TMI Blog2016 (3) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... re deemed to be the cost of new asset. The said deposit will therefore act as a safeguard to the Revenue that claim of deduction has been lawfully allowed in absence of actual purchase of the new asset. It is further provided that subsequently where the assessee doesn’t utilize the funds so deposited with the prescribed time limit of two years, the amount not so utilized shall be charged under section 45 as income of the previous year in which the period of two years from the date of transfer of the original asset expires. In other words, the requirements of section 54B(2) are therefore to supplement, support and aid in administration of deduction under section 54B(1) of the Act. Secondly, it is to be further noted that section 54B(2) provides that “for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of new asset together with the amount so deposited shall be deemed to be the cost of the new asset. “ Under section 54B(1) of the Act, it is for the assessee to claim the deduction and it is only when the assessee makes a claim of said deduction, the Revenue is well within its jurisdiction to examine whether the assessee has sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The action of the CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by following the relief. (2) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of ₹ 11,70,343/- u/s 50C by adopting the DLC rate. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 11,70,343/-. (3) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of ₹ 37,000/- by rejecting the claim of indexation u/s 48 of the I.T. Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 37,000/-. ITA No. 908/JP/13 (1) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in not allowing the claim of deduction u/s 54B of the I.T. Act, 1961 at ₹ 87,25,000/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,09,40,000/- Deduction u/s 54F ₹ 22,69,000/- ₹ 1,32,09,000/- Long Term Capital Gain NIL Subsequently, the assessee filed a revised return on 20.07.2012 at total income of ₹ 7,29,735/- wherein the capital gain was computed with reference to the value adopted by stamp authorities at ₹ 1,37,13,235/- in accordance with the provisions of section 50C. The deduction u/s 54B was claimed on purchase of an agricultural land bearing khasra No. 682/1938 situated at Village Khohra Malawali, Tehsil Laxmangarh, District Alwar from Shri Jagdish Singh on 10.07.2011 for ₹ 1,09,40,000/-. The payment of ₹ 50 lacs was made at the time of agreement and balance payment of ₹ 59,40,000/- was made on 16.08.2011. The deduction u/s 54F is claimed on purchase of house located at Plot No. 101, Chetan Enclave, Old Jaipur Road, Alwar on 06.02.2012 for purchase consideration of ₹ 21,50,000/- plus stamp duty and expenses of ₹ 1,19,000/- totaling to ₹ 22,69,000/-. The AO disallowed the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing of return of income u/s 139, shall be deposited by him before furnishing such return in a separate bank account in accordance with the capital gain accounts scheme. It has been further clarified in the provision itself that date of furnishing of return shall be taken as under sub-section 1 of section 139 of the IT Act. The use of words shall be leaves no scope for discretion on the part of the assessee and is to be treated as mandatory condition for compliance. The appellant has clearly failed to purchase the new asset before the due date i.e. 31.07.2010 (for A.Y. 2010-11, in the case of an individual) and has also failed to deposit the amount of capital gain in a separate bank account as provided under capital gains account scheme. 2.4 During the course of hearing, the ld. AR has submitted that: The sub-section (2) of section 54B reads as under: The amount of the capital gain which is not utilised by the assessee for the purchase of new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return (such deposit being made in any case not later than the due date applicable in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not to be charged in certain cases:(1) subject to the provisions of subsection( 2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee, or a parent of his for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, 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 land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rectification of assessments, the amendments made to section 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 appropriated or utilized by the taxpayer 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 the 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 deposit 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 stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of second scenario by introduction of subsection 2 to section 54B of the Act as it is made clear by the explanatory notes to Finance Act, 1987. Having examined the intent behind introduction of section 54(2), let s examine its provisions. If one were to dissect its language, it reads as under: The amount of the capital gain which is not utilized by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette frame in this behalf and such return shall be accompanied by proof of such deposit, and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase new asset together with the amount so deposited shall be deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be within the period of two years from the date of transfer of the original asset. At the same time, it seeks to regulate and administer the usage of such funds for the interim period till such time the funds are utilized for purchase of the new asset. For the purposes, it provides that if the assessee wishes to avail the deduction under section 54B, it has to deposit such funds with a bank/institution in such scheme as specified and such deposit shall be made within due date of filing of the return of income under section 139(1) of the Act and the return shall be accompanied by proof of such deposit. As a necessary corollary, it thus envisages a situation that a return of income is filed within the due date under section 139(1) and based on the proof of such deposit which is submitted along with the return of income, the assessee shall be eligible for deduction. 2.11 The next issue that arises for consideration is where the asseessee utilises the capital gains towards purchase of the new asset within a period of two years from the date of transfer of the original asset but at the same time, doesn t file the return of income under section 139(1) but files the return belatedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des that the amount of the capital gain which is not utilized by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139(1) should be deposited with a bank/institution in a specified scheme irrespective of whether the return has actually been filed under section 139(1) or under section 139(4) of the Act. 2.12 Now the next question that arises is where an appellant satisfies the first condition prescribed under section 54B(1) and at the same time, doesn t comply with the second condition as prescribed under section 54B(2) of the Act, would the appellant be held ineligible for deduction under section 54B of the Act. Here, we have to look at the issue from two perspectives. Firstly, we draw reference to the explanatory notes to the Finance Act 2007 which provides that the original assessment needs rectification whenever the taxpayer fails to acquire the corresponding new asset within the prescribed period of 2 years and with a view to dispense with rectification of assessments, the amendments has been made to section 54, 54B, 54D and 54F which provides for a new scheme for deposit of amounts meant for reinvestment in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the second condition as prescribed under section 54B(2) of the Act, the appellant would be eligible for deduction under section 54B of the Act. 2.13 The provisions of section 54F(2) are pari-materia with the provisions of section 54B(2) of the Act. Hence, the above discussion would hold equally good for the purposes of claim of deduction under section 54F of the Act. 2.14 The AO is accordingly directed to allow deduction to the appellant under section 54B as well as under section 54F of the Act after verifying the satisfaction of necessary condition by the appellant as prescribed under section 54B(1) and 54F(1) of the Act respectively. The ground no. 1 of the assessee is thus allowed. 3. Regarding ground No.2, the same is not pressed during the course of hearing. Hence the same is dismissed as not pressed. 4. Regarding ground No.3, the AO observed that assessee has not filed the original return within the due date and thus the revised return filed is treated as void-ab-initio and cannot be accepted. Therefore, he disallowed the deduction of ₹ 37,000/- claimed u/s 48 of the IT Act. 4.1 The CIT(A) confirmed the action of the AO by holding that the original ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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