ITAT CHENNAI BENCH 'A'
R.K.P. Elayarajan
v.
Deputy Commissioner of Income-tax, Circle - I, Vellore*
N.S. SAINI, ACCOUNTANT MEMBER
and V. Durga Rao, Judicial Member
IT Appeal No. 106 (Mds.) of 2012
[Assessment Year 2008-09]
JUNE 15, 2012
Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of,
in case of investment in residential house - Assessment year 2008-09 -
Assessee earned long-term capital gain of Rs. 38.67 lakh on sale of
shares - It claimed exemption under section 54F for Rs. 27.44 lakh in
its return of income
under section 139(4) filed on 9-1-2009 as it had made an investment in
acquisition of a residential flat - Assessing Officer denied exemption
on ground that due date of filing of return
under section 139(1) was 31-7-2008 while sale deed for acquired flat was
executed on 19-9-2008 - Whether since amount was utilized by assessee
for purchase of
new residential flat before 9-1-2009, same would be qualified for
deduction
under section 54F(1)
Held, yes - [In favour of assessee]
FACTS
The assessee derived long-term capital gains of Rs. 38.64
lakh on sale of shares. It filed its return of income on 9-1-2009
whereunder, it claimed deduction under section 54F for Rs. 27.44 lakh on
the ground that he had invested the capital gains in acquisition of a
residential flat. The Assessing Officer, found that the due date for
filing of return of income by the assessee was 31-7-2008 and the sale
deed for transfer of residential property was executed on 19-9-2008,
which was after the due date for filing of return. Therefore, the
Assessing Officer did not allow deduction under section 54F to the
assessee.
On appeal by the assessee, the Commissioner (Appeals)
allowed the deduction of Rs. 3 lakh and disallowed rest of the amount on
ground that agreement for purchase of residential property was entered
into on 2-5-2008 and Rs. 3 lakh was paid on that very day which was
before the due date of filing of return.
On second appeal by the assessee:
HELD
In the instant case, it is found that the eligible new
asset was not purchased within one year before the date on which the
transfer of the original asset took place. Thus, the amount which is not
utilized by the assessee for the purchase of new asset before the date
of furnishing the return of income under section 139 was required to be
deposited as per the provisions of sub-section (4) for availing
deduction under section 54F in respect of those amounts also. In other
words, as per the plain language employed in the above sub-section (4),
only the amount which was actually utilized by the assessee for the
purpose of purchase of the new residential house before the date of
furnishing of the return of income under section 139 shall only be
eligible for computation of deduction under section 54F(1). It is found
that in the instant case it is not in dispute that the return of income
for the relevant year was filed by the assessee on 9-1-2009, which is
the date of furnishing of return of income under section 139 by the
assessee. Thus, it is held that considered view, the amount utilized by
the assessee for purchase of new residential house before 9-1-2009
qualifies for consideration with reference to which deduction under
section 54F(1) is to be computed. Thus, the Commissioner (Appeals) was
not justified in holding that only the amount which was utilized by the
assessee before 31-3-2008 only qualifies for deduction under section
54F. The assessee claimed that Rs. 15 lakh was utilized by him for the
purchase of new residential flat on or before 9-1-2009. The orders of
the lower authorities on this issue is, therefore, set aside and the
Assessing Officer is directed to verify the amount which was invested by
the assessee before the date of furnishing of return of income under
section 139 by the assessee and, thereafter, allow the deduction under
section 54F(1) with reference to the said amount as per law. Needless to
mention that he shall allow reasonable and proper opportunity of
hearing to the assessee before adjudicating the issue afresh. [Para 13]
In the result, the appeal of the assessee is allowed. [Para 15]
