SRI. MAMMEN ADENETH PAPPY,PATHANAMTHITTA vs. THE ITO, THIRUVALLA

Per CHANDRA POOJARI, AM:

This appeal filed by the assessee is directed against the order of the CIT(A),

Kottayam dated 06/08/2018 and pertains to the assessment year 2012-13.

of the Act in respect of investment made in construction of residential house within

the time stipulated u/s. 139(4) of the Act.

AR has filed condonation petition alongwith affidavit stating that the appellate order

I.T.A. No.498/Coch/2018 was served on the assessee on 06/08/2018. Therefore, the appeal ought to have

been filed on or before 05/10/2018. Due to the death of the assessee’s father, he

could not file the appeal in time which resulted in delay of filing the appeal before

the Tribunal. It was submitted that the delay occurred due to reasons beyond the

control of the assessee and the conduct of the assessee was neither willful nor

contumacious. Hence, he prayed that the Tribunal may condone the delay of 38

days in filing the appeal.

by the assessee for filing the appeal belatedly before this Tribunal. We are satisfied

with the reasons explained by the assessee for filing the appeal belatedly.

Accordingly, we condone the delay of 38 days in filing the appeal and admit the

appeal for adjudication.

of income filed, the assessee claimed deduction u/s. 54F of the Act on the capital

gain. The Assessing Officer found that the assessee had not utilized the capital gain

for investment in house property before due date of furnishing of return of income

and also had not deposited the balance amount in the capital gain account in the

Bank. Therefore, the Assessing Officer restricted the allowance u/s. 54F of the Act

to the extent of investment made before due date of filing of return u/s. 139(1) of

the Act. The Assessing Officer relied on the decision of this Tribunal in the case of

Rosamma Korah, 45 taxmann.com 153.

I.T.A. No.498/Coch/2018

that the decision of the Jurisdictional Tribunal is binding on the lower authorities. In

view of the same, the CIT(A) upheld the assessment of long term capital gains at

Rs.52,75,000/-.

identical issue came up for our consideration in Revenue’s appeal in the case of ITO

vs. Late Shri K. Sasidharan, Rep. by Smt. K.P. Sailaja in ITA No. 56/Coch/2017

dated 10/07/2018 where it was held as under:

8.1 The Karnataka High Court in the case of CIT vs. Fathima Bai (32 DTR 243), the Guwahati High Court in the case of CIT vs. Rajesh Kumar Jalan (206 CTR 361) held that the due date for the assessee to invest the amount of capital gains in purchase/construction of new residential asset or investment in capital gains scheme u/s. 54F of the Act refers to the “extended due date” u/s. 139(4) of the Act. So far as the time limit for assessee to invest in construction of residential building, the time limit available u/s. 139(4) is to be considered to that extent we are agreeing with the contention of the Ld. AR. However, during the intermediary period, i.e., after the sale of capital asset till the date of investment, the amount has to be deposited in an account in any such bank or institution as may be specified in and utilized in accordance with any scheme of Central Government notified in official gazette framed in this behalf and the assessee shall file proof for such deposit. The Assessing Officer in this case has rejected 3

I.T.A. No.498/Coch/2018 the claim of assessee that the assessee has not utilized the capital gains on transfer of capital asset in investment in residential building as specified in section 54F(1) of the Act on the reason that the assessee has not filed the return of income within due date in terms of sec. 139(1) of the Act.

8.2 The Ld. DR made a plea that the assessee has not invested the capital gain in the capital gain accounts deposit scheme before the due date of filing of return of income u/s. 139(1) of the Act and the investment in the residential building was made after the due date of filing the return of income and hence, the assessee is not entitled for deduction u/s. 54F of the Act. The Ld. AR’s contention is that the assessee has purchased the land with partially completed building on 22/01/2007 for the consideration of Rs.7.03 lakhs and additional expenses were incurred at Rs.12.36 lakhs to complete the project. Thus, the total investment is Rs.19.78 lakhs and hence, deduction u/s. 54F is to be granted.

8.3 In our opinion, the decision of the Karnataka High Court in the case of CIT vs. K. Ramachandra Rao (56 taxman.com 163) is applicable wherein it was held that as per sec. 54F(4), in the event of the assessee not investing the capital gains either in purchasing the residential building or in constructing a residential house within the period stipulated in sec. 54F(1), if the assessee wants the benefit of sec. 54F, then he should deposit the said capital gains in an account which is duly notified by the Central Government. In other words, if the assessee claims exemption from payment of income tax by retaining the cash then the said amount is to be invested in the said account notified by the Central Government on this behalf. 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 i.e., section 139(4), then section 54F(4) is not 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. A similar view was taken by the Kerala High Court in the case of Dr. Xavier J. Pullikal vs. DCIT (104 DTR 134). In our opinion, the assessee could make investment in construction of new residential building within three years from the date of transfer of original asset to claim deduction u/s. 54F of the Act. Provisions of section 54F are beneficial provisions and are to be considered liberally.

8.4 In view of the above discussion, we are inclined to remit the issue to the file of the Assessing Officer to examine the fulfillment of the conditions u/s. 54F of the Act through intermediary period, i.e., from the date of transfer of the capital asset to the date of actual investment in construction of residential building. Accordingly the issue of allowability of deduction u/s. 54F is remitted to the file of the Assessing Officer with the direction to the assessee to prove the investment in the residential building as prescribed u/s. 54F of the Act before the due date of filing of return of income u/s. 139(4) of the I.T. Act, i.e., 31/03/2007. 4

I.T.A. No.498/Coch/2018 Accordingly, this issue is remitted to the file of the Assessing Officer for fresh consideration after giving adequate opportunity of hearing to the assessee. The appeal of the Revenue is partly allowed for statistical purposes.”

7.1 In view of the above order of the Tribunal, the issue of allowability of

deduction u/s. 54F is remitted to the file of the Assessing Officer with the direction

to the assessee to prove the investment in the construction of residential house as

prescribed u/s. 54F of the Act before the due date of filing of return of income u/s.

139(4) of the I.T. Act. Accordingly, this issue is remitted to the file of the Assessing

Officer for fresh consideration in the light of the order of the Tribunal cited supra.

This ground of appeal of the assessee is partly allowed for statistical purposes.

purposes. Order pronounced in the open Court on this 08th April, 2019

sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: Kochi Dated: 08th April, 2019 GJ Copy to: 1. Shri Mammen Adeneth Pappy, Adeneth, Vettipuram, Pathanamthitta-689 645. 2. The Income Tax Officer, Ward-2, Thiruvalla. 3. The Commissioner of Income-tax(Appeals), Kottayam.

I.T.A. No.498/Coch/2018

(ASSISTANT REGISTRAR) I.T.A.T., Cochin