TaxTMI 
TaxTMI 
2022 (9) TMI 81
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....conditions stated therein of making investment in new residential house within the stipulated period of two years from the date of sale of original asset. The assessee, on the other hand, has claimed that delay in investment was for reasons beyond his control and that too of a very short period of five months and intention of the assessee was to make investment of capital gain in new residential house, and therefore, it should be allowed the claim of the exemption under section 54F of the Act. The grounds raised before us, in this regard, are as under: "1. The ld.CIT(A) has erred in law in making addition of long term capital gain of Rs.1,08,69,338/- u/s.54F of the Act on the erroneous ground that the assessee has utilised the amount of sales consideration deposited in capital gain account in purchase of the residential property after a period of 2 years." 3. We have heard both the parties. The date line of events leading to earning of capital gain and denial of deduction under section 54F of the Act on the same were filed by the assessee before us by way of a detail as under: Sr. No. Date Particulars 1. 01.12.2011 Assessee sold a land situated at Bang....
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....filing return in the present case was 31.7.2012, amount was deposited in capital gain account scheme as per the assessee's claim on 29.3.2012 and even going by Revenue's claim, it was deposited on 17.5.2012,which was well before the due date of filing return of income. In this regard, he drew our attention to para 4.1 of the assessment order wherein the AO, while rejecting assesses claim of depositing the gain before due date of filing of return, on 29.3.2012, noted the fact that the capital gain account scheme of the assessee being opened on 17.5.2012, the assessee could have deposited the amount of consideration in the capital gain scheme only on 17.5.2012 and not before that. The contention of the assessee was that even going by the department's case, since the amount was deposited before the due date of filing of the return of income, the assessee was entitled to exemption under section 54F of the Act. ii) That even otherwise the facts demonstrate that the assessee intention all along was to immediately invest the net consideration in a new residential house . This he stated was evident from the fact that the assessee had parked the entire consideration immedi....
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....ir in. Clause 4 :-Parties hereby agree, Declare and confirm that this memorandum of understanding is final and conclusive and binding upon them . No fraud, force, or coercion has taken place. 6. The ld.counsel for the assessee contended that the residential house could not be purchased within the stipulated time since the Society, in which residential house was situated, was not registered, and therefore, occupants of the society had agreed to form and register a Cooperative Society i.e. "Vithalkunj" which was ultimately registered on 1.2.2014, and immediately thereafter the assessee made payment of entire sale consideration of the property of Rs.1,87,25,000/- on 02-04-2014 and invested entire net consideration received on sale of his own property amounting to Rs.1,52,04,000/-, and sale deed of new property purchased was immediately thereafter registered and executed on 3.5.2013. In this regard, the ld.counsel for the assessee stated that MOU entered into for the purchase of the property mentioned at clause (F) that the occupants of the building viz. "Vithalkunj" had agreed to form a registered cooperative society. The clause (F) of the MOU reads as under: Clau....
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....ch agency was imperative for assisting the execution of the registration of the purchase deed of new asset. Additionally the assessee claims the exemption allowable in the impugned year since it had complied with the condition stipulated of depositing the consideration in the capital gain account scheme of Bank before the due date of filing of return of income ,in case assessee is unable to invest the consideration in a new property by then. 10. To adjudicate the issue we consider it necessary to reproduce provisions of section 54F of the Act as under: 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and 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, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with....
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....d. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the net consideration 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 institut....
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.... extent so claimed shall be treated as income of the assessee of the previous year in which the period of three years from the date of transfer of original asset expires. Thus the scheme of the exemption u/s 54F is to grant the same against long term capital gains on investment of the net consideration in a residential house, to be constructed within 3 years or purchased within 2 years. This basic condition remaining, assesses can claim exemption by depositing the unutilised amount in a capital gain account scheme of Banks by the due date of filing return of income of the year in which the gain accrues, subject to its actual utilization for the stated purpose within the stipulated time, failing which the exemption earlier granted on deemed utilization shall be taxed in the year of completion of the maximum period given for utilization, i.e three year period. In the impugned case the facts demonstrate the assessee as having fulfilled the condition for claiming exemption in the impugned year by depositing the amount of net consideration in the capital gain account scheme of Bank before the due date of filing of return of income. The due date for filing of the return of incom....
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....e intention of investing in the new property all along. The MOU for purchase of property clearly mentions that the occupants of the building in which a flat was purchased by the assessee ,had agreed to form and register a cooperative housing society which was still pending as on date of entering the MOU. That it was only in December, 2014, that the society was formed, and the Vendor was allotted share certificates, thus making his title to the property clear. And immediately thereafter, within three months of the formation of the society, the assessee got possession of his property and the entire consideration was also paid. These facts are not disputed by the Revenue. 14. Considering the above facts, there is no iota of doubt that the delay in registration of the new property was for reasons beyond his control. Therefore, we are in complete agreement with the assessee that the denial of exemption u/s 54 F in the present case is for a mere technical default in not getting the new property registered in his name within the stipulated time period of two years, as specified under section 54F of the Act, the consequent delay being minor delay of 5 months that too for reasons beyo....