TaxTMI 
TaxTMI 
2026 (5) TMI 1071
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....Assessee was selected for scrutiny under CASS. An assessment order came to be passed on 30/12/2018 under Section 143(3) of the Act wherein the A.O. made disallowance of exemption claimed under Section 54B of the Act to the tune of Rs. 2,78,84,118/- and also made addition under Section 44AD of the Act of Rs. 52,536/-. Aggrieved by the assessment order dated 30/12/2018, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 04/11/2025, deleted the disallowance and held that Assessee is entitled for deduction under Section 54B of the Act and directed the A.O. to allow deduction of Rs. 2,78,84,118/- under section 54B of the Act. Aggrieved by the order of the Ld. CIT(A) dated 04/11/2025, the Revenue preferred the captioned Appeal. 3. The Ld. Departmental Representative submitted that the Ld. CIT(A) has erred in deleting the disallowance of Rs. 2,78,84,118/- claimed under Section 54B of the Act despite the Assessee not applying with the statutory requirement as laid down under Section 54B (2) of the Act. The Ld. Departmental Representative further submitted that the Ld. CIT(A) ignored the fact that the Assessee statutory lapse of non depositing the unutili....
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....period of two years on purchase of agriculture lands. The total accumulative sale consideration received by the Assessee in the sale of agriculture land was Rs. 2,92,01,133/- and spent total sum of Rs. 2,89,94,871/- which is within the span of two years. However, the amount has not been deposited in capital gain account. The Hon'ble High Court of Karnataka in the case of K. Ramchandra Rao (supra), held that Assessee having invested entire sale consideration in construction of a residential house within three years from date of transfer, he could not be denied exemption under Section 54F on ground that he did not deposit said amount in capital gains account scheme before due date prescribed under Section 139(1) of the Act and decided the issue in favour of the Assessee in following manners:- "3. The two substantial questions of law which arise for consideration in these batch of appeals are as under :- 1) Whether the assessee is entitled to the benefit conferred under Section 54F when the sale consideration is utilized for construction of a residential house on a site which is owned by him within one year from the date of transfer? 2) When the assessee....
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....the head "Income from house property".] Explanation.--For the purposes of this section,-- [***] [***] " net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of [two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, 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 subsection (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 residential house is purchased or constructed. (3) Where the new asset is transferred w....
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....on 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires ; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid. Section 54F(1) provides, 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 and the assessee 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 a residential house, the capital gain shall be dealt with in accordance with the said provision. This is subject to the provisions of Sub Section (4). Sub Section (4) stipulates if the amount of 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 transfer of the original asset took place or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 1....