TaxTMI 
TaxTMI 
2026 (8) TMI 449
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....ct, 1961, due to the assessee's failure to deposit the capital gain amount in the Capital Gain Account Scheme (CGAS) before the due date prescribed under section 139(1) of the Dated: 21/08/2025 (b) That the Learned CIT(A) has erred in law and on facts in allowing the exemption under section 54 of the Act, despite the assessee not fulfilling the mandatory condition of depositing the unutilized capital gain in CGAS within the due date, thereby violating the specific statutory requirement. (c) That on the facts & circumstances of the case, the ld. CIT(A) has erred in relying on the judgement of Jurisdictional Delhi High Court in CIT Vs. Bharti Mishra in ITA No. 567/2013 since in the said judgement, the Hon'ble Delhi High Court had considered only a single issue of whether benefit of section 54F can be denied to the assessee because construction of house had commenced before the sale of shares. 3. The principal issue emanating from the grounds of appeal raised by the Revenue are regarding the action of the ld. CIT(A) in granting Long Term Capital Exemption under section 54 to the assessee in spite of assessee's failure to deposit the capital gain amount in ....
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....tion of Rs. 1.60 cr was deposited in capital gain scheme or not. In view of the above, the claim of the assessee regarding commission, dues paid, cost of acquisition and exemption u/s. 54 are not allowable.....". The Ld. Counsel further submitted that the Ld.CIT(A) confirmed the disallowance of exemption u/s. 54 of I.T. Act, holding that "Regarding the investment in new asset, I find that the appellant had not invested the eligible amount before the due date for filing the return of income and as such the appellant was required to deposit the relevant amount in the specified capital gains scheme to avail the benefit of deduction u/s.54. However, the appellant has fail to do so. Therefore the appellant is not eligible for deduction u/s.54 of the Act." 4.1 The Ld.Counsel submitted that the assessee had sold his residential house No. B - 131, Sector 105 on 06/02/2017 for a total consideration of Rs. 1,60,00,000/-. Appellant assessee had filed his I.T. Return on 10/08/2017 declaring income of Rs. 10,90,520/-. Thereafter, appellant assessee purchased a residential apartment No. G-249, 1st Floor Preet Vihar for Rs. 94,50,000/- (including stamp duty of Rs. 4,50,000/-) on....
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....Kaur supra the Coordinate Bench as under as under : "......11. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record, including the decisions relied upon by the parties. In the instant case, the assessee has claimed deduction under section 54 of the Act against booking of flat before the due date of filing of return under section 139(4) of the Act. The chronological events of sale of the original asset and investment in new residential house submitted by the assessee are reproduced as under: Sl. No. Particulars Remark 1 Sale of residential house Property at 211, Sector-6, Panchkula 23.06.2010 2 Capital Gain arising there from 78,80,819 3 Date of agreement with M/S Hadapsar Infrastructure Pvt. Ltd. 15.10.2012 4 Due Date of Filling of Income Tax Return U/S 139(1) 31.07.2012 5 Date of Filling of Income Tax Return by assessee U/S 139(4) 31.10.2012 6 Due date of filing of Income Tax return u/s 139(4) 31.03.2013 11.1 The Assessing Officer and the Learned CIT(A) has denied the deduction on two grounds. Firstly, the amount of sale consideration has no....
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....ose of above section, the due date for deposit under the capital gain has been held as due date of filing of return under section 139(4) Act in the case of Principal Commissioner of Income-tax Vs Shankar Lal Saini (supra). The relevant finding of the Hon'ble High Court of Rajasthan is reproduced as under: "19. The contention of Mr. Singhi that under Section 139, investment is to be made before the return is filed otherwise it will render the provision nugatory is to be considered in the light that while considering the case, Karnataka High Court in para no. 6 & 7 (supra) has considered the provisions and interpreted the same. Even the same is accepted by the Punjab and Haryana High Court and Gauhati High Court which has taken the view contrary to Kerala High Court decision. 20. In that view of the matter, three High Courts have taken the view and the Tribunal has followed the Karnataka High Court which has followed the earlier Gauhati judgment which has been independently supported by the Punjab Harayana High Court." 11.2.2 In the above decision, Hon'ble High Court of Rajasthan has relied on the decision of the Hon'ble Karnataka High Court in the case of ....
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....he date on which the 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 s. 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-s. (1) of s. 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazettee, frame in this behalf and such return shall be accompanied by proof of such deposit, and for the purposes of sub-s. (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in sub-s. (1), then,- (i) the amount not so utilised shall be charged under s. 45 as ....
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....nce to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year." 11. 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-s. (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 the relevant assessment year. 12. The sale of the asset having taken place on 13th Jan., 2006, falling in the previous (sic-assessment) year 2006-07, the return could be filed before the end of relevant asst. yr. 2007-08 (sic- 2006-07) i.e. 31st March, 2007. Thus, sub-s. (4) of s. 139 provides extended period of limitation as an exception to sub-s. (1) of s. 139 of the Act. Sub-s. (4) is in relation to the time allowed to an assessee under sub-s. (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-s. (1) of s. 139. Therefore, such sub-s. (4) has to be read along with sub-s. (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar....
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....ng 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." 10. 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 of the next Financial Year in which sale has taken place, therefore, the assessee is not liable to pay any capital gain. Such is the view taken by the Income Tax ....
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....ted 16/10/1993 has considered booking of the flat as construction for the purpose of section 54 of the Act, whereas according to the Learned DR, those circulars are only applicable to booking of flats under self financing schemes of Delhi Development Authority and similar institutions. For ready reference, the aforesaid Circular No. 471, dated 15.10.1986 is reproduced as under: "CIRCULAR NO. 471 DATED 15TH OCTOBER, 1986 Capital gains tax-Whether investment in a flat under the Self-Financing Scheme of the Delhi Development Authority would be construction for the purpose of ss. 54 and 54F of the IT Act, 1961 CAPITAL GAINS SECTION 54 SECTION 54F Secs. 54 and 54F of the IT Act, 1961, provide that capital gains arising on transfer of a long-term capital asset shall not be charged to tax to the extent specified therein, where the amount of capital gain is invested in a residential house. In the case of purchase of a house, the benefit is available if the investment is made within a period of one year before or after the date on which the transfer took place and in case of construction of a house, the benefit is available if the invest....
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....evelopment Authority (DDA) should be treated as cases of construction for the purposes of sections 54 and 54F of the Income tax Act. The Board has since received representations that even in respect of allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and construction are similar to those of Delhi Development Authority, a similar view should be taken. 2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the c-ooperative societies or other institutions are similar to those mentioned in Para 2 of Board's Circular No. 471, dated 15th October, 1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income tax Act." 11.6.2 Regarding applicability of the circulars for booking of flats, the Hon'ble Delhi High Court in the case of RL Sood (supra) has observed as under: "2. The assessee was the owner of a residential house which he sold on 22nd Sept., 1981, for a total consideration of Rs. 2,75,000. On 25th Sept., 1981, he entered into an agreement for purchase of a residen....
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....when the DDA issues the allotment letter to an allottee under its self-financing scheme, on payment of first instalment of cost of construction, the allottee gets title to the property and such allotment should be treated as cost of construction for the purpose of capital gains. On the same analogy, the assessee having been allotted the flat, he having paid a substantial amount towards its cost within the stipulate period of one year, he cannot be denied the benefit of the said section because the flat purchased by him had come into his full domain within the period of one year, though the sale deed in his favour was registered subsequently 11.6.3 Further, regarding eligibility of deduction 54 of the Act for booking of flat with private builders, the Tribunal in the case of Rampraksh Miyan Bazaz (supra) has held as under: "11. Now coming to a concomitant situation that if booking of flats does not tantamount to ownership of the house then how come the assessee claim that by booking a flat it has acquired 'new house' and becomes entitle for this exemption. Similar situations repeatedly arose and to settled them, the CBDT issued a circular No. 471 dated 15/1....
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.... the assessee's half share was not considered. The assessee has claimed exemption under section 54F (l)(b) of the Act to the extent of Rs. 1,26,52,789/- as against total investment of Rs. 1,29,66,275/-. Thus, by now we have come to the conclusion that the assessee did not own more than one residential house on the date of transfer of the original asset. Therefore, one condition of this provision stands satisfied." 11.7 In the instant case also, the assessee has made entire payment within the period of three years from the date of the transfer of original asset, and therefore, the amount has to be treated as invested in purchase/construction. The provisions of section 54 nowhere prescribe construction of the house should be completed. The prime requirement is investment in new residential house within the prescribed period. Thus, respectfully following the Tribunal in the case of Ramprakash Miyav Bazaz (supra), we are of the opinion that the assessee has complied the provision of section 54 of the Act in substance and therefore Ld. CIT(A) is not justified in confirming rejection of deduction under section 54 of the Act. 11.8 In view of the above discussion, we ....