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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI MAHAVIR PRASAD & SHRI B.M. BIYANI
Per B.M. Biyani, A.M.:
This appeal filed by the assessee is directed against the order dated 25.08.2020 of learned Commissioner of Income-Tax (Appeals)-1, Bhopal [“Ld. CIT(A)”], which in turn arises out of the order of assessment dated 14.12.2017 passed by the learned ITO-2(3), Bhopal [“Ld. AO”] u/s 147 read with section 143(3) of the Income-tax Act, 1961 [“the Act”] for Assessment-Year 2015-16, on the following grounds:
“1. The assessing officer has failed to provide correct interpretation to the beneficiary provision and has not followed the principal of natural justice. 2. The assessee has always acted in good faith and follow all provisions of law. The delay in project was due to uncontrolled events and assessee has no intention of delay of construction.
ITA No.288/Ind/2020 Smt.Abhilasha Tatte A.Y. 2015-16
The delay was due to unavoidable and uncontrollable circumstances and was on the part of builder, assessee should not be panelised for the same and due to this addition, the motive of beneficiary provisions would destroyed. The assessee has already deposited the unulitised amount of capital gain account scheme maintained at Scheduled bank. Assessee has paid the amount as per demand by builder. Since the assessee has paid substantial amount to the builder hence assesse has no option to wait for the construction of the property. So the intention of assessee was clear that she has to invest the amount in purchase of new property but the construction process has been delayed on the part of builder due to stay by NGT. Also after the stay is removed builder has started construction and assessee has invested full amount in construction of property and property has been registered in the name of assessee on 22/03/2018.” 2. The assessee is an individual who earned income from salary, interest and long-term capital gain. During the year, the assessee sold a residential house for Rs. 90,00,000/- on 20.05.2014 which gave rise to a long-term capital gain of Rs. 74,64,000/-. While filing return of income, the assessee declared this long-term capital gain of Rs. 74,64,000/- and also claimed exemption u/s 54 of the Act to the extent of Rs. 74,64,000/- on the basis of investment of Rs. 79,64,064/- made in another residential house. The new house is stated to have been acquired from Danish Housing Co-operative Society, Bhopal. During assessment-proceeding, the Ld. AO observed that the original property was sold on 20.05.2014 but out of the total investment of Rs. 79,64,064/-, the investment made within the permissible time-limit of section 54 was to the extent of Rs. 40,88,792/- only. Although the assessee submitted to the Ld. AO that the entire project in which the newly acquired house was situated, was stayed by the Hon’ble National Green Tribunal and therefore the seller could not give possession of the house or execute the registered-deed in time but the allotment-letter had already been issued to the assessee. The assessee submitted that because of delay by seller, she could not make payment upto 19.05.2017 i.e. the last date of 3 years’ time-period prescribed in section 54 although she had full intentions to make the payments. It is Page 2 of 6
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also on record that the assessee continued to hold the money deposited in Capital Gain Account Scheme [“CGAS”] and finally the same was utilisted for making payment to the seller though after expiry of 3 years’ time- period. In short, the assessee submitted that the non-payment to the seller within the prescribed time was not attributable to her. Based on these submissions, the assessee requested the Ld. AO to grant full exemption as claimed. However, the Ld. AO did not accept the submission of assessee and as against the exemption of Rs. 74,64,000/- claimed by assessee, the Ld. AO allowed exemption of Rs. 40,88,792/- only and disallowed the remaining exemption of Rs. 33,75,208/-. Accordingly, the Ld. AO made an addition of Rs. 33,75,208/- to the taxable income of assessee. Being aggrieved by the order of Ld. AO, the assessee filed an appeal to Ld. CIT(A).
During appellate proceeding, the assessee re-iterated the same submissions as made before Ld. AO. But the assessee did not find any support from Ld. CIT(A). The Ld. CIT(A) confirmed the action of Ld. AO.
Being aggrieved by the order of Ld. CIT(A), the assessee has preferred this appeal and now before us.
During hearing before us, although the Ld. AR repeated the original submissions made before lower authorities yet the Ld. AR argued one more point which is very much legal. Initially, Ld. AR submitted that the assessee has made an investment of Rs. 40,88,792/- and the same had been allowed by Ld. AO and hence there is no dispute as far as exemption to the extent of Rs. 40,88,792/- is concerned. Going further, the Ld. AR submitted that in addition to the investment of Rs. 40,88,792/- admitted by Ld. AO, the assessee had also invested a sum of Rs. 41,30,000/- in CGAS with the State Bank of India in the month of April, 2015, a copy of the statement issued by the State Bank of India is also placed in the Paper-Book. Ld. AR submitted that the impugned capital gain was taxable in the assessment year 2015-16 and the investment of Rs. 41,30,000/- in the CGAS was made well before the due date of furnishing the return of
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income and hence the same fulfils the requirement of section 54 of the Act. Ld. AR submitted that as far as the assessment year 2015-16 is concerned, the assessee is entitled to exemption u/s 54 of the Act on the basis of the deposit of Rs. 41,30,000/- made in CGAS itself. Ld. AR submitted that the issue whether the assessee was able to utilize the sum of Rs. 41,30,000/- deposited in CGAS subsequently within the period of three years prescribed in section 54 or not, is not a concern as far as assessment-year 2015-16 is concerned. In his Written-Submission dated 13.06.2022, the Ld. AR has submitted:
“Thus, even if the amount could not have been utilised within 3 years, the same cannot be looked into in the instant assessment year as for the purpose of claiming exemption u/s 54 of the Act in the instant AY 2015-16, the assessee has fulfilled the condition u/s 54 by depositing the balance amount of capital gain in the CGAS.” Ld. AR submitted that the subsequent utilisation, non-utilisation or short- utilisation of the amount deposited in the CGAS was an independent issue unrelated to the assessment-year 2015-16 under consideration. In short, the Ld. AR prayed that the assessee deserves an exemption of Rs. 41,30,000/- on the basis of deposit made in CGAS which must be allowed.
Ld. DR supported the orders of lower authorities.
We have considered the rival submission, perused the material held on record and also the provision of section 54. We observe that the section 54(2) reads as under:
“ The amount of the capital gain 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 took 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 section1 39] is an account in any such bank or institution as may be specified in, and utilised in accordance with any scheme which the Central Government Page 4 of 6
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may, be notification in the official Gazette, frame in his 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 purposes or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then-____ (i) The amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expire and (ii) The assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.” Thus, the provision of section 54 is very clear and unambiguous in as much as it gives exemption on the basis of deposit made in the CGAS upto the due date of furnishing the return of income. We further observe that the subsequent utilisation (or non-utilisation) of the amount deposited in CGAS is taken care of by the Proviso to section 54 but that is not the concern for assessment-year 2015-16 involved in present appeal.
Therefore, we find merit in the submission of Ld. AR that deposit of Rs. 41,30,000/- made by the assessee in CGAS must be allowed as exemption. Ld. AR has further confirmed that the deposit of Rs. 41,30,000/- in CGAS is independent of the exemption of Rs. 40,88,792/- allowed by Ld. AO. Considering this submission of Ld. AR and also taking into account the fact that exemption of Rs. 40,88,792/- is already allowed by Ld. AO without any dispute, we are not required to examine the exemption of Rs. 40,88,792/-. For us, it is sufficient to note that the deposit of Rs. 41,30,000/- made in the CGAS is an independent investment which again is eligible for exemption u/s 54. However, since the Ld. AO has denied exemption to the extent of Rs. 33,75,208/- only, the deposit of Rs. 41,30,000/- in the CGAS shall give an exemption of Rs. Rs. 33,75,208/- to the assessee. We, therefore, allow exemption of Rs.
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33,75,208/- as claimed by the assessee and delete the addition made by Ld. AO.
In the result, this appeal of assessee is allowed.
Order pronounced as per Rule 34 of I.T.A.T. Rules 1963 on 28.07.2022.
Sd/- Sd/- (MAHAVIR PRASAD) (B.M. BIYANI)
Judicial Member Accountant Member
Indore, �दनांक /Dated : 28.07. 2022 Patel/ Sr. P.S. Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
Date of taking dictation 26.7.22 2. Date of typing & draft order placed before the Dictating Member 26.7.22 3. Date on which the approved draft comes to the Sr. P.S./P.S. 4. Date on which the fair order is placed before the Dictating Member for pronouncement 5. Date on which the file goes to the Bench Clerk 6. Date on which the file goes to the Head Clerk
Date on which the file goes to the Assistant Registrar for signature on the order 8. Date of dispatch of the Order
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