TaxTMI 
TaxTMI 
2020 (1) TMI 1058
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....irming the addition made by the learned assessing officer of Rs. 34,24,682/- by disallowing the deduction claimed by the Appellant under Section 54 of the Act on the facts and circumstances of the case. (b) The learned CIT(A) was not justified in law, in not appreciating that over sight in not making a deposit into the capital gains scheme was a technical default as long as the final objective of acquisition of the house property was met, on the facts and circumstances of the case. (c) The learned CIT(A) ought to have appreciated that the exemption provision under section 54 of the Act is a beneficial provision and therefore was to be liberally construed, on the facts and circumstances of the case. (d) Without prejudice, the assessee was entitled to file a return U/s 139(5) of the Act, on receiving a notice U/s 142(1) of the Act from the AO, before the expiry of one year from close of the assessment year or before the completion of the assessment proceedings whichever was earlier, hence the AO ought to have considered the payments made up to the date available for filing of revised return i.e. 31-03-2014 amounting to Rs. 54,13,000/- for the purposes of ca....
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....d added the remaining amount of Rs. 34,24,681, which was claimed in excess of the assessee's eligibility for deduction u/s 54 of the Act. 4. Aggrieved by the order of assessment, the assessee went in appeal before the CIT(A), who upheld the order of the Assessing Officer, by observing as under:- "5. I have carefully considered the submissions made by the appellant and findings given by the AO. The provisions of See. 54(2) clearly provides that the unutilized sale proceeds shall be deposited before furnishing the ROI the Capital Gains schemes notified by the Central Government. Whereas in the appellants case the assessee has not deposited the unutilized capital gain in the Capital Gain scheme and the entire amount was kept in SB A/c for granting hand loans and spent for other purposes. The provisions of See. 54(2) are extracted as under: 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 transferred 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 furn....
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....e return of income in capital gain scheme notified by the Central Government. According to the learned DR, the assessee has not deposited the unutilized capital gain in the capital gain scheme account and the entire amount was kept with saving bank account for granting hand loans and spent for other purposes. Since the amount of capital gain, which is not appropriated by the assessee towards purchase of new asset made within one year before the date on which the transfer of original asset took place and also which is not utilized by him for purchase or construction of new asset before the due date of furnishing the return of income u/s 139(1) of the Act, shall be deposited by him before furnishing such return of income and not deposit in capital gain scheme before furnishing the return of income u/s 139(1) of the Act, is not entitled for exemption u/s 54 of the Act. The learned DR further relied on the judgment of the Hon'ble Bombay High Court in the case of Humayun Suleman Merchant v. The CCIT, Mumbai & Anr. In IT Appeal No.545 of 2002 dated 18th August, 2016 and submitted that the judgment of the Hon'ble Karnataka High Court in the case of CIT v. K.Ramachandra Rao (supra) was ....
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....in v. ACIT in ITA No.453/Bang/2018, for assessment year 2013- 2014 - order dated 21.12.2018, wherein the Tribunal held that any ambiguity in reading of section 54F of the Act, it should be decided in favour of the Revenue as held by the Hon'ble Supreme Court in the case of Commissioner of Customs (Import) v. Dileep Kumar & Co. Further, the learned DR relied on the judgment of the Hon'ble Karnataka High Court in Writ Petition No.13541/2018 in the case of Prof.P.N.Shetty v. ITO - order dated 18th July, 2019, wherein the Court held that unutilized capital gain amount under section 54F(4) of the Act has to be charged u/s 45 as income of the assessee after the expiry of three years from the date of sale of capital asset. 7. I have heard the rival submissions and perused the material on record. Coming to the allowability of deduction u/s 54 of the Act on the reason that the assessee had not complied with the requirement of section 54 by depositing the amount into the specific bank account as notified in the Act, in terms of section 54(2) of the Act. In my opinion, the assessee should be given the benefit of deduction u/s 54 of the Act on the sum invested by the assessee in the constru....
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....ion 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, i.e., section 139(4), 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. 7.3 Similar view was taken by the Hon'ble Kerala High Court in the case of Dr.Xavier J.Pullikal v. Deputy Commissioner of Income-tax (104 DTR 134) where in the Hon'ble Kerala High Court held as under:- "The scheme for depositing capital gain is contemplated under Section 54F(4) and it depends upon when the property of the assessee is sold and when exactly the amounts were invested, whether it was invested in a residential house or otherwise. All these facts have to be considered with reference to provisions of Section 54F(4) along with Section 139 (1) of the Act, as the due time would be under Section 139(1) only not under Section 139(4) of the Act. I.T.A. No.10 of 2014 5 8. Tribunal, as a matter of fact, has accorded on....