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2015 (9) TMI 123 - ITAT LUCKNOWAddition on account of Capital Gains - denial of the exemption u/s 54 - CIT(A) deleted the addition - Held that:- As per the scheme of Section 54 of the Act and Circular No 495, it is clear that capital gains cannot be charged to income tax in the previous year in which the transfer of the original asset takes place if the amount of capital gain is utilised by the assessee for acquisition of new asset and the balance, if any, is deposited on or before the due date for filing of return of income u/s 139(1) in the specified Capital Gains Account Scheme and if the amount is not utilised fully for acquiring the new asset within the prescribed period, the unutilised amount can be taxed in the year in which the period expires. On facts of the case, exemption u/s 54 cannot be denied to the assessee in the year in which the transfer of asset took place as far as the assessee has invested ₹ 54,40,000/- in purchase of land on which the house has been constructed. The issue of disallowance, if any, will have to be considered in the previous year in which the period of three years from the date of the transfer of the original asset expires. - Decided against revenue. Investment in the Capital Gains Accounts Scheme, 1988 - Held that:- It is very much evident and an admitted fact that the deposit of ₹ 63,00,000/- was made in the Savings Account or Deposit Account A before 31/07/2008 i.e. before the due date of filing of return u/s 139(1) of the Act and thus such deposit was well within the parameters laid down in clause 4(4)the Capital Gains Account Scheme, 1988 (supra). Therefore, the contention of the Department that the transfer from this Deposit Account A to another Deposit Account B (Fixed Deposit Account) on 06.08.2008, i.e. after the due date of filing of return of income u/s 139(1), does not conform to the parameters laid down in clause 4(4) of the Capital Gains Account Scheme, 1988 (supra) is based on an incorrect interpretation. Since the entire initial deposit in the savings bank (Deposit A account) amounting to ₹ 63,00,000/- was made within the prescribed period, it is immaterial that a further transfer from this account was made to Deposit B account (Fixed Deposit Account) after the prescribed due date, the exemption on this count also cannot be denied to the assessee. Even if the transfer is not as per law in the year of withdrawal from Deposit account A, it can be considered as amount withdrawn and not utilised and addition can be made as per law but in the present year, the exemption cannot be denied. We accordingly hold that the assessee cannot be denied the benefit of exemption u/s 54 on deposited in the savings account of the Capital Gains Scheme, 1988 and we dismiss the appeal of the revenue on this issue also - Decided against revenue.
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