TMI Blog2013 (10) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of assessment proceedings - The bank had acted upon the instruction of the assessee on 31.7.2008 to deposit the money in special capital gain account - Assessee has duly complied with the requirements of law - Return of income was furnished in electronic form. The return of electronic mode does not permit filing of any documents/ annexures therewith. Denial of claim of deduction/exemption under the Act merely because the return of income was not accompanied by the prescribed documents / certificate, is not appropriate - Requirement is only directory and filing of necessary document/certificate in the assessment proceedings would be in compliance with law – Decided in favor of Assessee. Denial of exemption u/s 54F on the ground of payment made by M/s Capital Advertising Pvt. Ltd. wherein the assessee was Director and not by the assessee himself – Held that:- Assessee has duly made the arrangement for booking of the flat and necessary documentation were made by the assessee in his individual capacity. Only the payment of Rs. 55,70,800/- was done on behalf of the assessee by M/s Capital Advertising Pvt. Ltd. and subsequently, the assessee had duly reimbursed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the CIT(A) erred in law in enhancing the assessment by withdrawing the appellant's claim for exemption of Rs.55,70,800 under Section 54F of the Act. 2.1 That on the facts and in the circumstances of the case, the CIT(A) erred in denying exemption of RS.55,70,800 under Section 54F of the Act on the ground that the said amount had been paid by CAPL (and not by the appellant) to the builder towards construction of residential property of the appellant. 2.2 That on the facts and in the circumstances of the case, the CIT(A) failed to appreciate that the appellant had duly repaid the aforesaid amount of RS.55,70,800 to CAPL, which CAPL had originally paid to the builder towards construction of residential property of the appellant on behalf of the appellant. 2.3 That on the facts and in the circumstances of the case, the CIT(A) erred in failing to appreciate that Section 54F(1) of the Act did not contemplate one to one correlation between the proceeds/consideration arising on sale of long term capital asset and utilization thereof for the purchase/construction of residential property. The appellant craves leave to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RS.1,22,23,250 from the Savings Bank Account maintained by the appellant in the aforesaid branch (bearing account no. 90492010070924) to the Special Capital Gains Account maintained in the same branch of the same bank (bearing account no. 90492110000077). The aforesaid Bank, in this regard, has issued a certificate, dated, 15.12.2010, confirming receipt of instructions from the appellant on 30.07.2008, for transfer/deposit of funds to the Special Capital Gains Account. The appellant having issued the necessary instruction to the aforesaid Bank, in which both the accounts (i.e., Savings Bank Account as well as Special Capital Gains Account) were maintained, for transfer/deposit of the capital gains of Rs.1,22,23,250, in the Special Capital Gain Account, on 30.07.2008, the appellant proceeded to file his return of income on the same date i.e., 30.07.2008, wherein it claimed exemption of the aforesaid deposit of Rs. 1,22,23,250 under Section 54F(4) of the Act. The instructions were, however, acted upon and effected by the Syndicate Bank only on 31.07.2008. Vide the impugned order, the assessing officer denied exemption of long term capital gains tax in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that an assessee intending to avail benefit, inter alia, under section 54F of the Act may deposit the amount in a prescribed account with the prescribed banks defined as "deposit office". Non-furnishing of evidence of deposit with the return of income As regards the contention of the assessing officer that the evidence of deposit was not filed along with the return of income, it would be pertinent to note for the assessment year under consideration, the return of income was filed in electronic form. The return in electronic mode does not permit filing of any document/annexure therewith (Refer Instructions to the Return Form) and accordingly the appellant was prevented by law to file the certificate of deposit along with the return of income. The evidence of deposit was thus filed by the appellant during the course of the assessment proceedings. Without prejudice, it is respectfully submitted, that the Courts have repeatedly held that the claim for deduction/exemption under the Act cannot be denied merely because the return of income was not accompanied by the prescribed document/certificate. The Courts have held that such requirement is only directory and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the net consideration deposited by the appellant in the Special Capital Gains Account during the assessment proceedings for the assessment year under consideration. The assessing officer glossed over the provisions of proviso to sub-section (4) of section 54F of the Act. The said proviso reads as under: ''Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then, - (i) the amount by which - (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new assessee within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invest Rs. 55,70,800/- in individual capacity, he does not qualify for deduction u/s. 54F. Accordingly, he held that exemption to the extent of Rs. 55,70,800/- is not available to the assessee. 4.2 Ld. Commissioner of Income Tax (A) noted that as far as exemption u/s. 54F(4) on the amount of Rs. 1,22,23,250/- on account of investment in special gain account is concerned, the date on which the cheque is received by the deposit office is to be treated as the date of deposit in view of para 5(6) of the Capital Gain Account Scheme, 1988. Keeping in view of the said provisions, Ld. Commissioner of Income Tax (A) held that the assessee's plea that issue of verbal directions to the bank amounted to issue of cheque has no merit. He held that verbal directions to the bank do not amount to issue of cheque/deposit. Ld. Commissioner of Income Tax (A) further referred to the provisions of section 54F(4), he observed that assessee has failed to deposit in capital gain scheme before furnishing of return on 31.7.2008. therefore, he held that the assessee has failed to comply with the prerequisite conditions of section 54F(4):- (i) The amount of net consideration not utilized for purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] Explanation. For the purposes of this section, [** ** **] [***] "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of [two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires ; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid." 6.1 We find that in this case the assessee has been denied benefit of exemption u/s. 54F on the amount of Rs. 1,22,23,250/- on account of investment in special capital gain account after filing of return. In this regard, it is the submissions of the assessee that in order to avail the exemption in respect of a sum of Rs. 1,22,23,250/- u/s. 54F(4) of the Act, the assessee on 30.7.2008 issued instruction to the Syndicate Bank, Hauz Khas, New Delhi to transfer the aforesaid amount of Rs. 1,22,23,250/- from the savings bank account maintained by the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to the bank to transfer the amount from the savings bank account to the special capital gain account. This has been duly acknowledged by the bank and the bank has issued certificate in this regard. The bank had acted upon the instruction of the assessee on 31.7.2008. Hence, we find that assessee has duly complied with the requirements of law. Furthermore, we note that the return of income was furnished in electronic form. The return of electronic mode does not permit filing of any documents/ annexures therewith. Hence, it is apparent that assessee was prevented by sufficient cause in not filing the certificate of deposits alongwith return of income. The evidence of deposits was duly filed by the assessee during the course of assessment proceedings. We further take note of the fact that courts have repeatedly held that the claim of deduction/exemption under the Act merely because the return of income was not accompanied by the prescribed documents / certificate. The Courts have held that such requirement is only directory and filing of necessary document/certificate in the assessment proceedings would be in compliance with law. Accordingly, we hold that assessee's claim is perfect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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