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Income Tax Officer Versus Shri R. Srinivas,

2015 (3) TMI 641 - ITAT BANGALORE

Denial of claim for exemption under Section 54 / 54F - assessee failed to invest the capital gains of ₹ 70,16,326 before the due date of filing the return of income for Assessment Year 2008-09 i.e. 31.7.2008, as laid down u/s. 139(1) of the Act or to deposit the same by this date, i.e. 31.7.2008, in the Capital Gains Account Scheme of the Govt., the assessee is not eligible for exemption under Section 54 / 54F - CIT(A) allowed the claim - Held that:- We find the co-ordinate bench of the IT .....

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77; 52,08,164 on 3.4.2008 and b) for cost of construction of the Ground to 2nd floor of the residential construction of the Ground to 2nd floor of the residential building upto 31.3.2010 amounting to ₹ 72,91,836. In this factual matrix, we are of the opinion that the assessee is eligible for exemption under Section 54F of the Act. In coming to this finding we draw support from the decision of the co-ordinate bench of the Tribunal in the case of Nipun Mehrotra (supra),wherein following the .....

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tion, in respect of the other co-sellers of the said property, has been allowed by the Department. In this view of the matter, following the decision of the co-ordinate bench of the ITAT, Bangalore in Nipun Mehrotra (supra), we find that revenue has failed to controvert the decision of the learned CIT (Appeals) and therefore uphold the impugned order of the learned CIT (Appeals). - Decided in favour of assessee. - I. T. A. No.79/Bang/2014 - Dated:- 4-3-2015 - Smt. P. Madhavi Devi And Shri Jason .....

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eedings for Assessment Year 2009-10, the Assessing Officer noticed that the assessee had not filed his return of income for Assessment Year 2008-09 though as per the 26AS statement, the assessee had received an amount of ₹ 5,63,303 during the F.Y. 2007-08. Since income exigible to tax for Assessment Year 2008-09 had escaped assessment, the Assessing Officer initiated proceedings under Section 147 of the Income Tax Act, 1961 (in short 'the Act') by recording reasons for the same and .....

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25,00,000 on 18.1.2008 in the assessee's bank account with Bank of India. On being queried in regard to the same, the assessee explained that this amount was the amount received in lieu of relinquishment of right in property w.r.t. the Memorandum of Agreement between the assessee along with three other persons to M/s. Kristal Projects (India) Ltd., Bangalore. Examination of the Memorandum of Agreement dt.12.12.2007 with Kristal Projects (India) Ltd. showed that the assessee along with three .....

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ee contended that in order to assess the same under capital gains, the conditions prescribed in sections 2(14), 2(47) r.w.s. 45 and 54 are to be satisfied and since the property in respect to which he relinquished his rights was agricultural land, the proceeds ofRs.1.25 Crores received by him were exempt. 2.1.3 The Assessing Officer did not accept these contentions of the assessee as the schedules thereto did not indicate the said property to be agriculture land and further the same had been tra .....

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2 and therefore rejected the assessee's claim that the said land was agricultural. 2.1.4 When the Assessing Officer embarked on the computation of capital gains, the assessee filed a computation of income; including computation of capital gains at ₹ 1,20,10,964 after appropriating legal fees for litigation of ₹ 1,25,000, cost of acquisition as on 1.4.1981 at ₹ 50,000, cost of improvement at ₹ 88,736 and claimed exemption under Section 54F of the Act in respect of the .....

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Section 54 / 54F of the Act on the ground that, since as per the Valuation Report filed by the assessee the commencement of construction of the new property was from 1.5.2009, which is after the due date for filing the return of income u/s. 139(1) of the Act for Assessment Year 2008-09 i.e. 31.7.2008, the assessee ought to have, but failed to invest the unutilized portion of the capital gains in a Capital Gains Account Scheme, of the Government. The assessment was accordingly completed under Sec .....

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icer s action in denying the assessee's claim for exemption under Section 54 / 54F of the Act amounting to ₹ 70,16,326. The learned CIT (Appeals) disposed of the appeal vide the impugned order dt.13.9.2013 allowing the assessee relief in respect of its claim for exemption under Section 54F of the Act, by following the decision of the co-ordinate bench of the ITAT, Bangalore in Nipun Mehrotra V ACIT (2008) 297 ITR (AT) 110 (Bang) and directed the Assessing Officer to verify the assessee .....

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untarily, but, he filed it only after issue of a notice under Section 148. 3. Only when it was noticed during scrutiny proceedings that the assessee received ₹ 1.25 Crores on relinquishment of right in the property at Sy. No.97 & 98 of Hoodi Village, KR Puram Hobli, Bangalore, the assessee put forth his claim for deduction under Section 54 / 54F. 4. The due date of filing of return for A.Y. 2008-09 was 31.7.2008, whereas the commencement of construction of the building as claimed by th .....

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return filed under Section 139(4). 6. The assessee ought to have deposited the money within the due date of filing of return of income under Section 139(1). The conclusion drawn by the CIT (Appeals) regarding the expiry of due date of filing of return of income under Section 139(4) cannot be accepted. 7. The other decision relied upon by the assessee during appellate proceedings is in the case of Smt. Fatima Bai Vs. ITO, Ward 5(4), Bangalore in ITA No.435/2004 (KHC). In the above case, SLP was n .....

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that the deposit in Capital Gain Scheme should be made in any case not later than the due date applicable in the case of the assessee for furnishing of the return of income under sub-section (1) of section 139. 10. Hence the decision of CIT (Appeals) to consider the last date of filing of return of income under Section 139(4) is opposed to law. 11. On these and any other grounds that may be urged at the time of hearing, the Hon'ble ITAT is pleaded to quash the order of CIT (Appeals). 5. The .....

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nfirmed. OR The Hon'ble ITAT may hold that in view of the City Civil Judge s order dt.30.01.1997, drawing up the Sale Deed Decree in O.S.No.3486/1995, the actual sale took place in the year ended on 31.3.1997 and the long term capital gains, if any, should be assessed for the Assessment Year 1997-98 and not for the Assessment Year 2008-09. 2. For these and such other grounds which may be urged at the time of hearing, it is prayed that the reliefs, as prayed for, may be granted. 6. Exemption .....

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of the ITAT, Bangalore in the case of Nipun Mehrotra (supra). The learned Departmental Representative was heard in support of the grounds raised (supra) and submitted that the learned CIT (Appeals) while granting relief, to the assessee under Section 54F of the Act, the provisions of sections 54(1) and 54(2) of the Act have not been properly and strictly applied. It was submitted that in order to avail the benefit of exemption under Section 54F of the Act, since the assessee commenced constructi .....

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he expiry of the due date for filing the return of income, as 31.3.2010, as per the provisions of section 139(4), was erroneous. The learned Departmental Representative submitted that in view of the above arguments, the order of the learned CIT (Appeals) be reversed and that of the Assessing Officer, rejecting the assessee's claim for exemption under Section 54F of the Act, be restored. 6.2 Per contra, the learned Authorised Representative strongly supported the impugned order of the learned .....

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to claim there is no transfer or sale on the period relevant to Assessment Year 2008-09 for levy of capital gains as the transfer / sale was concluded on 30.1.1997, by virtue of the order of the XV Addl. City Civil Judge in O.S. No.3486/1995 r.w. Execution Case No.803/1996. The learned Authorised Representative further submits that if, as held by the authorities below, the transfer has taken place by virtue of the Memorandum of Agreement dt.12.12.2007, when the assessee relinquished its right i .....

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a) and Nipur Mehrotra (supra), is within the time limit permitted under Section 139(4) of the Act. The learned Authorised Representative submitted that in view of the above, revenue s appeal on this issue is liable to be dismissed. 6.3 We have heard both parties and perused and carefully considered the material on record, including the judicial decisions cited and placed reliance upon. The issue, before us, for consideration is the assessee's claim for exemption under Section 54 / 54F of the .....

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ty was transferred through Memorandum of Agreement dt.212.12.2007 on mutual consent. Therefore, it is clear that what was sought to be sold by the assessee's uncle in 1997 was not valid in the eye of law and the fact that the said property was transferred through the Memorandum dt.12.12.2007 proves that the real transfer took place on 12.12.2007 when the assessee relinquished his right for the consideration of ₹ 1.25 Crores and not in 1997 as contended by the assessee. We, therefore, f .....

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i.e. Assessment Year 2008-09. In this regard, the assessee computed the LTCG on transfer of his share of the said property at ₹ 70,16,326 and claimed that the entire capital gains was exempt under Section 54 / 54F of the Act. It was submitted by the assessee that the consideration received was invested in the purchase of a site on 3.4.2008 for ₹ 52,08,174 and the balance was invested in the cost of construction incurred in putting up the new residential property thereon between 1.5.2 .....

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to utilize the capital gains for making the deposit or to invest the capital gains in the construction of the new residential building is 31.3.2010, as per the provisions of section 139(4) of the Act. In support of this proposition, the assessee placed reliance on the decision of the co-ordinate bench of this Tribunal in the case of Nipur Mehrotra (supra); the decision of the Hon'ble Gauhati High Court in the case of Rajesh Kumar Jalan reported in 286 ITR 274 and of the Hon'ble High Cour .....

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Act or to deposit the same by this date, i.e. 31.7.2008, in the Capital Gains Account Scheme of the Govt., the assessee is not eligible for exemption under Section 54 / 54F of the Act. In this regard, we find the co-ordinate bench of the ITAT, Bangalore in the case of Nipun Mehrotra (supra) held that if the sale consideration / capital gains is utilized for the purchase or construction of the new asset before the date of filing the return under Section 139(4) of the Act, the assessee is entitled .....

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