TaxTMI 
TaxTMI 
2021 (2) TMI 580
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....rcular No. 471 dt. 15.10.1986 and 672 dt. 16.10.1993 as well as judicial precedents relied upon by the appellant are not applicable in her case and her claim that booking of flat is be considered as construction for the purpose of section 54 is without any basis is grossly injudicious, unwarranted, against the facts of the case and bad at law. 3. Under the facts and circumstances of the case, the Id. First Appellate Authority has grossly erred in disregarding the claim of appellant that the amount invested before the filing of return of income u/s 139(4) of the Act is eligible for claiming exemption u/s 54 of the Act which is highly injudicious, unwarranted, against the facts of the case and bad at law. 4. Under the facts and circumstances of the case, the Id. First Appellate Authority has grossly erred in affirming the action of Id. A.O. denying exemption u/s 54 of the Act on the ground that the appellant has not yet received the possession of the flat and also sale deed has not been executed till date which is highly injudicious, unwarranted and against the settled principle of law. 5. Under the facts and circumstances of the case the finding of the ld.....
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.... that actual sale consideration was of Rs. 1,58,33,333/- and the amount of Rs. 1,53,85,000/- was inadvertently declared as sale consideration in the return of income. The assessee further submitted that entire amount of capital gain arising on the sale of 'Panchkula Property' was invested in residential house at 'YOO - Project' of M/s Eon Hadsaper Infrastructure P Ltd, Pune, jointly with another two co- owners of Panchkula Property i.e. Mrs. Jaswinder Kaur and Mrs. Harsawar Kaur before 31/10/2012. The agreement with the said company was made on 15/10/2012. The assessee filed return of income for the year under consideration on 31/10/2012 i.e. within the time allowed under section 139(4) of the Act and, therefore, claimed that she has complied with the conditions prescribed under section 54 of the Act and therefore she is eligible for deduction under section 54 of the Act. The assessee submitted that in view of the CBDT Circular No. 471 and 672, booking of flat is to be considered as a case of construction for the purpose of section 54 of the Act. However, the Assessing Officer rejected the claim of the deduction under section 54 of the Act on following grounds: (i) The amo....
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....aryana High Court is on its own facts which is different from Appellant's case. Therefore, judgments relied on by the Appellant does not help her as the primary / basic conditions to claiming exemption u/s 54 are not fulfilled by her. I am in agreement with Assessing Officer that Section 54 nowhere provides that grant of possession is a mere formality and that the payments made within the prescribed time limits would be sufficient to claim exemption u/s 54. Further, in the judgment of Hon'ble Delhi High Court in the case of CIT vs. R.L. Sood, 245 ITR 727, it is seen that judgment is on different facts. In that case, possession was delivered after the prescribed date of one year and the Sale Deed was registered thereafter whereas in the case of Appellant, it is seen that possession has not been handed over till date i.e. beyond the period of prescribed date and Sale Deed has also not been executed till date. Therefore, in such a situation, if exemption u/s 54 is allowed then the provisions of Section 54 become otiose as none of the conditions have been fulfilled even after the prescribed date is over. Though the provisions of Section 54 and Section 54F are beneficial provisions, pro....
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....54 of the Act, was made before due date of filing return of income under section 139(4) of the Act and therefore the assessee is entitled for deduction under section 54 of the Act in accordance with law. She also submitted that similar claim of deduction under section 54 of the Act has been allowed by the respective Learned Commissioner of Income-tax (Appeals) in the case of Mrs Jaswinder Kaur and Mrs Harsarwar Kaur. In support of the contention that amount of capital gain utilized in purchase of the property within the due date of filing return under section 139(4) would qualify for deduction under section 54 of the Act, the Learned Counsel relied on following decisions: (a) Principle Commissioner of Income-tax Vs. Shankar Lal Saini, (2018) 89 taxmann.com 235 (Rajasthan). (b) Commissioner of Income-tax Vs Ms. Jagriti Aggarwal (2011) 15 taxmann 146 (Punjab & Haryana). (c) Commissioner of Income-tax Vs Jagtar Singh Chawla (2013) 33 taxmann.com 38 (Punjab and Haryana). (d) Fatima Bai Vs. Income Tax Officer, ITA No. 435 of 2004] (Karnataka) (e) Income Tax Appellate Tribunal - Cochin in case of Muthuletchumi Janardhahanan. 8. As far as finding ....
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....ula 23.06.2010 Capital Gain arising there from 78,80,819 3. Date of agreement with M/S Hadapsar Infrastructure Pvt. Ltd. 15.10.2012 4. Due Date of Filling of Income Tax Return U/S 139(1) 31.07.2012 5. Date of Filling of Income Tax Return by assessee U/S 139(4) 31.10.2012 6. Due date of filing of Income Tax return u/s 139(4) 31.03.2013 11.1 The Assessing Officer and the Learned CIT(A) has denied the deduction on two grounds. Firstly, the amount of sale consideration has not been invested in the capital gain scheme, prior to due date of filing of return under section 139(1) of the Act and therefore, assessee is not entitled for deduction under section 54 of the Act. Secondly, construction of the flat was not completed within the period specified in section 54 of the Act i.e. three years after the sale of the property and therefore, the assessee is not entitled for the deduction under section 54 of the Act. 11.2 As far as condition of deposit of the sale consideration in capital gain scheme account is considered, the relevant provision of section 54 is reproduced as under: "Profit on sale of property used for reside....
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....unjab and Haryana High Court and Gauhati High Court which has taken the view contrary to Kerala High Court decision. 20. In that view of the matter, three High Courts have taken the view and the Tribunal has followed the Karnataka High Court which has followed the earlier Gauhati judgment which has been independently supported by the Punjab Harayana High Court." 11.2.2 In the above decision, Hon'ble High Court of Rajasthan has relied on the decision of the Hon'ble Karnataka High Court in the case of Fatima Bibi Vs ITO (2009) 32 DTR 243 (Kar), Hon'ble Punjab and Haryana High Court in the cae of Jagtar Singh Chawala (2013) 87 DTR 217 ( P & H) and CIt vs jagriti Aggarwal (supra). The relevant finding of Hon'ble Punjab and Haryana High Court in the case of Jagriti Aggarwal (supra) has held that "Sub-s. (4) of s. 139 is in fact, a proviso to sub-s. (1) and provides for extension of period of due date for filing the return in certain circumstances and, therefore, exemption under s. 54 was allowable where the assessee had purchased new property before the extended due date of filing of return as per s. 139(4) and filed return within such extended time." The relevant finding of....
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.... proof of such deposit, and for the purposes of sub-s. (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in sub-s. (1), then,- (i) the amount not so utilised shall be charged under s. 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid." 7. The question which arises is; whether the return filed by the assessee before the expiry of the year ending with the assessment year is valid under s. 139(4) of the Act ? 8. Learned counsel for the Revenue has argued that the assessee was required to file return under sub-s. (1) of s. 139 of the Act in terms of sub-s. (2) of s. 54 of the Act. It is contended that sub-s. (4) is not applicable in respect of t....
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....1st March, 2007. Thus, sub-s. (4) of s. 139 provides extended period of limitation as an exception to sub-s. (1) of s. 139 of the Act. Sub-s. (4) is in relation to the time allowed to an assessee under sub-s. (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-s. (1) of s. 139. Therefore, such sub-s. (4) has to be read along with sub-s. (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar Jalan cases (supra) respectively. 13. In view of the above, we find that due date for furnishing the return of income as per s. 139(1) of the Act is subject to the extended period provided under sub-s. (4) of s. 139 of the Act." 11.2.3 Further, the Hon'ble High Court of Punjab and Haryana in the case of Jagtar Singh Chawla (supra) has held that "The unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income Tax under Section 139 of the Act and that would include extended period to file return in terms of Sub Section 4 of Section 139 of the Act." The rele....
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....ntial property on or before 31.3.2008, that is within extended period of limitation of filing of return. Only a sum of Rs. 24 lacs was paid out of total sale consideration of Rs. Two Crores on 23.4.2008, though possession was delivered to the assessee on execution of the power of attorney on 30.3.2008. Since the assessee, has acquired a residential house before the end of the next Financial Year in which sale has taken place, therefore, the assessee is not liable to pay any capital gain. Such is the view taken by the Income Tax Appellate Tribunal." 11.3 In the case of the assessee, the agreement to purchase of flat has been made on 15/10/2012. The assessee has provided detail of payments made, which are available on page A-56 of the paper-book, and same are reproduced as under: Particulars Date Mode of Payment Amount (in Rs.) Investment in yoo project 5.02.2010 Cheque No. 153816 before the due date u/s 139(1) 700,000 Investment in yoo project 18.5.2011 RTGS before the due date u/s 139(1) 60,83,200 Amount paid for stamp duty on registration of agreement to sell 16.7.2012 Cheque No. 35875 entry in bank statement 7,50,000 Investmen....
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.... Secs. 54 and 54F of the IT Act, 1961, provide that capital gains arising on transfer of a long-term capital asset shall not be charged to tax to the extent specified therein, where the amount of capital gain is invested in a residential house. In the case of purchase of a house, the benefit is available if the investment is made within a period of one year before or after the date on which the transfer took place and in case of construction of a house, the benefit is available if the investment is made within three years from the date of the transfer. 2. The Board had occasion to examine as to whether the acquisition of a flat by an allottee under the Self-Financing Scheme of the Delhi Development Authority amounts to purchase or its construction by the Delhi Development Authority on behalf of the allottee. Under the Self-Financing Scheme of the Delhi Development Authority the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the Scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the....
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.... such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income- tax Act." 11.6.2 Regarding applicability of the circulars for booking of flats, the Hon'ble Delhi High Court in the case of RL Sood (supra) has observed as under: "2. The assessee was the owner of a residential house which he sold on 22nd Sept., 1981, for a total consideration of Rs. 2,75,000. On 25th Sept., 1981, he entered into an agreement for purchase of a residential flat and by September, 1982 paid a sum of Rs. 2,39,850 to the builder of the said flat. The actual possession was delivered to the assessee on 17th Feb., 1983 and the sale deed in his favour was registered on 26th Feb., 1985. 3. During the course of the assessment proceedings for the relevant assessment year, the AO brought the difference between the sale price of the residential flat sold by the assessee and the cost of acquisition of the said house to tax as capital gains on the ground that the assessee had failed to satisfy the conditions laid down in s. 54(1) of the Act inasmuch as he had failed to purchase the flat within the stipulated period of one year. The assessee's appeal ....
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....4 of the Act for booking of flat with private builders, the Tribunal in the case of Rampraksh Miyan Bazaz (supra) has held as under: "11. Now coming to a concomitant situation that if booking offlats does not tantamount to ownership of the house then how come the assessee claim that by booking a flat it has acquired 'new house' and becomes entitle for this exemption. Similar situations repeatedly arose and to settled them, the CBDT issued a circular No. 471 dated 15/10/1986 clarifying that payment made to a builder/developer is a sufficient compliance for exemption under section 54F of the Act. Id. CIT(A) has gone by sheer technicalities to hold that the flat at Emaar-MGF, Gurgaon is not covered under section 54F of the Act. To meet such recurrence of situations in the modern days where properties are booked and thereafter purchased, the CBDT in their wisdom further clarifies vide circular No. 672 dated 16/12/1993 that if any amount out of net sale consideration of the original asset is paid to any builder or developer, this amount should be considered towards the terms 'purchase/construct' for the purpose of sections 54/54F of the Act. It is not disputed b....