2022 (1) TMI 1196

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....xed cost from the amount received from the buyer, calculated the capital gain of Rs. 69,36,789/- and claimed deduction of the same u/s. 54 of the Income Tax Act, 1961 (hereinafter referred to as the Act) on account of booking of flat from M/s. Sunworld Developer Pvt. Ltd., Sunworld, Vanalika, purchased at Rs. 72,15,255/-. 3.1. Though the Assessee has claimed before the Assessing Officer that as per Hon'ble Delhi High Court judgment in the case of CIT Vs. R.L. Sood 245 ITR 727 (Del.), the benefit under Section 54 (1) shall be available where substantial amount has been made for purchase of new house and as per judgment of the Hon'ble Calcutta High Court in the case of CIT Vs. Smt. Bharti C. Kothari 244 ITR 352 (Cal.) deduction under Section 54 shall be available where payment for new flat has been made within period of three years from the date of sale of flat, however the claim of the Assessee was denied by the Assessing Officer on the grounds that the Assessee has filed his return of income on 29th March, 2014 i.e. after due date of filing of return of income and has claimed deduction under Section 54 of the Act to the extent of Rs. 69,36,789/-, however, the Assessee ne....

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....in 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. The Assessee has given the details of investment in the flat at Vanalika in the paper book, page no. 2. Admittedly, the Assessee has filed return belatedly i.e. beyond the time stipulated u/s. 139(1) of the I.T. Act, 1961. Up to 31.01.2013, the Assessee has made the payment of Rs. 57,33,088/-. Next date of payment is 23.01.2014 which is beyond the due date of filing of return. The Assessee has not deposited the balance amount of capital gain in Capital Gain Account. Therefore, whatever investment has been made before the due date of filing of the return, that amount only can be considered for deduction u/s. 54. Hence, the amount which will qualify for considering the deduction is Rs. 57,33,088/- including the payment made to M/s. PGSD/Lalit Kumar. The observation of the Assessing Officer that the payments were not made to builder are not relevant because the builder has ultimately acknowledged the payment towards the sale of flat. The Assessing Officer has failed to prove his allegation that th....

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....ore the due date of filing of return. As far as, the sum of refund amounting to Rs. 39,786/- is concerned, it is stated that the same was part of the cost. Therefore, this amount has to be first deducted from the cost of acquisition, only then the indexed cost of acquisition is to be worked out on the balance amount of cost of acquisition. The Assessing Officer has also done the same exercise, therefore, that does not call for any interference. The Assessing Officer has computed Long Term Capital Gain at Rs. 71,78,207/-. The Assessee has invested Rs. 57,33,088/- only till the due date of filing of return u/s. 139(1) of I.T. Act. In view of the discussion made above, the Assessee is not entitled for deduction on the amount of Rs. 14,45,119/- (Rs. 71,78,207/- minus Rs. 57,33,088/-)." 5. The Assessee being aggrieved has preferred the instant appeal raising the following grounds of appeal:- "1. That CIT(Appeals) has erred in law and facts of the case in allowing part/short deduction u/s. 54 on capital gain. 2. That CIT(Appeals) has erred in law and facts of the case in holding that deduction u/s. 54 is to be allowed to the extent of investment made in new residenti....

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.... the return of the Income Tax under Section 139 of the Act and that it would include extended period to file return in terms of Sub Section 4 of Section 139 of the Act. It was held as under:- "From a plain reading of sub-section (2) of Section 54 of the Income-tax Act, 1961, it is clear that only section 139 of the Income-tax Act, 1961, is mentioned in section 54(2) in the context 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 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 sub-section (1) of Section 142 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." The said judgment was relied upon by a Division Bench of the Karnat....

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....re the completion of the assessment whichever is earlier; Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year." A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-section (1) i.e. before 31st day of July of the Assessment Year, the Assessee can file return before the expiry of one year from the end of ever relevant Assessment Year." In the present case, the Assessee has proved the payment of substantial amount of sale consideration for purchase of a residential 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 o....