2020 (1) TMI 156

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....property, the assessee had adopted sale consideration of Rs. 1,11,00,000. The claim of exemption on the long term capital gain on sale of residential property was Rs. 82,96,920. The assessee had sold the residential house property on 7.2.2013. The assessee purchased a site for putting up a residential house on 30.3.2013 for a consideration of Rs. 1.15 crores. In the return of income filed for the relevant assessment year, the assessee claimed exemption u/s. 54 in respect of the investment made in the purchase of site on 30.3.2013. 4. The assessee could not put up residential house over the site purchased by him. The assessee, however, purchased under a Sale Deed dated 31.10.2014 another residential house for a sum of Rs. 96,11,000. In the course of assessment proceedings, the assessee claimed deduction u/s. 54 of the Act for purchase of residential house under the Sale Deed dated 31.10.2014. The conditions to be satisfied for allowing deduction u/s. 54 of the Act are that the amount of capital gain has to be invested in purchase of a residential house within two years from the date of transfer. The date of transfer in the present case was 7.2.2013 and in terms of section 54(1....

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.... be charged under section 45; 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 reduced by the amount of the capital gain. (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 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 a....

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....investment was Rs. 96,11,000/-. It is seen from the sale deed furnished that the total sale consideration of the property is Rs. 1,80,00,000/-. The assessee has further stated that he has satisfied the conditions u/s 54(1) i.e., purchase of residential property within two years from the date of sale of the original assets. The assessee has relied upon the following decisions as mentioned in the letter filed: 5.1 As per Income Tax Act 1961, the assessee has to inter alia satisfy the following conditions far claiming exemption u/s 54: 1. 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 a residential house. 2. If the amount of capital gain is not appropriated by the assessee towards purchase of the new assets made within one year before the date on which the transfer of the original asset took place, or which is not utilized for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited furnishing such return (such deposit being made in any case ....

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....essee has preferred the present appeal before the Tribunal. 8. We have heard the rival submissions. The ld. Counsel for the assessee reiterated the stand of assessee as taken before the revenue authorities. The ld. DR relied on the order of AO/CIT(A). 9. We have considered the rival submissions. The two grounds on which deduction u/s. 54 of the Act was denied by the revenue authorities was (a) non-compliance of the provisions of section 54(2) of the Act i.e., not depositing the unutilized capital gain in a designated bank account within the due date prescribed u/s.139 of the Act and (b) the Assessee purchased land by utilizing the capital gain but did not put up construction of residential house on the said land but claimed deduction u/s.54 of the Act in respect of purchase of residential house. As far as the second ground on which deduction u/s.54 of the Act was denied to the Assessee, viz., the ground that the Assessee purchased a land with a view to put up construction on the same but did not do so instead purchased a residential house property, we are of the view that the provisions of Sec.54(1) give two options, viz., (i) purchase of a residential house or (ii) putting u....