TaxTMI 
TaxTMI 
2023 (2) TMI 154
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....he sustenance of the restriction of the claim for tax exemption u/s. 54 of the Act in the re-computation of the long term capital gains to the extent of the utilization of the exempted capital gains without routing through the prescribed capital gains account on the presumed violation of section 54(2) of the Act was wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) failed to appreciate that the misconstruction of section 54(2) of the Act would defeat the purposive construction of the said statutory provisions in granting tax exemption for creation of new asset/house and ought to have appreciated that having not disputed the creation of the new asset as mandated in section 54 of the Act, the technical violation of not utilizing the exempted capital gains through the prescribed capital gains account to the extent quantified in the assessment order would not negate the claim for tax exemption as per the computation forming part of the return of income filed for the assessment year under consideration. 5. The CIT (Appeals) went wrong in recording the findings in para 5.1 of the impugned order in this regard without assigning proper reasons an....
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....he date of sale of original asset, the entire amount of capital gains has been utilized for construction of house property. Therefore, the AO is erred in denying the benefit of exemption u/s. 54 of the Act. The Ld. CIT(A) after considering relevant submissions of the assessee and also by relying upon the decision of the Hon'ble Supreme Court in the case of Smt. Tarulata Shyam and Others v. CIT West Bengal reported in [1977] 108 ITR 345 (SC) rejected the arguments of the assessee and sustained the additions made by the AO towards disallowance of exemption claimed u/s. 54 of the Act. The relevant findings of the Ld. CIT(A) are as under: 5.1 CIT's decision: The findings of the A.O. as per the assessment order have been considered. Further, the written submissions filed by the A.R. in this regard have also been considered. The following are relevant for deciding the issue under consideration and simultaneously the issue under consideration is adjudicated as under: (i) The major issue in this ground of appeal is that the A.O. had not granted exemption u/s. 54 on the ground that the unutilized LTCG was not deposited in the Capital Gain Account Scheme of Nationalized Bank be....
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.... the re-computation of long term capital gains and also exemption u/s. 54 of the Act, without appreciating the fact that the assessee has utilized full amount of capital gains derived from sale of original asset for acquiring new residential house property within three years from the date of transfer of original asset. Although, the assessee has not deposited unutilized amount of capital gains in 'Capital Gain Account Scheme' as required u/s. 54(2) of the Act, but facts remain that the entire amount has been utilized within three years from the date of transfer of original asset and therefore, the AO as well as the Ld. CIT(A) ought to have allowed the benefit of exemption u/s. 54 of the Act. In this regard, he relied upon the decision of the Hon'ble High Madras Court in the case of CIT v. Smt. Umayal Annamalai reported in [2020] 273 Taxman 146 (Madras) and also the decision of the Hon'ble ITAT Chennai Benches in the case of Mr. P. Shankaran v. ITO in ITA No. 1167/Chny/2016. 6. The Ld. DR, on the other hand, supporting the order of the Ld. CIT(A), submitted that as per the provisions of Sec. 54(2) of the Act, the assessee should deposit unutilized amount of capital ....
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....ital Gain Account Scheme' as per the provisions of Sec. 54(2) of the Act. The law is very clear in as much as the amount which is not utilized for construction and purchase of property before filing return of income must necessarily be deposited in an account duly notified by the Central Government so as to be exempted. Although, the provisions of Sec. 54(2) of the Act, is a beneficial which needs to be construed liberally so as to allow benefit to the tax payer, but fact remains that if assessee demonstrate with evidences that full amount of consideration/capital gains is invested in purchase of new residential house property on or before filing return of income, if such filing is even beyond due date specified u/s. 139(1) of the Act and within due date specified u/s. 139(4) of the Act, then, the benefit of exemption should be allowed. However, in a case, where the assessee has filed return of income on or before due date for filing return of income u/s. 139(1) of the Act, but, does not spend full amount of capital gains for purchase or construction of new house property, then, the unutilized amount of capital gains must be deposited in 'Capital Gain Account Scheme'. T....