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2019 (1) TMI 1134 - AT - Income TaxDeduction claimed u/s. 54 - Profit on sale of property used for residence - assessee has not opened any capital gain account within due date of filing the return of income - deposit of balance capital gain amount in capital gain account scheme upto the date of filing of return u/s. 139(4) - Held that:- The assessee is eligible for getting deduction u/s. 54(1) if (i) he has purchased a property within one year prior to the date of sale of property and (ii) if the assessee purchased a new property within two years from the date of sale of original asset or if the assessee has constructed the house within three years from the date of sale of original asset. If the assessee is unable to invest entire capital gain before furnishing of return of income u/s. 139, he has to deposit the unutilized amount of capital gain by opening an account in any nationalized bank under the Capital Gain Scheme. From the perusal of the order of the authorities below, we find that the assessee has furnished his return of income on 31.03.2010 u/s. 139(4) and he has spent money to the extent of ₹ 61,33,234/- upto the filing of its return. CIT(A) has followed the decision in the case of CIT v. Rajesh Kumar Jalan [2006 (8) TMI 126 - GAUHATI HIGH COURT]. The assessee can deposit the balance capital gain amount in capital gain account scheme upto the date of filing of return u/s. 139(4) of the Act. The Assessing Officer has allowed the exemption on the amount spent upto the due date of filing of return only as contemplated u/s. 139(1) of the IT Act. As far as the appropriation of capital gain towards repayment of bank loan is concerned, it is notable that the loan was raised in 2004 and property was also purchased on 27.09.2004. As per provisions of section 54, the amount of capital gain which is appropriated towards purchase of a residential property prior to one year from the date of transfer of asset, is eligible for exemption. In the instant case, the assessee had been the owner of the said property in the year 2004 which does not fall within one year prior to the transfer of asset. Therefore, the amount of capital gain spent by the assessee towards repayment of loan in the instant case is outside the provisions of section 54 and the assessee, thus, would not be eligible for exemption on the balance amount of capital gains used for repayment of loans to the extent of ₹ 1,22,68,857/-. The decisions relied by the ld. CIT(A) in the impugned order, in these peculiar circumstances, are not found applicable on this score, having been based on different footings. Accordingly, the appeal of the Revenue deserves to be allowed.
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