2019 (12) TMI 1204

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....ly computed capital gain thereon, wherein he claimed deduction u/s 54F of the Act to the tune of Rs. 1.50 crores. 4. The AO noticed that the assessee has invested a sum of Rs. 50 lakhs in capital gains bond scheme eligible for deduction u/s 54EC of the Act. He further noticed that the assessee has not deposited the unutilised sale consideration into capital gain accounts scheme as required u/s 54F(4) of the Act before the due date prescribed u/s 139(1) of the Act for filing return of income. The AO noticed that the assessee has made deposit in capital gain scheme as per sec. 54F(4) of the Act only on 26/8/2013, i.e., subsequent to the due date prescribed u/s 139(1) of the Act for filing return of income. The AO noticed that the assessee has withdrawn money from capital gain account scheme and purchased a vacant plot at Devanahalli for a consideration of Rs. 1.29 crores during the May 2014. 5. Since the assessee had transferred the property on 13/8/2012, the AO observed that, as per sec. 54F of the Act, the assessee should have constructed a residential house on or before 31/8/2015. The AO deputed his Inspector to physically inspect the status of construction. The Inspector, v....

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....should be the cut-off date and not the due date for filing of return u/s 139(1). 13. The appellant has relied on the judgement of the Hon'ble Karnataka High Court in the case of FATIMA BAI. It is claimed that the mere delay in deposit of the amount in the capital gains account scheme will not disentitle the appellant to exemption claimed as the appellant has time till the due date u/s. 139(4) of the Act. I have examined the issue further. 14. The section 54(2) is 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 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 .21 in an account in any such hank or institution as may be specified in, and utilised in accordance w....

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.... Bench to examine the correctness of the ratio in Sun Export Corporation. 1. This Constitution Bench is setup to examine the correctness of the ratio in Sun Export Corporation, Bombay v. Collector of Customs, Bombay, (1997) 6 SCC 564 /hereinafter referred as 'Sun Export Case for brevity, namely the question is What is the interpretative rule to he applied while interpreting a tax exemption Reportable provision/ notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied? 2. in Sun Export Case (supra), a three Judge Bench ruled that an ambiguity in a tax exemption provision or notification must be interpreted so as to favour the assessee claiming the benefit of such exemption. Such a rule was doubted when this appeal was placed before a Bench of two Judges. The matter then went before a three Judge Bench consisting one of us (Rarijan Gogoi, J.). The three Judge Bench having noticed the unsatisfactory state of law as it stands today, opined that the dicta in Sun Export Case (supra), requires reconsideration and that is how the matter has been placed before this Consti....

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....e requirement of non-compliance of provisions of sec.54(2) cannot come in the way of the assessee in claiming deduction. The Hon'ble Karnataka High Court held as under in the case of K Ramachandra Rao (supra):- "If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, then Section 54F(4) is not at all attracted and therefore, the contention that the assessee has not deposited the amount in the Bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct." Hence, if the assessee has invested entire sale consideration within three years, then the requirement of complying with provisions of sec.54F(4) cannot come into the way of the assessee for claiming deduction u/s 54F of the Act. 8. The next reason cited by the AO is that the assessee has not completed the construction within 3 years of date of transfer of original asset. In this regard, the Ld A.R placed his reliance on the decision rendered by Hon'ble jurisdictional Karnataka High Court in the case of CIT vs. Samban....

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.... required under the law, that would not disentitle the assessee from the said benefit." In view of the above said binding decision of jurisdictional High Court, the second reasoning given by the AO would also fail. 9. The Ld CIT(A) has expressed the view that the exemption provision should be strictly construed as per the decision rendered by Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai vs. M/s Dilip Kumar and Company (Civil Appeal No.3327 of 2007). The Ld A.R submitted that the Ahmedabad bench of Tribunal has examined an identical question in the case of DCIT vs. Shri Pankaj Chimanlal Patel (HUF) (ITA No.3179/Ahd/2016 dated 12.12.2018) and has held that the decision rendered by Hon'ble Supreme Court in the case of Dilip Kumar and Company (supra) cannot be invoked while examining the issue of deduction u/s 54F of the Act. We notice that the Ahmedabad Bench has observed as under in the above cited case:- "11. However, to address the concern of Revenue for strict construction of beneficial provisions in the light of Dilip Kumar & Co. (supra), we notice that the deduction under s.54F of the Act essentially depends upon the extent of util....