TMI Blog2015 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to complete the construction. Based on the report of the ITI, the AO concluded that the construction of the new residential house was not complete even on 10.11.2010. The AO was of the view that since the transfer of property had taken place on 11th May 2007 (relevant to AY 2008-09), in order to avail the exemption u/s 54 of the Act, the new residential house should have been constructed within three years from the date of transfer i.e. in between 11.05.2007 and 10.05.2010. The AO further concluded that since ₹ 54,40,000/- were spent on purchase of a plot and not towards the construction of a residential property, the same would not qualify for exemption u/s 54 of the Act. Accordingly, the AO disallowed the exemption claim of ₹ 54,40,000/- towards the purchase of plot in AY 2008-09 itself. As regards the second portion of claim of exemption of ₹ 63,00,000/-, the AO was of the view that the Capital Gains Account Scheme, 1988 requires that the deposit in the scheme should be made before the due date of filing of the return of income. The AO has noted that although the date of initial deposit in the Savings Bank Account of the Capital Gains Account Scheme, 1988 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 54 of the Act which reads as under: Profit on sale of property used for residence. 54. [(1)] [ [Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset [***], being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of [one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date [constructed, a residential house], then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain [is greater than the cost of [the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Finance Act, 1992, w.e.f. 1-4-1993.] 7. Reference may also be made here to Circular No. 495, dated 22nd September, 1987 (168 ITR (St.) 87) which contains the Explanatory Notes on the provisions relating to direct taxes as contained in the Finance Act, 1987. Para 26.1 and 26.2 are relevant to the issue involved and are reproduced here under : 26.1 Under the existing provisions of sections 54, 54B, 54D and 54F, longterm capital gains arising from the transfer of any immovable property used for residence, land used for agricultural purposes, compulsory acquisition of lands and buildings and other capital assets are exempt from income tax if such gains are reinvested in new assets within the time allowed for the purpose. The original assessment needs rectification whenever the taxpayer fails to acquire the corresponding new asset. 26.2 With a view to dispense with such rectifications of assessments, amendments made to sections 54, 54B, 54D and 54F provide for a new scheme for deposit of amounts meant for reinvestment in the new asset. After the aforementioned amendments, where the amount of capital gains or the net consideration, as the case may be, is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, it is the contention of the Department that although the initial deposit in the Capital Gains Account Scheme (Savings Account) was made on 18.07.2008 (i.e. before the due date of filing of the return of income), a transfer from such savings account was made to the Fixed Deposit Account under the Capital Gains Account Scheme on 06.08.2008 (i.e. after the due date of filing of return of income). Therefore, since the deposit was made beyond the due date, the AO had rightly denied the exemption u/s 54 of the Act. 12. A reference may be made here to clause (4) of the Capital Gains Account Scheme, 1988 notified vide Notification No. GSR 724(e), dated 22nd June, 1988 which provides as under: (1) ......... (2)........... (3).......... (4) Types of Deposits - (1) There shall be two types of deposit accounts, namely :- (i) Deposit account - A and (ii) Deposit account - B. (2) The deposit made under account A shall be in the form of savings deposit and subject to the other provisions of this Scheme, withdrawals under this account can be made from time to time by the depositor. (3)The deposit made under account B shall be in the form of ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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