TaxTMI 
TaxTMI 
2018 (11) TMI 1323
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....A. Y 2010-11 on 03/03/2011. The case was selected for scrutiny and the Assessing Officer (AO) observed that the assessee has not admitted the capital gains arising out of the transactions entered into by her for sale of the property at Madhuranagar, Vijayawada. The AO called for the details and the assessee submitted that she has purchased apartment on 01. 12. 2010 in Kesava Heights for a consideration of Rs. 13,91,000/- and claimed the deduction u/s 54F, thus contended that there is no liability for capital gains. However, the AO found that the assessee had sold the property during the assessment year 2010-11 and acquired the property on 01. 12. 2010 relevant for the assessment year 2011-12 and the assessee did not make investment of unutilized consideration on sale of property in the capital gains account before the due date of furnishing the return of income i. e. 31. 07. 2010 as required u/s 54F, sub section (4) of the Act, therefore viewed that the sum is chargeable to capital gains in the impugned Assessment year(A. Y). The Ld. AO further observed that the consideration for the purchase of the property was paid on 30. 11. 2010, that is after the due date for furnishing the re....
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....firmed the remaining addition made by the AO, u/s 54 of the Act. For the sake of clarity and convenience, we extract relevant part of the order of the Ld. CIT(A) which reads as under : 8. 3. However, appellant contended that new property (Flat) was purchased on 01. 12. . 2010 i. e. before the due date of furnishing the return of income u/s. 139 of the Act which implies u/s. 139(4) also i. e. on or before filing of belated return of income u/s. 139(4) of the Act. Decision of Hon'ble Karnataka High Court in the case of Fathima Bai Vs. ITO in ITA No. 435 of 2004 order dated 17. 10. 2008 (2010) 0932 DTR 0243 clearly supported appellant's contention (i. e. when entire capital gain was utilized by the appellant by purchasing a house property before the extended due date under section 139(4), exemption under section 54 would be allowed to appellant. 8. 4. In the case of Pawan Kumar Garg V s. CIT (2009) 311 ITR 397 (P&H) Hon'ble Punjab and Haryana High Court held as follows : "Since section 54F is a relief provision, it is for the assessee to establish the right to such relief by adducing evidence for the same" 8. 5. However, on perusal of relevant details including registere....
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....h was sanctioned as loan on 19. 11. 2010 by Dewan Housing Finance Corporation Limited. Details are as follows: Date Account Head Cheque No. Amount 30. 11. 2010 Housing Loan (Disb) 000000 Rs. 25,754/- 30. 11. 2010 Housing Loan (Disb) 702485 Rs. 8,74,246/- From the above confirmation, as well as the registered document (No. 6604/2010) dated 01. 12. 2010, it is evident that loan amount of Rs. 8,74,246/- issued by cheque No. 702485 was utilized for purchase of new flat by appellant. This indicates that sale proceeds were admittedly appropriated by the appellant for different purposes and the appellant did not have personal funds to purchase the property. Since the sale proceeds or the capital gain accrued to the appellant was not wholly appropriated towards the purchase of flat, the appellant is not entitled to claim exemption of whole capital gain u/s 54F of the Act. When the property is purchased out of borrowed funds, it is not proper to say that appellant is entitled for exemption u/s 54F of the Act. i. e. whatever amount of capital gain was utilized towards purchase of flat, the corresponding deduction u/s 64F was to be allowed. Hon'ble ITAT, Mumbai in t....
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.... has purchased the property before the date of filing the return of income u/s 139(4) of the Act and hence, the assessee is entitled for deduction u/s 54F of the Act. Similarly, the Ld. AR argued that though the Ld. CIT(A) has accepted that the assessee is entitled for deduction u/s 54F, relying on the decision of Hon'ble Karnataka High Court in the case of Fatima Bai Vs. ITO (supra), disallowed the investment sourced from the loan taken from Divan Housing Finance Corporation and allowed only to the extent of the investment made from the sources of the assessee. The assessee further argued that the source is immaterial and the assessee is permitted to make the investment either from the sale proceeds or from his own source or from the loans. The Ld. A. R argued that the assessee is also entitled for deduction even if the amount is invested out of the bank loans. The Ld. AR relied on the decision of Hon'ble High court of Karnataka in the case of Gouli Mahadevappa Vs. ITO (2013) 215 Taxman 145 (Karn) and the decision of Hon'ble Madras High Court in the case of CIT Vs. R. Srinivasan (2010) 45 DTR 298 (Mad). 6. On the other hand, the Ld. DR argued that it is mandatory on the part of t....
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....n the consideration received by the assessee from sale of original asset has to be utilised for investment in new house property is accepted, the provision of section 54(1) becomes redundant because such a situation will never arise in case assessee purchases the new house property one year before the date of transfer of new asset. Thus, in such an eventuality the assessee can never utilise the capital gain in purchase of new house. Thus, on a plain interpretation of section 54(1) of the Act, it has to be concluded that if the assessee purchases a new house property one year before or two years after the date of transfer of original asset, it is entitled to claim deduction under section 54 of the Act irrespective of the fact whether money invested in purchase of new house property is out of the sale consideration received from transfer of original asset or not. The conditions of sub-section (2) of section 54 of the Act comes into play only in a situation where the assessee does not stick to the time limit provided under section 54(1) of the Act. Undisputedly, in the present case, the assessee has purchased the new house property within the stipulated period of two years from the da....
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.... property. The assessee also relied on the jurisdictional High Court's judgment in the case of CIT vs R. Srinivasan, 235 CTR 588. The Ld. AR also relied on the judgment of P&H High Court in the case of CIT vs Kapil Kumar Agarwal In order to avail benefit under section 54F, the assessee is required to either purchase a residential house within a period of one year before or two years after the date on which transfer takes place or construct a residential house within a period of three years after that date. In such cases, the capital gains shall be computed as per clauses (a) and (b) of sub-section (1). In case, the assessee is not able to appropriate the sale proceeds of long- term capital gain, then before filing of a return under section 139(1) he is required to deposit the same under any Capital Gain Account Scheme with a bank or institution specified by the Central Government in the official gazette. The assessee has to file proof of such depositalong with the return for claiming exemption under section 54F[Para 13] * The assessee has to purchase or construct a house property during the period specified under section 54F in order to get benefit thereunder. Section 54F....