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TMI Blog2015 (12) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... versing the finding of the CIT (A) and that of the Assessing Officer whereby the addition of Rs. 1.21 crores was made by disallowing the claim for exemption under section 54F of the Income Tax Act, 1961 as the same amount of sale consideration had not been utilized towards the purchase of property prior to the date of sale as per the said provisions?" 3. A few facts relevant for the decision of the controversy involved as narrated in ITA No.12 of 2015 may be noticed. The return declaring income of Rs. 1,27,04,920/- was filed by the assessee on 29.7.2009.Assessment was completed under Section 143(3) of the Act on 30.12.2011, Annexure A.1 at total income of Rs. 2,48,37,560/- after making an addition of Rs. 1,21,32,636/- on account of capital gain as the assessee had claimed benefit of section 54F of the Act even though he had not entirely sourced the amount invested in his new asset from capital gain receipts. On appeal by the assessee, the Commissioner of Income Tax (Appeals) [CIT (A)] vide order dated 11.3.2013, Annexure A.II, upheld the addition made by the Assessing Officer. Aggrieved thereby, the assessee filed appeal before the Tribunal. The Tribunal vide order dated 16.7.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be expedient to refer to Section 54F of the Act, the relevant portion thereof reads as under:- "54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (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 (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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. 10. Under sub section (1) of Section 54F of the Act, the amount of capital gains exempt under this provision is equal to the difference between the cost of the new asset and the net consideration received from the transfer of the original asset. Where the cost of the new asset is equal to or exceeds the net consideration received, in that situation, the entire amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appropriated or utilized by the tax payer for acquisition of the new asset before the date for furnishing the return of income, it shall be deposited by him on or before the due date of furnishing the return of income, under section 139(1) in an account with a bank or institution and utilized in accordance with a scheme framed by the Central Government in this regard. The amount already utilized together with the amounts of deposits shall be deemed to be the amount utilized for the acquisition of the new asset. If the amount deposited is not utilized fully for acquiring the new asset within the period stipulated, the capital gain relatable to the unutilised amount shall be treated as the capital gain of the previous year in which the period specified in these provisions expires. In such cases, the threshold deduction of ten thousand rupees as well as the deduction under section 53 will not be admissible. Further, the tax payer shall be entitled to withdraw such amount in accordance with this scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 upto August 2008 i.e. well within period. Learned Assessing Officer has also not disputed about the investment made by the assessee. His grievance is that investment was made after taking loan from the employer and therefore, assessee cannot claim benefit under section 54F(1) qua the loan amount utilized for purchasing of the new house. Hon'ble Kerala High Court in the case of ITO vs. KC Gopalan (supra) has held that in section 54, there is no condition that assessee should utilize the sales consideration itself for the purpose of acquisition of new property. Similar are the other orders of the ITAT relied upon by the assessee. On perusal of section 54F(1) and sub section (4), it reveals that these sections do to put any restriction that only capital gain would be utilized for purchase of the new house. The law permits utilization of capital gain within the specified time, the assessee may use such funds for other purposes and may find resources from other source for investment in time. The section provides investment in a house prior to one year of the transfer of long term capital assets. It will make it clear that if the transfer has not taken place then from where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 54 would also make it clear that no provision is made by the statute that the assessee should utilise the amount which he obtained by way of sale consideration for the purpose of meeting the cost of the new asset. 6. A reading of sections 53 and 54 of the Act would make it clear that a special provision is made in respect of capital gains arising out of transfer of particular type of capital asset, namely, house property which was being used by the assessee or a parent of his for the purpose of their residence. Entitlement of the exemption under section 54 relates to the cost of the acquisition of a new asset in the nature of a house property for the purpose of his own residence within the specified period." 17. Further, following the judgment of the Kerala High Court in K.C.Gopalan's case (supra), the Gauhati High Court in CIT vs. Rajesh Kumar Jalan, (2006) 157 Taxman 398 (Gau.) held as under:- "11.....We are of the view that the assessee had already appropriated the entire capital gain for purchase of the new asset within the stipulated time. In this regard, we find support from the decision of the Kerala High Court in the case of K.C. Gopalan wherein it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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