ACIT, CIR-I, SILIGURI, SILIGURI vs. MRS HARMEET KAUR, SILIGURI

Per M.Balaganesh, AM

2 ITA No.1482/Kol/2014 Mrs. Harmeet Kaur A.Yr.11-12 on 4.2.2011 to Prayag Infotech Hi-Rise Ltd, Kolkata for a consideration of Rs 6 crores and that the same were reinvested in purchase of a ready built H.P. Flat at Delhi on 24.5.2012 for Rs 1,55,88,863/- and a plot of land measuring 1000 sq.yards at Pearls City, Mohali , Sector 100 for Rs 2,54,80,000/- on 23.5.2012. The assessee after claiming deduction u/s 54F of the Act in the return offered capital gains of Rs 48,00,000/- in the return of income and paid taxes accordingly. The ld AO observed that the date of sale of old property was on 4.2.2011 and assessee had not submitted any proof of having deposited her capital gain proceeds in specified bank account (capital gains account scheme) nor was it submitted during the course of assessment proceedings. The ld AO observed that the assessee purchased two new capital assets of which one is a flat and another is a plot of land at Mohali. Both were purchased after a period of one year from the date of sale so the assessee was liable to deposit the amount in the capital gains account scheme as per section 54F of the Act which was not done in the instant case. He further observed that the flat was purchased on 24.5.2012 for which full payment of consideration was completed on 16.6.2012 and plot of land was allotted on 23.5.2012 for which full consideration was paid on 18.5.2012. For want of deposit in capital gains account scheme, the ld AO concluded that the assessee had not fulfilled the basic conditions for claiming of exemption u/s 54F(4) of the Act. He observed that the assessee in the instant case had deposited the sale consideration in the normal bank account maintained by him instead of specified bank account. Moreover, the due date of filing the return u/s 139(1) of the Act was 31.7.2011 but the assessee filed his return only on 20.3.2012 and till that date, the amount was kept by the assessee in the normal savings bank account. Based on these observations, the ld AO denied the benefit of deduction u/s 54F of the Act amounting to Rs 4,10,68,863/- ( 1,55,88,863+2,54,80,000). The ld AO further observed that the sale consideration value adopted by the stamp valuation

3 ITA No.1482/Kol/2014 Mrs. Harmeet Kaur A.Yr.11-12 authority was Rs 9,60,80,616/- and whereas the assessee had declared only Rs 6,00,00,000/-. Accordingly, by invoking the provisions of section 50C of the Act, he replaced the sale consideration figure at Rs 9,60,80,616/- as against Rs 6,00,00,000/- and after giving deduction towards indexed cost of acquisition at Rs 1,41,31,137/-, he computed long term capital gains at Rs 8,19,49,479/-. 4. The ld. CIT(A) observed that the capital gains account was opened by the assessee on 28.2.2010 which was informed to the ld AO during the assessment proceedings. A copy of the submission of the assessee intimating this fact to the ld AO vide letter dated 14.11.2013 was filed during the appellate proceedings. The assessee pleaded that the due date of filing the return had to be as per section 139(4) of the Act and not section 139(1) of the Act and in the instant case the assessee had duly deposited the net consideration in the capital gain account scheme within the due date prescribed u/s 139(4) of the Act and hence the assessee should not be denied the benefit of deduction u/s 54F of the Act. The assessee placed reliance in this regard on the decision of the Hon’ble Punjab and Haryana High Court in the case of CIT vs Jagriti Agarwal reported in (2011) 339 ITR 610 (P&H) wherein it was held that : The sale of the asset having been taken place on 13.1.2006, falling in the previous year 2006-07, the return could be filed before the end of the relevant assessment year 2007-08, i.e 31.3.2007 . Thus, section 139(4) of the Act provides the extended period of limitation as an exception to section 139(1) of the Act. Sub-Section (4) is in relation to the time allowed to an assessee under sub-section (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-section (1) of section 139. Therefore, sub-section (4) has to be read along with sub- section (1). Similar is the view taken by the Division Bench of the Karnataka and Gauhati High Courts in Fatima Bai (2009) 32 DTR 243 and Rajesh Kumar Jalan (2006) 286 ITR 274 (Gauhati) respectively. In view of the above, we find that due date for furnishing the return of income as per section 139(1) of the Act is subject to the extended period provided under sub-section (4) of section 139 of the Act. Consequently, the question of law is answered

4 ITA No.1482/Kol/2014 Mrs. Harmeet Kaur A.Yr.11-12 against the Revenue and in favour of the assessee. Thus, the present appeal is dismissed.

The ld CITA by placing reliance on the aforesaid judgment directed the ld AO to call for the details of investment made in purchase of house property in subsequent years and bring to tax the amount which has not been invested in purchase of house property and accordingly allowed the appeal of the assessee. Aggrieved, the revenue is in appeal before us on the following grounds:- 1. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in fact and in law, in cancelling the assessment order without considering the implication of Section 50C of the I.T. Act, 1961, on the basis of which the value sale consideration declared by the assessee at 6,00,00,000/- had been rejected by the Assessing Officer who adopted the sale value at Rs. 9,60,80,616/- as assessed by the Registering Authority. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in law, in allowing exemption u/s 54F by treating the due date as specified u/s 139(4) of the I.T. Act, 1961, and not as specified in Section 139(1) of the I.T. Act, 1961 in violation of the decision of the Apex Court in Prakash Nath Khanna vs. CIT (2004) 266 ITR 1 (SC). 3. That the appellant craves leave to add, amend or alter the grounds of appeal, if any. 5. We have heard the rival submissions. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. At the outset, the ld AR fairly conceded that there is no dispute on the adoption of sale consideration of Rs 9,60,60,816/- (as against Rs 6,00,00,000/- declared by the assessee) in accordance with the provisions of section 50C of the Act. Hence the Ground No. 1 raised by the revenue deserves to be allowed. But we hold that the said deemed sale consideration would be relevant only for the purpose of section 48 of the Act as is very clear from the language of section 50C of the Act. For the sake of convenience, the provisions of section 50C of the Act are reproduced below:- Section 50C – Special Provisions for full value of consideration in certain cases .

5 ITA No.1482/Kol/2014 Mrs. Harmeet Kaur A.Yr.11-12 (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, beign land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. 5.1. Hence it is very clear that the deemed value of consideration as per stamp valuation authority for the purpose of stamp duty is relevant only for the purpose of section 48 of the Act and cannot be extended to other sections of the Act. We hold that the ld AO is justified in adopting the sale consideration on sale of old commercial property at Rs 9,60,60,816/- as against Rs 6,00,00,000/- . However, the same would not contribute anything to the exchequer as admittedly the assessee had reinvested the part of the net sale consideration in another property and claimed deduction u/s 54F of the Act. We find that the provisions of section 54F of the Act are as below:- Section 54F – Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house

(1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house in India (hereafter in this section referred to as the new asset) , the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, -

(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as

6 ITA No.1482/Kol/2014 Mrs. Harmeet Kaur A.Yr.11-12 the cost of the new asset bears to the net consideration , shall not be charged under section 45:

Provided….. ** ** ** Explanation,- for the purpose of this section,- "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer."

5.2. Hence the language of section 54F explaining the meaning of ‘net consideration’ is very clear expecting an assessee to reinvest only the actual consideration received by the assessee and not the deemed value of consideration u/s 50C of the Act. We hold that the deeming fiction as provided in section 50C of the Act in respect of the words ‘full value of consideration’ is to be applied only to section 48 of the Act and therefore, meaning of ‘full value of consideration’ as referred to in Explanation to Section 54F(1) of the Act is not governed by the meaning of the words ‘ full value of consideration’ as mentioned in section 50C of the Act. We hold that the provisions of section 54F of the Act are to be looked independently by ignoring section 50C of the Act. We find that the co-ordinate bench of this tribunal in the case of Chandrakala Devi Bansal vs ITO in ITA No. 2481/Kol/2005 dated 20.4.2007 had also endorsed this view. 5.3. We hold that the ld CITA had rightly relied on the decision of the Hon’ble Punjab and Haryana High Court in the case of CIT vs Jagriti Agarwal reported in (2011) 339 ITR 610 (P&H) that even if the assessee had deposited the net sale consideration in capital gain account scheme within the due date prescribed u/s 139(4) of the Act for reinvestment in another property, then the assessee should be treated as having satisfied the basic conditions of claiming deduction u/s 54F of the Act. In the instant case, the assessee had filed his return of income on

7 ITA No.1482/Kol/2014 Mrs. Harmeet Kaur A.Yr.11-12 20.3.2012 which is well within the time limit prescribed u/s 139(4) of the Act and it is not in dispute that before the date of filing of such return, the assessee had duly deposited the sale consideration in capital gains account scheme. Hence the assessee would be entitled for deduction u/s 54F of the Act for the reinvestment made in the new property. However, we find that there was no occasion for the ld AO to look into the total amount of reinvestment made by the assessee in new property in terms of section 54F of the Act. Hence we deem it fit and appropriate , in the interest of justice and fair play , to remand this issue to the file of the ld AO for the limited purpose of examination of reinvestment of Rs 6 crores (actual sale consideration received) in new residential property and re-compute the long term capital gains accordingly. Hence the grounds raised by the revenue are allowed for statistical purposes. 6. In the result, the appeal of the revenue is partly allowed for statistical purposes. Order pronounced in the Court on 24.07.2017

Sd/- Sd/- [A.T.Varkey] [ M.Balaganesh ] Judicial Member Accountant Member Dated : SB, Sr. PS Copy of the order forwarded to: 1. ACIT, Circle-1, Siliguri 2. Mrs. Harmeet Kaur 3..C.I.T.(A)-Siliguri 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.