TaxTMI 
TaxTMI 
2026 (8) TMI 1271
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....ice on 20.04.2024 declaring income at Rs. 6,250/-. The AO noted that on the sale of the property at Rs. 68,49,000/- the assessee had calculated capital gains of Rs. 12,72,664/- which was claimed as a deduction u/s 54 of the Act on account of purchasing a residential property on 01.10.2020 for Rs 33,92,000/-alongwith Sh. Varun Agarwal on joint ownership each having 50% share. and the value attributable to her share came to Rs 16,96,000/-, which is more than the capital gains earned by the assessee. The AO referring to the provisions of section 54(2) of the Act stated that the assessee failed to provide evidence as per subsection 54(2) of the Act, and accordingly denied the deduction u/s 54 of the Act. 3. Aggrieved with the said order the assessee filed an appeal before the Ld. CIT A who also dismissed the appeal of the assessee. The relevant extracts of the order of the Ld. CIT (A) are reproduced as under: "Further during assessment proceedings, on perusal of information available on record/appellant ITR filed in response to notice u/s 148, AO observed that the appellant is involved in claiming exemption u/s 54 of Rs. 12,72,664/- on account of purchase of a new residenti....
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....nt facts of case as analysed and discussed supra and the same are neither comparable nor equitable in its facts of case and ratios of adjudication apparently as per law. Further, appellant did not bring out such comparative analysis as applicable to appellant facts of case and ratios of adjudication as attributable to the citations as needed to adduce and thereby appellant mere contentions on this analogy is to be treated as not maintainable as per the facts of case and circumstances as explained above. In the result there exists no infirmity in the order of AO in disallowing such claim of exemption and treating the amount to that extent as appellant capital gain/income as appellant failed to provide any such substantiating evidences/proofs as needed to support the appellant claims as discussed above and thereby appellant GOA as advanced are to be treated as dismissed as discussed supra." (emphasis supplied by us) 4. Aggrieved with the said order the assessee is in before us on the following grounds of appeal: 1. That the. Ld. CIT (A) has erred in confirming the action of the AO in disallowing the exemption amounting to Rs. 12,72,664/- (Rupees Twelve lac seventy two ....
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....tion 54(1) of the Act. In this regard the assessee relied upon the decision of the Hon'ble High Court of Allahabad in the case of Principal Commissioner of Income-tax v. Ms. Sarita Gupta 2025 478 ITR 446, wherein the Hon'ble Court observed that where the proceedings under s. 263 of the Act arose primarily on the objection of the PCIT that the petitioner did not deposit the amount of capital gain that arose to her in her bank account and that she did not make the investments therefrom in accordance with the Scheme of the Act held that while procedural lapse may have been caused by the assessee in observing the provision of s. 54 of the Act, but in absence of real prejudice having arisen to the revenue, no substantial question of law arose and dismissed the appeal of the assessee. 6. On the other hand, the Ld. Sr.DR supported the orders of the authorities below. 7. We have heard both the parties and perused the material available on record. In this case the AO denied deduction u/s 54 of the Act on the capital gains amounting to Rs. 12,72,664/-on the sale of residential property made by the assessee on 28.02.2020. The Ld. CIT (A) while dismissing the appeal of the assessee noted....
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....ons pointed out by the Assessing Officer in para 4.5 of the assessment order. In response thereto, the assessee furnished duly authenticated documents issued by the seller/developer wherein Flat No.82 in Tower-3 was specifically mentioned. The said documentary evidence was confronted to the Ld. Sr. DR, however, the Revenue could not controvert the same by bringing any material contrary thereto on record. Therefore, the objection raised by the Assessing Officer with regard to discrepancy in the flat number stands adequately explained and does not survive any longer. 9. Be that as it may, we further note that the principal basis adopted by the Ld. CIT(A) for sustaining the disallowance was not founded upon the aforesaid discrepancies noted by the Assessing Officer. The disallowance has essentially been confirmed on the technical objection that since the assessee had not deposited the unutilized capital gain amount in the Capital Gain Account Scheme before the due date prescribed u/s 139(1) of the Act, the assessee was disentitled from claiming deduction u/s 54F of the Act. 10. In our considered opinion, such an approach adopted by the Ld. CIT(A) is highly pedantic a....
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.... situated at Bangalore on 06.10.2016, which was after due date for filing of return u/s 139(1). (iii) The assessee did not make any deposit in Capital Gain Deposit Scheme before due date u/s 139(1). 6. Thus, the assessee has made new investment within the prescribed period of 2 years in section 54 and this fact cannot be disputed by revenue. However, the sole reason of denial of exemption u/s 54 is that the assessee did not follow the procedure of depositing capital gain in Capital Gain Deposit Scheme by the due date for filing of return u/s 139(1) for AY 2016- 17. The AO is of the view that the proper procedure would have been to deposit money in Capital Gain Deposit Scheme before due date u/s 139(1) and thereafter utilize such deposited money in new investment within 2 years. 7. Similar issue has already been decided by ITAT, Indore in ITO-1(2), Indore Vs. Rajendra Singh Yadav, ITA No. 152/Ind/2024, as under: "7. We have considered rival submissions of both sides and perused the orders of lower-authorities and facts of case in the light of judicial view. The undisputed fact is that the assessee has made investment in new agricultural land withi....
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....own u/s 54(2) of the Act the deduction cannot be denied only for any procedural lapse committed by the assessee. The relevant extracts of the order of the Hon'ble Allahabad High Court are reproduced as under: Undoubtedly, the assessee sold residential house in which she had a share. The sale took place on 22.03.2012 and the share of the assessee came to Rs. 31,03,000/-. Against that capital gain was computed at Rs. 14,59,321/-. Other things apart it is admitted to the revenue that the assessee did purchase another house property on 11.09.2013 and that she did invest the eligible amount of capital gain in raising constructions etc. Thus, it was the case of the assessee that she withdrew Rs. 5,00,000/- and Rs. 4,00,000/- on 26.11.2012 and again Rs. 4,00,000/- on 12.06.2013, which withdrawals were utilised (largely) in acquiring the new capital asset. 5. While the above primary facts are not seriously doubted by the revenue, the proceedings under Section 263 of the Act arose primarily on the objection of the Commissioner of Income Tax that the petitioner did not deposit the amount of capital gain that arose to her in her bank account and that she did not make the inv....