Issue
Whether exemption under Section 54F could be
denied to assessee who had purchased a new residential house within 2 years
from the date of transfer of original asset on ground that he had not deposited
the amount in capital gain account scheme before the due date of filing of
return under section 139(1)
The tribunal held in favour of assessee as under-
1. A
combined reading of sections 54F(1) and 54F(4), makes it clear that the
assessee would be entitled to exemption under section 54F in the event he
purchases new asset within two years from the date of transfer of original
asset or the amount is utilized before the date of furnishing the return under
section 139. In a case it is not utilized for the purpose of aforesaid and
within the period aforementioned, section 54F(4) mandates the assessee to
deposit such amount in capital gain account scheme before due date of filing of
return under section 139(1).
2. Therefore,
there is no ambiguity in the provision; so far deposit of the unutilized amount
is concerned, it has to be deposited in a specified capital gain account before
the due date of filing of return under section 139(1).
3. In
the instant case, the return was filed by assessee in response to a notice
issued under Section 148 and not under section 139(1). Therefore, the
contention of the assessee was that he should be allowed exemption under
section 54F even if had not deposited the amount in capital account scheme.
4. The
Karnataka High Court in the case of CIT
v. K. Ramachandra Rao [2015] 56 taxmann.com 163 held that when the assessee
had invested the entire sale consideration in construction of a residential
house within the three years from the date of transfer, he could not be denied
exemption under section 54F on the ground that he did not deposit the said
amount in capital gain account scheme before the due date prescribed under
section 139(1).
5. Under
section 54F (1), the exemption would be available if the assessee purchased the
residential house within two years after the date when transfer took place. Hence,
as per judgment of Karnataka High Court, the provisions of section 54F(4) would
not be attracted if assessee has purchased or constructed the residential house
within period prescribed under section 54F(1).
6. In
the instant case, there was no dispute with regard to the fact that the
assessee had purchased a new asset within two years from the date of transfer
of the original asset. Therefore, following the ratio laid down by the
Karnataka High Court in the case of K. Ramachandra Rao (supra), the court
directed Assessing Officer to re-compute the assessed income after granting the
benefit of section 54F to the assessee- Ashok
Kapasiawala v. ITO [2015] 63 taxmann.com 284 (Ahmedabad - Trib.)
