TaxTMI 
TaxTMI 
2018 (3) TMI 2066
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....assessee got her share of Rs. 1,13,00,000/-. The certified market value of the property as per ADSR-I, Kolkata was Rs. 2,26,07,917/-. From the computation of total income as submitted, it is found that the Long Term Capital gain was computed at Rs. 60,85,432/- after taking indexation and claimed deduction u/s 54 on the full amount as evident from the return. 1. During the course of hearing, the assessee was asked to produce the documentary evidence of her claim u/s 54 of the Act. From the documents as submitted it is fond that the assessee deposited Rs. 1,11,50,000/- in an unfixed Deposit (term deposit) in SBI jointly with Rajiv Kumaria on 09.03.2012. The return of income was filed on 20.03.2013 and the due date was 31.07.2012. The 1st payment towards purchase of a new flat was made on 19.02.2013 and the allotment letter was issued by the M/s Andes Town Planners Pvt. Ltd. on 19.02.2013. Therefore, it is evident that the amount of capital gain was not utilized by the assessee for purchase of new residential house before the due date of furnishing the n of income nor the amount was deposited in the account in accordance with the Capital Gains Accounts Scheme, 1988. The Assessing Offi....
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....on the following grounds as mentioned in the assessment order: "The contention of the assesses is not acceptable, because the contention itself is self contradictory, the assessee is claiming deduction u/s 54 without knowing that she had to invest the sale proceeds in Capital Gain Accounts scheme but she invested the amount in a property within the time limit in accordance with the Income-tax Act. Ignorance of law can't exonerate the assessee from the mischief committed. Infraction of law makes her claim ineligible. In this context, it is to be rioted that the new property in question has not yet been registered in the assessee's name by M/s Adnes Town planners Pvt. Ltd. Moreover, the assessee had invested the sum for booking two separate flats oh two separate floors. The booking "slips for the two separate flats are marked as Annexure 'A' and Annexure "B" and forms part, of the assessment order." The appellant filed her income tax return for the year under consideration on 20.03.2013 u/s 139(4) of the Act declaring total income of Rs. 2,68,715/-. This income tax return was duly processed u/s 143(1) of the Income-tax Act, 1961 on 07.05.2013. The ca....
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.... with bonafide belief for claiming exemption u/s 54 kept the sale receipts from property situated in Kolkata in her saving bank account instead of depositing in Capital Gains Account Scheme before investing in flat no. E-904 situated at Rohtas Plumeria Homes, Gomti Nagar, Lucknow. The details of investment made by the appellant towards the aforesaid property are as under: Particulars Amount Date Payment made towards purchase cost of aforesaid flat Andes Town Planners Pvt. Ltd. 2,00,000/ - 16.02.2013 10,00,000/- 19.02.2013 10,00,000/- 19.02.2013 10,00,000/- 19.02.2013 10,00,000/- 19.02.2013 10,00,000/- 19.02.2013 1,00,000/- 02.04.2014 4,65,251/- 02.04.2014 34,733/- 02.04.2014 Total 'A' 57,99,984/- Payments made with respect to interiors of the aforesaid flat Sevak Complete Electrical Solutions 23,150/- 25.11.2014 28,000/- 29.01.2015 Saroj Ply & Deeding House 3,836/- 17.11.2014 34,548/- 21.11.2014 15,293/- 04.12.2014 ....
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.... (1). Motilal Padampal Sugar Mills Co. Ltd Vs. State of Uttar Pradesh and Others 118 ITR 326 (SC) in which Hon'ble Supreme Court has held as under :- "Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement there is no such maxim known to the law. Over a hundred and thirty years ago, Maula J. pointed out in Martindale this Vs Falkner [1846] 2 CB 706: "There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so. "Scrutton L. J. also once said: "It is impossible to know all the statutory laws, and not very possible to know all the common laws". But it was Lord Atkpipn who, as in so many other spheres, put the points in it proper context when he said in Evans V Bartlam [1937] AC 473: " ..... the fact is that there is not and never has been a presumption that every one knows the law." (2) Commissioner of Wealth-Tax, Orissa Vs Ramniklal D. Mehta reported in (1982) 136 ITR 729 (Orri), in which the Hon'ble High Court has made the following observation and ....
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....e-tax law, particularly, the provisions of section 269T, read with section 271E. However, the departmental authorities have also not rejected this contention of the assessee. On this count, it can be held that due to ignorance of law, the concerned officer was under the bonafide belief that repayments exceeding Rs.20,000 can be made in cash also. Section 271E, read with section 273B provides that if the assessee proves that it was prevented by reasonable cause from complying with the provisions of above sections, no penalty can be imposed. The courts of the country have held that ignorance of law can be taken as a valid plea for non-compliance of provisions of Income-tax law and rules. At the same time, it has also been held by the various Benches of the Tribunal that ordinarily a plea as to the ignorance of law cannot support the breach of a statutory provision, but the fact of such an innocent mistake due to ignorance of the relevant provisions of law coupled with the fact that the transactions in question were genuine and bonafide transactions and were undertaken during the regular course of the business, will constitute a reasonable cause. In the instant case, it was the conten....
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..... Infraction of law makes her claim ineligible." In this regard, it is submitted that generally people have general idea of a particular Act, Rule or law or part thereof but they are not aware of the entire Act or Rule or law or part thereof. If people have complete knowledge of Acts, Rules or laws, the need for lawyers would not arise. The appellant was aware that capital gain tax can be saved by investing it in purchase of new house but she was not aware of the law that if the capital gain is not utilised up to the due date of filing of return u/s 139(1), it will be required to be deposited under Capital Gain Account Scheme. Therefore, the aforesaid remark of the Ld. Assessing Officer deserves to be ignored. In this regard it is further submitted that the capital gain was kept in a bank account even though it was not kept under Capital Gain. Account Scheme due to ignorance of law. Therefore, exemption u/s 54 deserves to be allowed to the appellant. (II) DEDUCTION U/S 54 ALLOWABLE IF CAPITAL GAIN WAS NOT DEPOSITED UNDER THE CAPITAL GAIN ACCOUNT SCHEME BEFORE DUE DATE FOR FILING RETURN U/S 139(1) Reliance is placed on the following judgements in support o....
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....e end of relevant assessment year. In the instant case, the due date for filing of return is 30th July, 1988. Under s. 139(4) the assessee was entitled to file return in the extended time, which is within 31st March, 1990. The extended due date under/s. 139(4) would be 31st March, 1990. The assessee did not file the return within he extended due date, but filed the return on 27th February,-2000: However, the assessee had utilised the entire capital gains by purchase of a house property within the stipulated period of s. 54(2) i.e. before the extended due date for return under s. 139. The assessee technically may have defaulted in not filing the return under s. 139(4). But, however, utilised the capital gains for purchase of property before the extended due date under s. 139(4). The contention of the Revenue that this deposit in the scheme should have been made before the initial due date and not the extended due date is an untenable contention. The Gauhati High Court in CIT v. Raiesh Kumar Talan (2006) 206 CTR (Gau) 361 : (2006) 286 ITR 274 (Gau) has taken a similar view that the time limit for deposit under the scheme or utilisation can be made before the due dat....
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....nd Fifty Four) up to August 31,1996, towards the purchase of the property and balance amount of capital gain of Rs. 15,29,794 (Rupees Fifteen Lakhs Twenty Nine Thousand Seven Hundred And Ninety Four) was not deposited in a separate capital gain account with the bank by construing subsection (2) of section 54 of the Income tax Act, 1961, in such a manner that the appellant/assessee did not deposit the unutilized portion of the capital gain before the date of furnishing the return of income tax under section 139(1) of the Income-tax Act, 1961. "9. Bench considered the submissions of the learned representatives of the parties. Bench had also gone through the orders of the authorities below and the copies of the documents to which our attention was drawn by the learned representatives of the parties at the time of hearing of the appeals. Therefore, for the purpose of transfer the possession of the flat in part performance of the contract under section 53A of the Transfer of Property Act is essential. Further, under the provision of section 54(1) of the Act, it is stipulated that a person is entitled to take the benefit if the purchase has been made within the stipulated period....
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....2.1 The Ld. CIT(A) erred In directing the Assessing Officer to allow the claim of deduction u/s 54 even though the assessee had not invested the entire capital gain within the due date as mentioned u/s 54 or 54F and also not within the due date for filing of return of Income u/s 139(1) of the I.T Act. 2.2 The Ld. CIT(A) failed to appreciate that the assessee had made the payment of Rs 40 lakhs out of the total capital gains, only on 248.2007 beyond the due date for filing of return of income as per sec. 139( 1) of the IT Act 2.3 It is submitted that the due date of filing of Return of Income is specifically mentioned for claiming deduction u/s 54 (2) as sec 139(1) and not as per sec 139(4) of the IT Act. The Assessing Officer is directed to compute the taxable long term capital gains at Rs.nil by allowing deduction of Rs.86,92,810/- (but restricted to the amount of "long term capital gains) u/s 54 of the Act. 7. No specific error could be pointed out by the DR in the order of the CIT (A). The DR could not cite any contrary: decisions to the decision of the High Court and the Tribunal relied ort by the CIT{A) in allowing the claim for deduction of 40 lakhs....
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.... ends on 31/8/2008. Therefore, the period extended by one year end on to 31st March 2009 and in the present case the assessee made the investment in the agricultural land before the extended due date for filing the return of income u/s 139(4) of the Act i.e. 31/3/2009. Therefore, the Ld. CIT(A) was fully justified in directing the AO to allow the deduction u/s 54B of the Act. We do not see any infirmity in the impugned order of the Ld. CIT(A) on this issue. (B) EXEMPTION U/S 54 CAN NOT BE DENIED IF PROPERTY NOT REGISTERED One of the grounds on which the Ld. Assessing Officer has refused exemption u/s 54 is that only booking/allotment' of flats, being new assets was made and they were not registered in the name of the appellant. In this regard, it is submitted that registration of the new house is not legally required for the purpose of availing of exemption u/s 54. Requirement of law for granting of exemption u/s 54 is fulfilled, if the property is booked/allotted. In this regard, reliance is placed on-the following judgements and CBDT-circulars: (1) JUDGEMENTS . 1. Vinod Kumar Jain v. CIT, Ludhiana (2010) 195 Taxman 174 (P&H)) ....
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....ndivided share of land and construction, date of allotment of undivided share in land was to be adopted as date of acquisition for computing capital gain instead of date of sale deed - Held, yes [Para 10] [In favour of assessee]" 4. Assistant Commissioner of Income-tax, Circle 25(3) v Smt. Sunder Kaur Sujan Singh Gadh (2005) 3 SOT 206 (Mum) Gist Brief facts of the case are,' that the assessee had sold a residential flat No. 4 in Vasant Vihar, 14th Khar Road, Mumbai-52, for a total consideration of Rs. 41 lakhs as per agreement dated 13-1-1997. The said flat had been purchased by the assessee for a sum of Rs. 7.75 lakhs on 10-7-1992. As against the sale proceeds of Rs. 41 lakhs the assessee had invested a sum of Rs. 11,47,500/- towards purchase of another residential house property at Ahmedabad. The builders M/s. Radhe Developers (India) Ltd., of Ahmedabad, Gujarat had, issued an allotment letter dated 26-2-1996 to the assessee allotting flat No. B-62 in the building names as Thirthdham and Rs. 11,47,500/- were paid by the assessee to the developers in two instalments, i.e. Rs. 10 lakhs were paid on 5.01.1996 and Rs. 1,47,500/- were aid on 12.1.1996 ou....
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....provision has o be construed liberally and for achieving the purpose for which it was incorporated in the statute. In support of the said contention the assessee relied upon the decision in the case of Bajaj Tempo Ltd. The assessee also relied upon certain circulars issued by the CBDT. One of the circulars was Circular No. 471, dated 15th October, 1986. This was issued by the CBDT clarifying the-position that where an assessee acquires a flat by an allotment under the self-financing scheme of the Delhi Development Authority the allotment itself is sufficient compliance for getting the benefit under section 54F, even though the assessee has not paid all the instalments due under the said scheme. Later by another Circular No. 672, dated 16th December, 1993, the CBDT has issued clarification extending the same benefits for acquisition of houses or flats on allotment under similar schemes. Therefore it was contended that the intention of the Legislature was to invest in the acquisition of a residential house and completion of construction or occupation is not required. We find force in the argument of the learned counsel for the assessee. The said intention is very clear from the two c....
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....es, we hold that the Commissioner of Income-tax was not justified in revising of the Assessing Officer. Hence we set aside the order of the CIT and restore that of the Assessing Officer. (2) CBDT Circulars I. Circular No. 471 dated 15/10/1986 "Flats allotted under SFS schemes of DDA-For the purpose of capital gains tax the cost of the new asset is the tentative cost of construction of the fact that the amount was allowed to be paid in instalments does not affect the legal positions. Therefore, cases of allotment of flats under the Self-Financing Scheme of the D.D.A. shall be treated as cases of x construction for the purpose of capital gain - Circular: no. 471 [F. No.207/27/85-IT (A-II)], dated 15/10/1986." II. Circular No 672 dated 16/12/1993 "Construction, Connotation of - Allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and construction, are similar to those of DDA (see Circular no. 471), should be treated as cases of construction - Circular: no. 672, dated 16/12/1993." (C)NOT MORE THAN ONE HOUSES WAS PURCHASED The fact of the-case is that the appellant had purcha....
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....ue to oversight the flat number has been mentioned E-1004 in place of Flat no. E-904. Kindly correct your record accordingly. Further, the appellant has filed following papers/documents in compliance to the direction given vide order sheet entry dated 12.09.2016: (i) Copy of letter from M/s Andes Town Planners Ltd. regarding correction in the receipts issued earlier for flat no. E-904 at page no. 37 of written submission. (ii) Copy of agreement with the builder. (iii) Proof of investment amounting to Rs. 60,74,811/- The appellant has explained and argued that she had kept the equivalent amount to capital gain arisen from sale of property has been deposited in her bank account and the deposited amount withdrawn from her bank account at the time of payment to M/s. Andes Town Planners Pvt. Ltd, for purchases of new flat. Though she had admitted the said amount deposited in specified capital gain account scheme but it is fact that the money equal to capital gain account has been deposited and kept in nationalized bank. The appellant has also categorically argued that she had purchased new flat and invested entire capital gain before the year....
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....floors. The mistake in the slips submitted before Ld. Assessing Officer came to the notice of appellant only when she received the assessment order. The copy of letter from M/s Andes Town Planners Pvt. Ltd. acknowledging their mistake have already been enclosed above for your kind perusal. 5.1 I have examined the written submission of appellant and relevant evidences on this issues were called through order sheet entry dated 12.09.2016. I find the claim of appellant appears to be correct because of in the correction certificate issued by M/s Andes Town Planners pvt. Ltd. in which it has been certified that the flat no. was wrongly mentioned E-l004 instead of 904. This is factual position which may be verified from the records of concerned party M/s Andes Town Planners Pvt. Ltd. 5.2 The appellant has claimed travelling expenses in computing capital gain of Rs. 56,500/- but the appellant did not furnish any justification of the expenses incurred and claimed for deduction in computing capital gain during assessment proceedings as well as during appellate proceedings. Therefore, the long term capital gain correctly worked out at Rs. 61,46,459/- by AO after disallowing....
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....ur record accordingly." It is also on record that assessee has filed various papers/documents in compliance to the direction given vide order sheet entry dated 12/9/2016 i.e. (1) copy of letter from M/s Adnes Town Planners Pvt. Ltd regarding correction in receipts issued earlier for flat No.E-904 at page 37 of the written submission; (2) copy of agreement with builder and (3) brief of investment amounting to Rs.60,74,811/-. Assessee has explained that she had kept equivalent amount to capital gain arising from sale property has been deposited in her bank account and the deposited amount withdrawn from her bank account at the time of payment to M/s Adnes Town Planners Pvt. Ltd. for purchase of new flat. There was only a procedural lapse that the assessee did not deposit the amount in the specified capital gain account scheme. Records are clear that the assessee has invested the amount in purchase of new property. We also find even CBDT Circular No.471 and 672 are in favour of the assessee. At this juncture, we observe that section 54 is enacted in order to promote purchase/construction of residential houses. Section 54(1) is a substantive provision. Section 54(2) is an enabling prov....