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2016 (3) TMI 823 - AT - Income TaxDeduction u/s 54B and 54F - Entitlement to claim whether the return has actually been filed under section 139(1) or under section 139(4)? - Held that:- A combined reading of section 54B(2) read with the proviso clearly provides that the amount of the capital gain which is not utilized by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139(1) should be deposited with a bank/institution in a specified scheme irrespective of whether the return has actually been filed under section 139(1) or under section 139(4) of the Act. The legislative intention behind the introduction of subsection 2 to section 54B was therefore to obviate the need for rectification of assessment orders where the assessee fails to purchase the assets within prescribed time limit of 2 years. It was therefore provided that where the assessee deposits the funds in the specified capital gains scheme, the funds so deposited in the specified capital gains scheme were taken into consideration for allowing the deduction and were deemed to be the cost of new asset. The said deposit will therefore act as a safeguard to the Revenue that claim of deduction has been lawfully allowed in absence of actual purchase of the new asset. It is further provided that subsequently where the assessee doesn’t utilize the funds so deposited with the prescribed time limit of two years, the amount not so utilized shall be charged under section 45 as income of the previous year in which the period of two years from the date of transfer of the original asset expires. In other words, the requirements of section 54B(2) are therefore to supplement, support and aid in administration of deduction under section 54B(1) of the Act. Secondly, it is to be further noted that section 54B(2) provides that “for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of new asset together with the amount so deposited shall be deemed to be the cost of the new asset. “ Under section 54B(1) of the Act, it is for the assessee to claim the deduction and it is only when the assessee makes a claim of said deduction, the Revenue is well within its jurisdiction to examine whether the assessee has satisfied the necessary conditions for claiming such deduction. Under subsection 1 to section 54B, it requires the purchase of the new asset and under subsection 2 to section 54B, it is provided that even if the assessee has not purchased the new asset but has deposited the funds in the capital gains account scheme, such deposit shall be considered as deemed cost. In a situation where assessee has neither claimed nor deposited the unutilised capital gains consideration in the capital gains account scheme, where is the question of allowing the deduction at first place. Accordingly, where an appellant satisfies the first condition prescribed under section 54B(1) and at the same time, neither claim nor comply with the second condition as prescribed under section 54B(2) of the Act, the appellant would be eligible for deduction under section 54B of the Act. The provisions of section 54F(2) are pari-materia with the provisions of section 54B(2) of the Act. Hence, the above discussion would hold equally good for the purposes of claim of deduction under section 54F of the Act. The AO is accordingly directed to allow deduction to the appellant under section 54B as well as under section 54F of the Act after verifying the satisfaction of necessary condition by the appellant as prescribed under section 54B(1) and 54F(1) of the Act respectively. - Decided in favour of assessee Disallowance u/s 48 - Held that:- Where the capital gains have been brought to tax, it would be just and proper that the assessee is granted its claim of deduction under section 48 of the Act. The AO is accordingly directed to allow the claim of deduction after necessary verification. - Decided in favour of assessee.
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