SHRI PANKAJBHAI AMBALAL PATEL,,SURAT vs. THE INCOME TAX OFFICER, WARD-3(1),, SURAT

Page 1 of 10 Pankajbhai Ambalal Patel & Other Vs. ITO, Ward-3(1), Surat. /ITA No’s.3039 & 3040/AHD/2014 for A.Y. 2010-11

आयकरअपील�यअ�धकरण,सुरत�यायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A No.3039/AHD/2014 �नधा�रण वष�/Assessment Year: 2010-11 Shri Pankajbhai Ambalal Patel, V The Income Tax Officer, Ward-3(1), Surat. 1004, Shreeji Sayona Apartment, s City Light Road, City Light, . Surat – 395007. [PAN: AXJPP 8297 Q] अपीलाथ� / Appellant ��यथ�/Respondent आ.अ.सं./I.T.A No.3040/AHD/2014 �नधा�रण वष�/Assessment Year: 2010-11 Shri Champakbhai Ambalal Patel, V The Income Tax Officer, 1004, Shreeji Sayona Apartment, s Ward-3(3), Surat. City Light Road, City Light, . Surat – 395007. [PAN: AXJPP 8296 R] अपीलाथ� / Appellant ��यथ�/Respondent �नधा�रतीक�ओरसे /Assessee by Shri Hiren M.Diwan – CA राज�वक�ओरसे /Revenue by Smt. Anupama Singla – Sr.DR सुनवाईकीतारीख/ Date of hearing: 04.12.2019 उ�घोषणाक�तार�ख/Pronouncement on: 13.12.2019 आदेश /O R D E R PER SANDEEP GOSAIN, JM: 1. This two appeals by the Assessee are directed against the separate orders of Ld.Commissioner of Income Tax(Appeals)-IV, Surat dated 27.08.2014 for the assessment year 2010-11.

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Page 3 of 10 Pankajbhai Ambalal Patel & Other Vs. ITO, Ward-3(1), Surat. /ITA No’s.3039 & 3040/AHD/2014 for A.Y. 2010-11

respect of such deposits of unused sale consideration deposited into the capital gain bank account after the expiry of time limit provided in section 139(1) of the Act but before the expiry of time limit provided in section 139 (4) of the Act. (c) Please note that in the appellant's case, the time limit for filing the Return of Income for the current Assessment Year u/sec. 139(1) of the Act is 31s' July 2010. However, by virtue of provisions of section 139(4) of the Act, the appellant can file his Return of Income for the current Assessment Year on or before 31.03.2012 As stated by the Id. A.O. the appellant deposited the amounts of Rs.16,06,043/- and Rs.,20,00,000/- into the capital gain bank account 10.01.2011 and 18.03.2011 respectively i.e. before the time limit provided for filing of Return of Income by the appellant u/sec.139(4) of the Act being 31.03.2012. (d) It is, therefore, prayed that following the above judgments the impugned rejection of claim for deduction u/sec.54F of the Act in relation to the above deposits made by the Id. A. O. be quashed. (e) Without prejudice to the above submissions, it is further submitted that out of the total sale consideration receivable by the appellant of Rs.71,33,26,500/-, the appellant received a sum of fi,20,00,000/- from M/s. Siddhivinayak Corporation on 18.03.2011 only and that the same was deposited in the capital gain bank account on the same day i.e. on 18.03.2011. As stated by the Id. A.O. in detail vide para No.4 on page No.2 of the Assessment Order the appellant sold final plot No.l34C to partnership firm M/s. Siddhi vinayak Corporation for a sum of T3,31,06,500/-. Kindly note that out of the above sale consideration the appellant received sale consideration to the tune of Rs.20,00,000/- from Ms. Siddhivinayak Corporation on 18.03.2011 . i.e. after the due date for filing Return of Income applicable to the appellant under the provisions of section 139(1) of the Act being 31.07.2010…………… "(g) As your Honour is aware, the Hon'ble courts have held that the provisions of the Income-tax Act should not be so construed which would require the assessee to do an impossible act. Your Honour would appreciate that when a part of the consideration to the tune of 20,00,000/- was received by the appellant after the due date for filing the Return of Income applicable to the appellant under the provisions of section 139(1) of the Act i.e. 31.07.2010, the appellant cannot be required or expected to make the deposit of such sum not received into the capital gain bank account before 31.07.2010. As stated above, the appellant immediately on receipt of above sum of sale consideration of ,20,00,000/- from M/s. Siddhivinayak Corporation on 18.03.2011 deposited the same into the capital gain bank account on same day i.e. 18.03.2011 itself. Your Honour would recollect that the Id. A.O. has also stated in para No.4.2 on page No.6 of the Assessment Order that the appellant deposited the impugned sum of Rs.20,00,000/- in capital gain bank account on 18.03.2011.

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(h) In view of above facts, your Honour would find that in the case of your appellant the requirement of making deposits of unused sale consideration into the capital gain bank account should be treated as complied with by the appellant in respect of the sale consideration of Rs.1,20,00,000/- referred to above. (i) In support of my above submission, reliance is placed on the following judgments: a) S. Gopal Reddy V/s CIT (1990) 181 ITR 378 (AP). Gist of the judgment enclosed at Pages No. 19 & 20 b) Chanchal Kumar Sircar V/s ITO (2012) 16 ITR (Trib) 91 (Kolkata). Gist of the judgment enclosed at Pages No.21 & 22. (j) Kindly note that the remaining sum of 6,06,043/- which was deposited by the appellant into the capital gain bank account on 10,01.2011 i.e. after the time limit provided in section 139(1) of the Act for the purpose of filing Return of Income in the appellant's liquidity situation improved the appellant immediately on 10.01.2011 deposited the sum of Rs.16,06,043/- into the capital gain bank account on 10.01.2011. (k) It is, therefore, prayed that the following the above judgments also the impugned rejection of claim for deduction u/sec.54F of the Act made by the Id. A.O. in respect of above sums be quashed since as soon as the sums became available to the appellant, the appellant immediately deposited the respective sums into the capital gain bank account that too within the time limit provided in section 139(4) of the Act being 31.03.2012.” 5. On the other hand, the ld.Departmental Representative (DR) relied upon the orders of the ld.CIT(A).

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question before me as deposits were made after these dates. The question to be decided is whether amounts deposited in the capital gain scheme account after the date specified in Se.c 139(1) would be eligible for computation of deduction u/s.54F if the amounts have been deposited before the date specified in Sec.139(4). The second question to be decided is whether the time limit specified for deposit in capital gain scheme account, i.e. the date specified in Se. 139(1), can be extended for reasons of hardship to the assessee. 2.7 The relevant section covering the dispute, i.e. Sec.54F(4) reads as under:- “The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset tool place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 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-section(1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (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.” 2.8 From the above it is abundantly clear that the intention of the legislature is to allow deduction u/s.54F in respect of only that amount which has been deposited in the capital gain scheme account by the date specified in Sec. 139(1). However, in case any amount has been spent before the filing of return u/s. 139, be it 139(1) or 139(4), the said amount would also be considered for deduction. The words of the section are loud and clear. It specifically states that "such deposits 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-section (1) of Sec. 139". To interpret the section in the way suggested by the appellant would make these words redundant. By permitting the expenses made towards construction/purchase of residential premises even if made after the date specified in Sec. 139(1) but before filing of return u/s 139(4), the Legislature has allowed an additional benefit to the assessee to mitigate any hardship to him. However, this cannot be interpreted to mean that deposits made in the account up to the time allowed u/s 139(4) are to be considered for deduction u/s 54F. Therefore the Section in no way can be interpreted, even by the yardstick of 'lenient interpretation beneficial to the assessee', to mean that amounts deposited in the capital gain scheme account up to the date of filing of return u/s. 139(4) is to be considered for deduction; It would be appropriate to mention that in the decision given by the Hon'ble Apex Court in the case of Smt.Tarulata Shyam, 108 ITR 345, it has been held by the Court that "there is no scope for importing into importing into the statute words which are not there. Such importation would be, not to construe but to amend the statute. Even if there is casus omissus, the defect can be remedied only by legislation and not by judicial interpretation." It was further held by the Hon'ble Court that "once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be". The wordings of Sec. 54F(4) as applicable in the case of the appellant are clear and unambiguous - deposits have to be made before the! due date u/s. 139(1) to avail the benefit available u/s 54F(1). To avail the benefit of deduction certain pre conditions are prescribed. When the pre conditions laid down had not been fulfilled, the benefit cannot be claimed. There is no reason to find out whether the directions are directory or mandatory. When the provision is that the benefit cannot be claimed if the amount is not deposited within the due dates specified

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u/s. 139(1), it is a mandatory direction which prescribes the consequences of omission. Reliance is placed on the decision of the Hon'ble Kolkatta High Court pronounced on 16th Jan., 2014 in the case of Shelcon Properties (P) Ltd., (2014) 57 (1) ITCL 389(Cal.-HC). Therefore the first question has to be answered in the negative and against the assessee.” 7. After having gone through the arguments of the Counsel at length and after perusal of material placed on record, we noticed that the assessee has also filed statement showing details of events which are necessary for adjudicating the controversy between the parties, the same is reproduced below: Sr.No. Particulars Date Amount (Rs.) 1. Share in sale price of plot no.134-A and 26-11-2009 4,69,24,500 date of sale 2. Share in sale price of plot no.134-B 22-12-2009 3,39,95,500 3. Share in sale price of plot no.134-C 01-02-2010 3,31,06,500 4. Total sale consideration - 11,33,26,500 5 Opening of and deposit in capital gain 31-07-2010 10,00,18,374 account with bank 6. Second deposit in capital gain account 10-01-2011 16,06,043 with bank 7. Third deposit in capital gain account with 18-03-2011 1,20,00,000 bank 8. Total deposit in capital gain account with - 11,36,24,417 bank 9. Due date for filing return of income u/s. 31-07-2010 - 139(1) of the Act 10. Due date for filing return of income u/s. 31-03-2012 - 139(4) of the Act 11. Cost of construction of new residential 20-11-2012 11,44,24,341 house and date of completion thereof 12 Long term capital gain on sale of share in - 9,96,65,893 3 plots 13. Assessee’s claim u/s.54F of the Act - 9,96,65,893 14. Amount of claim u/s.54F of the Act - 8,79,61,956 allowed by the ld.A.O. 15. Amount of claim rejected by the ld.A.O. - 1,17,03,937

received by the assessee and as per the facts the assessee had received

total sale consideration at different dates amounting to

Rs.11,33,26,500/- and had deposited Rs.11,36,24,417/-. In the Capital

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Gain Account with the bank on 31.07.2010, 10.01.2011 and 18.03.2011.

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interpreted the provisions of section 54 of the Income Tax Act and in all those judgments it has been held that even if the sale consideration received on transfer of asset is deposited into the capital gain bank account before the due date of filing the return of income prescribed u/s.139(4) of the Act then the deduction u/s.54 of the Act cannot be denied. It was further been held that when the sale consideration received on transfer of capital asset is utilized for purchase/construction of the residential house within the prescribed period u/s 54F of the Act the exemption u/s 54F of the Act cannot be denied on the ground that though the assessee concerned has utilized the sale consideration after due date for filing the return of income prescribed u/s 139(1) of the Act, the unutilized amount before said time limit prescribed u/s 139(1) of the Act was not deposited into the bank account opened under capital gain bank account scheme.

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be denied. Since from the facts of the present case the amounts has already been deposited by the assessee in the capital gain account with the bank before the due date for filing Return of Income u/s.139(4) of the Act, thus in this eventuality the deduction u/s.54F of the Act cannot be denied to the assessee and thus we allow this ground and set-aside the order of the ld.CIT(A) and direct the AO to give deduction to the assessee u/s.54F of the Act, accordingly effective ground of the assessee is allowed.

Sd/- Sd/- (O.P.MEENA) (SANDEEP GOSAIN) (लेखा सद�यतथा/ACCOUNTANT MEMBER) (�याियक सद�यकेसम� /JUDICIAL MEMBER) सुरत/ Surat, �दनांक Dated: 13th December, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / Assistant Registrar, Surat

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