intention and produce a rational construction. (Per Lord Reid in Luke v. IRC {1963 AC 557} where at AC p.577 he also observed: "This is not a new problem, though our standard of drafting is such that it rarely emerges".) 20. Another plea which was urged with some amount of vehemence was that the provisions of Section 276CC are applicable only when there is discovery of the failure regarding evasion of tax. It was submitted that since the return under Sub-section (4) of Section 139 was filed before the discovery of any evasion, the provision has no application. The case at hand cannot be covered by the expression "in any other case". This argument though attractive has no substance. 7. He relied upon the judgment in the Sh. Nand Lal Sharma vs. The ITO, Bundi, ITA No. 413/JP/2012, wherein it has been held as under :- 3.7 We have heard the rival contentions and perused the materials available on record. Apropos Ground No. 1 i....
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....mount 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, 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 account in any such bank or institution as may be specified in, and utilised 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 or construction of the 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 utilised wholly or partly for th....
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....et as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. 10.2 He contended that from a bare perusal of Section s 54B(2), it is clear that investment or the benefit which he is seeking the investment is to be made before return u/s 139(1) is filed. The language used by the legislature in 54B(2) is very clear "shall be deposited by him before furnishing such return not later than due date as applicable in the case of assessee for furnishing of Income Tax under sub-section (1) of Section 139 in an account in which such bank or institution as may be specified. 11. In that view of the matter, he contended that every word which has been used in sub section (2) is to be constructed very strictly otherwise provision will be rendered nugatory and interpretation which has been given by the tribunal will frustrate the object of the Section. 12. He also taken us to Section 54F(4) and contended that it is the identical language which has been used in 54B(2) in that view ....
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....ate of filing of return on 21.02.2013, the assessee is eligible for deduction u/s 54B & 54F even if he has not deposited the amount in capital gain account. In support of his contention, ld. Counsel for the assessee has placed reliance on the decision of Coordinate Bench rendered in the case of Nandlal Sharma Vs. ITO (2015) 122 DTR 404 (JPR) (Trib.), Ashok Kapasiwala vs. ITO (2015) 45 CCH 407 (Ah.) (Trib.) and the judgments of Hon'ble Punjab & haryana High Court rendered in the case of CIT vs. Jagtar Singh Chawla (2013) 87 DTR 217 (P&H)(HC), CIT vs. Ms. Jagriti Aggarwal (2011) 64 DTR 333 (P&H)(HC) and on the judgments of Hon'ble Karnataka High Court in the ase of Fathima Bai vs. ITO (2009) 32 DTR 243 (Kar.) (HC) and in the case of CIT vs. Smt. Vrinda P. Issac (2011) 64 DTR 376 (Kar.)(HC) and also decision of Coordinate Bench rendered in the case of Nipun Mehrotra vs. ACIT (2008) 110 ITD 520 (Bang.)(Trib.) 3.6 The Coordinate Bench of the Tribunal while deciding the identical issue in the case of Nand Lal Sharma vs. ITO (supra) has taken into consideration the various judgments of Hon'ble High Courts referred above. Therefore, respectfully following the decision of Coordinat....
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....ave defaulted in not filing the return under section 139(4). But, however, utilized the capital gains for purchase of property before the extended due date under section 139(4). The contention of the revenue that the deposit in the scheme should have been made before the initial due date and not the extended due date is an untenable contention. 10. A Division Bench of this Court in which one of us (Hemant Gupta, J.) was a member, had an occasion to consider the provisions of Section 54(2) of the Act, wherein it has been held that subsection( 4) of Section 139 of the Act is in fact a proviso to Section 139(1) of the Act. Therefore, since the assessee has invested the sale proceeds in a residential house within the extended period of limitation, the capital gain is not payable. The judgments in Rajesh Kumar Jalan's case and Fathima Bai's case (supra) were referred to. It has been held as under:- Having heard learned counsel for the parties, we are of the opinion that sub-section (4) of Section 139 of the Act is, in act, a proviso to sub-section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for differen....
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....fore or two years after the date on which the transfer took place purchases residential house, then instead of the capital gain, the income would be charged in terms of provisions of Sub Section (1) of Section 54. As per Sub-Section (2), if the amount of capital gains is not appropriated by the assessee towards the purchase of new asset within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, the amount shall be deposited by him before furnishing such return not later than due date applicable in the case of 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. Relevant Sub-Section (2) of Section 54 of the Act reads as under: (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 utilized by him for the purchase or construction of the ....
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....243. Even if two views are possible, the revisional authority had no jurisdiction to initiate proceedings under section 263 of the Act. It was held that the order passed by the High Court is incorrect, which decision cannot be accepted. The Tribunal has followed the judgment of this Court as the decision of the High Court is binding on the subordinate Courts. If the judgment passed by this Court is erroneous, the revenue should have challenged the said order. At any rate that cannot be a ground for invoking section 263 of the Act in the facts of this case. In that view of the matter, we do not see any merit in this appeal. Accordingly, no substantial question of law arises for consideration. Hence, the appeal is dismissed. 6. Commissioner of Income Tax vs. Rajesh Kumar Jalan, (2006) 286 ITR 0274 (GUHC), it has been held as under :- 6. From a plain reading of Sub-section (2) of Section 54 of the Income Tax Act, 1961, it is clear that only Section 139 of the Income Tax Act, 1961, is mentioned in Section 54(2) in the context that the unutilised portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the....
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....tions to this rule. The first is that the rule of strict construction does not apply to a provision which merely lays down the machinery for the calculation or procedure for the collection of tax. 27. The second exception is: If two constructions are possible and a strict construction would lead to an absurd result then the construction which is in keeping with the object of the statutory provision or in keeping with equity could be accepted. This was the view expressed in Commissioner of Income Tax. v. J.H. Gotla, Yadagiri while interpreting section 24(2) of the Income Tax Act, 1922: "...if strict literal construction leads to an absurd result i.e. result not intended to be subserved by the object of the legislation found in the manner indicated before, and if another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not mean always so and if a construction results in equity rather than in injustice; then such construction should be preferred to the literal construction." 8. The....