TMI Blog2009 (11) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... ale proceeds also available with the assessee. In this case, though the assessee constructed new building within the period of three years from the date of sale, it was with funds borrowed from HDFC. Assessee is not entitled to exemption u/s 54F because the assessee neither deposited the sale proceeds for construction of the building in the bank in terms of sub-section (4) before the date of filing returns nor was the sale proceeds utilised for construction in terms of section 54F(3) - So much so, the assessee was not entitled to claim exemption on capital gains under section 54F of the Act which the Assessing Officer rightly declined. Validity of intimation u/s 143(1)(a) denying exemption - Whether claim of exemption u/s 54F could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Income-tax Appellate Tribunal granting exemption under section 54F of the Income-tax Act to the respondent-assessee from paying tax on long-term capital gains. The assessee was the Managing Partner of the firm namely M/s. Desai Nirman which was engaged, among other things, in real estate business including construction and sale of flats. During the previous year relevant for the assessment year 1995-96, the assessee transferred 12.876 cents of land to the said Partnership firm treating it as his contribution to the capital of the firm. The firm in turn credited capital account of the respondent-assessee with ₹ 38,62,800 the full value of the land brought to the firm by the respondent-assessee as capital contribution. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both grounds raised and therefore they cancelled the assessment proceedings issued under section 143(1)(a) of the Act. It is against this order of the Tribunal the Revenue has filed this appeal and we have heard the Senior Standing Counsel appearing for the Revenue and Sri P. Balakrishnan appearing for the respondent-assessee. 2. There is no dispute that the transfer of the land by the assessee to the partnership firm towards his capital contribution to the firm is a transfer within the meaning of section 2(47) of the IT Act which is subject to long term capital gains under section 45(3) of the Act. In the return filed for the assessment year 1995-96, the assessee had in fact offered tax on capital gains on the very same transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough section 54F, particularly sub-section (4), we are of the view that in order to qualify for exemption on capital gains, before the last date for filing return, the net sale consideration should have been deposited in any bank account specified by the Government for this purpose. In fact, the requirement of sub-section (4) of section 54F is that the assessee should produce along with the return, proof of deposit of the amount under the specified scheme in a Nationalised Bank. Admittedly, the assessee allowed the firm to which the property was transferred to retain and use it as a business asset and towards consideration he got only credit of land value in his capital account. In other words, sale consideration was not received by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are prima facie inadmissible. The assessee who claims exemption should prove the ingredients of section with facts. The assessee has no case that he received any sale proceeds for the sale of the land to the firm of which he is a partner. The firm was allowed to purchase the property from the managing partner of the firm, towards his capital contribution at a very low cost and the firm developed the property and sold the same. It was the duty of the assessee to establish the eligibility for exemption from payment of tax on capital gains by production of documents in terms of the statutory provisions. According to the relevant provisions stated above in the first place, it was the duty of the assessee to deposit the net sale proceeds in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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