2018 (6) TMI 1740

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....48 of the Act on 29.01.2015 to assess the capital gain arising from sale of house. The assessee claimed deduction U/s 54 of the Act to the tune of Rs. 12,69,950/- on account of investment made in purchase of new residential house property flat No. 702, Club Side, Jaipur. The AO denied the claim of deduction of U/s 54 of the Act on the ground that the assessee has not invested the capital gain in the new asset before due date of filing of return of income U/s 139(1) of the Act nor the assessee has deposited the amount in the capital gain scheme account. The assessee challenged the action of the AO before the ld. CIT(A) and contended that the assessee has purchased the new house on 23.09.2012 within the stipulated time period of 3 years from the date of transfer made on 14.03.2012 and further, the said investment is also within the time period for filing of return U/s 139 of the Income-tax Act. The ld. CIT(A) did not accept the contention of the assessee and confirmed the disallowance made by the AO. 3. Before us, the ld. AR has reiterated its contention that when the assessee has invested the capital gain in new residential house on 23.09.2012 within time period for filing the retu....

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....nder:- 54. 48[(1)] 49[50[Subject to the provisions of sub-section (2), where, in the case of an assessee51 being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset 52[***], being buildings or 53lands appurtenant thereto, and being a residential house53, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of 54[one year before or two years after the date on which the transfer took place purchased55], or has within a period of three years after that date 56[constructed, one residential house in India], 55then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain 57[is greater than the cost of 58[the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset sha....

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....ew asset before the date of the filing of return of income U/s 139 of the Act then the amount of capital gain is required to be deposited in the capital gain account scheme before the date of filing of return and latest by the due date of filing of return U/s 139(1) of the Act. However, this issue was considered by the Hon'ble Punjab and Haryana High Court in case of CIT vs. Ms Jagriti Agarwal (supra) and held in paras 10 to 13 as under:- "10. Having heard learned counsel for the parties, we are of the opinion that Sub-Section (4) of Section 139 of the Act is, in fact, a proviso to Sub-Section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for different assesses. In the case of assessee as the respondent, it is 31st day of July of the Assessment Year in terms of clause (c) of the Explanation 2 to Sub-Section 1 of Section 139 of the Act, whereas Sub-Section (4) of Section 139 provides for extension in period of due date in certain circumstances. It reads as under: "(4) Any person who has not furnished a return within the time allowed to him under Sub-Section (1), or within the time allowed under a notice issued under Sub-Se....

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.... 139 of the Income-tax Act. Section 139 of the Income-tax Act, 1961, cannot be meant only section 139(1) but it means all sub-sections of section 139 of the Income-tax Act, 1961. Under sub-section (4) of section 139 of the Income-tax Act, any person who has not furnished a return within the time allowed to him under subsection (1) of section 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year whichever is earlier. Such being the situation, it is the case of the respondent/assessee that the respondent/assessee could fulfil the requirement under section 54 of the Income-tax Act for exemption of the capital gain from being charged to income-tax on the sale of property used for residence up to 30-3-1998, inasmuch as the return of income-tax for the assessment year 1997-98 could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier under sub-section (4) of section 139 of the Income-tax Act, 1961." Following the decision of Hon'ble High Court in case of CIT vs.....