DINESH N. BHANUSHALI,MUMBAI vs. ITO 24(1)(5), MUMBAI

The assessee has filed this appeal challenging the order dated 05- 02-2018 passed by Ld CIT(A)-36, Mumbai and it relates to the assessment year 2013-14. The assessee is aggrieved by the decision of Ld CIT(A) in confirming disallowance of deduction claimed u/s 54F of the Act.

I heard the parties and perused the record. The assessee sold a shop for a consideration of Rs.45.00 lakhs and worked out capital gain thereon at Rs.36.97 lakhs. The assessee purchased a residential flat and accordingly claimed deduction u/s 54F of the Act. The AO noticed that the new residential flat was purchased after the expiry of time limit prescribed u/s 139(1) of the Act, in which case, the assessee should have deposited money in Capital gains Account Scheme. However, the assessee had deposited money in fixed deposits. Since the assessee did not deposit money in capital gains account scheme, the AO rejected the claim for deduction u/s 54F of the Act. The Ld CIT(A) also confirmed the same by following the decision rendered by Hon’ble jurisdictional Bombay High Court in the case of Humayun Suleman Merchant vs. CIT (2016)(73 taxmann.com 2).

The Ld A.R submitted that the Hon’ble Kerala High Court had also taken the view in the case of Xavier J Pulikkal that the deduction u/s 54/54F is not available if the unutilised funds were not deposited in Capital gains Scheme. When the matter reached Hon’ble Supreme Court, the Hon’ble Apex court, in the very same case reported in (2016) 73 taxmann.com 34, has restored the issue to the file of the AO for examining the issue denova without being influenced by any observations made by Hon’ble High Court. The Ld A.R submitted that the Mumbai bench of ITAT has followed the decision rendered by Hon’ble Supreme Court and restored an identical issue to the file of the AO for examining it afresh in the case of ACIT vs. Shri Ramakant M Kadam (ITA No.4514/Mum/2014 dated 05-04-2018).