“Section 54(4)”

Section 139(4) of the Income-tax Act, which allows for filing a belated return, acts as a proviso to Section 139(1). Consequently, the time limit for depositing amounts or utilizing funds to claim exemptions, such as under Section 54, extends up to the due date for filing a return under Section 139(4).

A return of income filed within the period allowed under Section 139(4) is valid for claiming exemptions and deductions, including those under Sections 54, 54F, and 80AC. However, depositing the unutilized capital gains in the Capital Gains Account Scheme is a statutory and mandatory requirement for claiming exemption under Section 54F.

The exemption under Section 54F (or Section 54) for long-term capital gains cannot be denied if the assessee invests the entire sale consideration in constructing a residential house within the prescribed three-year period, even if the amount was not deposited in the Capital Gains Account Scheme before the due date for filing the income tax return under Section 139(1). The purpose of the Capital Gains Account Scheme is to preserve the exemption when actual investment is pending, not to deny it if actual utilization occurs within the statutory timeframe.

Additions to income based on statements recorded under Section 132(4) during a search operation are valid, even if later retracted, provided the additions are supported by corroborative seized material and other evidence establishing unaccounted income or transactions.

For claiming capital gains exemption under sections 54 and 54F, it is not mandatory for the assessee to complete the construction of a residential house or obtain an occupancy certificate within the specified period, provided the capital gains are invested in the purchase or construction.

The annual value of a self-occupied property, for both wealth tax and income tax purposes, is the reasonable rent expected from a hypothetical tenant. When using municipal ratable value, statutory deductions permissible under municipal law must be added back to arrive at this expected rent.

An assessee is not entitled to the full deduction under section 54F if the capital gains were not utilized for the construction of a new house or deposited in the specified bank accounts before filing the return of income. In such cases, the exemption is restricted proportionately to the amount invested.

An assessee is eligible for deduction under section 80IA(4) if they are engaged in the construction of an infrastructure facility, irrespective of whether the activity is considered a works contract or a transfer of property in chattel. The nature of the activity, particularly regarding infrastructure development, determines eligibility.