TaxTMI 
TaxTMI 
2018 (10) TMI 1100
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....pellant reserves its right to add, amend alter or modify any of the grounds stated hereinabove either before or at the time of hearing." 3. Ground No.2 is not pressed by the assessee. Therefore, same is dismissed as not pressed. 4. The only grievance of the assessee is that ld CIT(A) erred in holding the gain of Rs. 50.69 earned on sale of factory shed as short term capital gain. 5. Briefly stated facts are that the assessee is an individual and running its proprietor ship business under the name and style of Makarana Marbles. The assessee has shown his income under the head salary, other sources and capital gain. The assessee has discontinued his business from the year under consideration. Accordingly, the assessee has sold its factory shed located at 988/2 GIDC Estate Makarpura for Rs. 53,75,000/- on 13-04-2010. The assessee has claimed depreciation on such factory shed. Accordingly, the income earned thereon for Rs. 49,21,367/- was shown as short term capital gain u/s 50 of the Act. 5.1 However, the assessee in its return of income has claimed exemption u/s 54F of the Act against the short term capital gain as discussed above. 5.2 As per the AO, the exemption is a....
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....acts and circumstances. 6.1 It is undisputed fact that the factory shed is a depreciable assets and its period of holding exceeds more than 3 years. Therefore, the same is long term capital assets within the meaning of Section 2(42A) of the Act. 6.2 It is a fact on record the assessee has not deposited the amount of net consideration received by him on the sale of factory shed in capital gain scheme within the time specified u/s 139(1) of the Act. But the assessee has utilized the money in the construction of residential house within the time as specified u/s 139(4) of the Act. Therefore, the assessee was not liable to deposit the amount in capital gain account. The assessee in respect of his claim relied on the judgment of Gauhati High Court in the case of CIT vs. Rajesh Kumar Jalan reported in 157 taxman 398. 6.3 However, the ld CIT(A) disregarded the contentions of the assessee and confirmed the order of the AO by observing as under: "5.3 I have carefully considered the facts and circumstances of the case, the observations of the Assessing Officer, assessee's submissions, material available on record and the judicial pronouncements on the subject. The issue....
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....set falling within that block of assets, acquired by the assesses during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets.1" (Emphasis supplied) In view of the unambiguous and clear provisions of section 50 of the Act, there is no doubt that the gains from the transfer of the factory shed are to be treated as STCG. 5.4 Now, coming to the issue of allowability of exemption u/s 54F on this STCG, arising as a result of transfer of the factory shed, in view of express provisions of section 54F(1), it is clear that the benefits of the benevolent provisions of section 54F are only available to LTCG and not to STCG, despite assertions to otherwise by the assessee. The relevant portions of-section 54F are extracted below for ready reference- "54F. (1) [Subject to the provisions of sub-section (4), where, In the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset,.,........." The provisions of section 54F(1) clearly indicate t....
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....m capital gain has been duly fulfilled. The period of holding factory shed exceeds more than 36 months. Therefore it is a long term capital assets by virtue of the provision of Section 2(42A) of the Act. The ld. AR before us reiterated the submissions as made before the ld CIT(A). The ld AR in support of his claim relied on the judgment of Hon'ble Jurisdictional High Court in the case of DCIT vs. Himalaya Machinery Pvt. Ltd. reported in 29 taxmann.com 380. 7.1 The ld AR also submitted that the amount of net consideration was utilized before the due date of income tax return filing as specified u/s 139(4) of the act. The ld AR in support of his claim relied on the order of this Tribunal in the case of Ashok Kapasiawala vs. ITO in ITA No.2692/Ahd/2014 vide order dated 10th September 2015. 7.2 The ld. AR also submitted that there was another assets being land which was sold by the assessee during the year under consideration and the assessee failed to utilize the net consideration received on the sale of such assets before the due date of filing of income tax return as specified u/s 139(1) of the Act. But the same was utilized before filing the income tax return as specified....
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....y an assessee for not more than [thirty-six] months immediately preceding the date of its transfer" 9.3 Similarly, we find important and relevant to reproduce the provision of Section 54F of the Act, which reads as under: "[Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before 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, one residential house in India] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of suc....
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.... (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets;" 9.5 From the combined reading of the above provision, we note that all the provisions of the Section as discussed above are mutually exclusive to each other. There is no mention Under Section 50 of the Act referring to the provision of section 54F of the Act and vice versa. Therefore, we are of the view that the provision of one section does not exclude the provision of other section. Therefore, both the provision in our considered view should be applied in the instant case independently. The assessee has claimed deduction u/s 54F of the Act because of the fact that the factory shed was long term capital assets and there is nothing mention under the provision of Section 54F of the Act for depreciable assets. Thus, we are of the view that the sale of f....
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....tal gain, shall not be charged under section 45 : Section 54EC thus provides for exemption from payment of capital gain subject to condition made therein be satisfied. Ld. Counsel for the Revenue would refer to the beginning words of sub-section (1) of Section 54EC which refer to capital gain arising from the transfer of a long-term capital asset and would contend that by virtue of Section 50 of the Act, such exemption would not be available in the cases of transfer of assets on which depreciation has been allowed. 14. We are afraid that such an interpretation would not be warranted. It is true that under section 54EC of the Act, exemption would be made available in case of transfer of long term capital assets. However, once such condition is fulfilled, by virtue of the fact that asset was such on which the depreciation was allowed and therefore, computation would be done as provided u/s. 50 of the Act by applying modifications in Section 48 and Section 49 would not change the nature of capital asset or availability of exemption specified under Section 54EC of the Act." 9.6 From the above judgment, we note that it was passed with the reference to the provision ....
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....led income-tax return u/s.139(1) so that matter u/s.139 of the Act. It was only in response to notice u/s.148 of the act dated 27/03/2012 the assessee filed return on 30/04/2012. The contention of the assessee is that the amount was utilized before due date of filing of return. As per assessee, the period as prescribed under section 54F(4) for deposit in the capital gain account should be reckoned from the due date of filing of return u/s.139(4) of the Act. In support of this contention, ld.counsel for the assessee relied on the judgement of Hon'ble Punjab & Haryana High Court rendered in the case of CIT vs. Jagtar Singh Chawla and judgement of Hon'ble Karnataka High Court rendered in the case of CIT vs. K. Ramachandra Rao. The Hon'ble High Court of Punjab & Haryana held as under:- "In the case of Fathima Bai vs. ITO, ITA No.435 of 2004 it was held that the extended due date u/s. 139(4) would be 31.3.1990. The assessee did not file the return within the extended due date. However, the assessee had utilized the entire capital gains by purchase of a house property within the stipulated period of section 54(2) i.e., before the extended due date for return u/s 139.....