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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV
आदेश/O R D E R
The assessee is in appeal before the Tribunal against the order of learned CIT(A), Ahmedabad-5 dated 08.01.2016 passed for Assessment Year 2010-11.
The solitary substantial grievance of the assessee is that the learned CIT(A) has erred in confirming the disallowance of exemption claimed under Section 54F of the Act amounting to Rs.20 lakhs.
The undisputed facts are that the assessee has sold an immovable property, i.e. land, alongwith six co-owners on 11.02.2010. Her share in the capital gain or sale of property was Rs.23,33,500/-. She did not file return; but in response to the notice under Section 148, she has shown Long Term Capital Gain at Rs. Nil after claiming exemption under Section 54F at Rs.23 lakhs. This exemption has been denied to the assessee on the ground that she has made a payment of Rs. 3 lakhs only before 31.07.2010, i.e. the due date of filing of return for Assessment Year 2010-11. The Revenue Authorities are of the view that either the assessee ought to have purchased the property within the time period or ought to have deposited in the capital gain account before the due
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date of filing of return under Section 139(1) of the Act. The Assessing Officer has disallowed the claim of the assessee; however, on appeal, learned CIT(A) has allowed the same to the extent of Rs.3 lakhs. Learned CIT(A) was of the view that since Rs. 3 lakhs was paid before the due date of filing of return, to that extent the assessee is eligible for claiming deduction under Section 54F(4) of the Act.
With the assistance of learned representatives I have gone through the record carefully. A perusal of the learned CIT(A)’s order would indicate that there is no dispute with regard to certain facts namely the assessee has sold land which has given rise to the Long Term Capital Gain. She has booked a flat no. C-301 at 3rd Floor in Radhe Kishan Heights. She has paid Rs.3 lakhs on 22.07.2010 and Rs.20 lakhs on 14.08.2010. The amount of Rs.3 lakhs paid before 31.07.2010 was considered as eligible by the learned CIT(A) because it was paid before the due date of filing of return. The only reason assigned by the learned CIT(A) in confirming the disallowance is that the assessee failed to deposit this amount in a capital gain account before filing of return.
On due consideration of above facts and circumstances, I am of the view that this aspect is squarely covered in favour of the assessee by two orders of the ITAT rendered in ITA No. 490/Ahd/2017 in the case of Nandkishore Ramanlal Parikh-HUF vs. ITO as well as in the case of Nilam R Kataria vs. ACIT in ITA No.3427/Ahd/2014. Copies of both the orders have been placed on record. In the case of Nilam R Kataria, the Tribunal has made reference to earlier order passed in the case of Anita D Kanjani Vs. ACIT in ITA No. 2291/Mum/2015. In this order, Tribunal has made reference to a circular bearing No.471 issued by the CBDT which contemplates that, for the purpose of Income-tax Act, the allottee gets title to the property on the issuance of the allotment letter and the payment of installments is only a follow up action and taking the delivery of possession is only a formality. This circular provides
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that in certain schemes even floated by the government body i.e. Housing Boards, sometimes allotment letter are issued on receipt of first installments and possession of house was given after 4-5 years. Payments were also spread over in different years. Such cases were considered as eligible for grant of deduction under Section 54F of the Act.
Similarly, in the case of Nandkishore Ramanlal Parikh-HUF, the Tribunal has considered that making a deposit before the due date of filing of return ought not to be considered as a mandatory condition because ultimately the assessee has purchased the house and in the present case the final payment was made on 14.08.2010 - within one year from the date of sale. The discussions made by the Tribunal in the case of Nandkishore Ramanlal Parikh- HUF read as under:-
“5. The stand of the assessee is that since she has made investment in purchase of a new flat and utilised the total capital gain. In other words, she has invested the amount more than the sale consideration, therefore, no capital gain is taxable in her hands under section 54F(1), and she is entitled for exemption in toto. The case of the AO is that since she has not deposited the sale consideration in a capital account before the due date of filing of return under section 139(1) of the Act, therefore, she cannot claim exemption as contemplated under section 54F(4). In other words, according to the AO, benefit of section 54F should be available to the assessee, if she had purchased new residential flat within one year before the sale of house or two years after the sale, but in such condition she has to make deposit of consideration/capital gain in a bank account maintained under the capital gains cheme. She failed to make such deposits before the date of filing of return, therefore, she is not entitled for exemption under section 54F. Before me, the ld.counsel for the assessee made reference to the decision of ITAT, Ahmedabad Benches in the case of Ashok Kapasiawala vs. IT), 63 taxamnn.com 284. She has placed on record copy of this order. Division Bench of the ITAT has considered this aspect and after putting reliance upon the decision of Karnataka High Court, allowed the claim of the assessee in an identical situation. The reason recorded by the Hon'ble Court is worth to note in this connection. It read as under: "6.2 The Hon'ble Karnataka High Court in the case of K. Ramachandra Rao (supra) answered the question in favour of assessee i.e. when the assessee had invested the entire sale consideration in construction of a residential house within the three years from the date of transfer. Could
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he be denied exemption under section 54 F on the ground that he did not deposit the said amount in capital gain account scheme before the due date prescribed u/s.139(1) of the Act. The Hon'ble High Court of Karnataka High Court held as under:--
"As it clear from Sub-section (4) in the event of the assessee not investing the capital gains either in purchasing the residential house or in constructing a residential house within the period stipulated in Section 54F(1), if the assessee wants the benefit of Section 54F, then he should deposit the said capital gains in an account which is duly notified by the Central Government. In other words if he want of claim exemption from payment of income tax by retaining the cash, then the said amount is to be invested in the said account. If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, then Section 54F(4) is not at all attracted and therefore the contention that the assessee has not deposited the amount in the Bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct."
6.3 In the present case, the assessee purchased new asset on 05/10/2009 and had transferred the original asset on 8/01/2008. As per Section 54F (1) of the Act, the exemption would be available if the assessee purchased the residential house within two years after the date when transfer took place. As per the judgment of Hon'ble Karnataka High Court, the provisions of section 54F(4) would not be attracted in the event if the assessee has purchased or constructed the residential house within the period prescribed under section 54(1) of the Act. In the case in hand, there is no dispute with regard to the fact that the assessee had purchased within two years [the period prescribed u/s.54(F(1)] a new asset on 05/10/2009 from the date of transfer of the original asset. The Revenue has not cited or placed on record any contrary judgment by the Hon'ble Jurisdictional High Court or Hon'ble Supreme Court. Therefore, respectfully following the ratio laid down by the Hon'ble Karnataka High Court in the case of K. Ramachandra Rao (supra), we hereby set aside the impugned order and direct the AO to re-compute the assessed income after granting the benefit of section 54F of the Act to the assessee"
I find no disparity on the facts. In the case of Ashok Kapasiawala (supra) also the assessee did not deposit the sale consideration in the bank account before the due date of filing of return. But otherwise purchase of house is within two years stipulated in section 54F(1) of the Act. It is not the case of the assessee that she has purchased beyond the period as contemplated in section 54F(1). The only failure is, she has not deposited the sale consideration in capital account. This
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condition has not been considered as mandatory by the Hon'ble Karnataka High Court. In the decision of Tribunal in the case of Ashok Kapasiawala (supra) Division Bench has followed this decision. No contrary decision was brought to my notice by the department. Therefore, respectfully following the decision of Hon'ble Karnataka High Court and decision of ITAT (supra), I allow the appeal of the assessee and direct the AO to grant exemption under section 54F to the assessee.”
On due consideration of the above facts, I am of the view that the assessee has sold the house on 11.02.2010 and ultimately purchased the house on 14.08.2010. She has utilized the capital gain by 14.08.2010; therefore, if facts are being examined in the light of the proposition laid down in the case of Nandkishore Ramanlal Parikh-HUF as well as in the light of CBDT Circular No.471, then it would reveal that the assessee is eligible for grant of exemption under Section 54F of the Act. Accordingly, I allow this ground of appeal and delete the disallowance of Rs.20 lakhs confirmed by the learned CIT(A).
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 3rd February, 2020 at Ahmedabad.
Sd/-
(RAJPAL YADAV) VICE PRESIDENT Ahmedabad; Dated 03/02/2020 *Bt
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A) 5. !वभागीय �%त%न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड, फाईल / Guard file. आदेशानुसार/BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad