TMI Blog2016 (12) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri Shiva Srinivas, JCIT For The Respondent : Shri P.B. Srinivasan, CA ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) 4, Chennai, dated 28.12.2015 and pertains to assessment year 2011-12. 2. The only issue arises for consideration is with regard to disallowance of deduction claimed by the assessee under Section 54 of the Income-tax Act, 1961 (in short 'the Act') while computing capital gain. 3. Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the assessee has sold a residential flat at Santhome High Road, Chennai on 09.03.2011 for a total consideration of ₹ 1,09,00,000/-. The assessee admitted the long term capital gain at ₹ 64,84,686/-. The assessee explained before the Assessing Officer that a sum of ₹ 99,00,000/- was invested before the date of filing of return under Section 139(1) of the Act and claimed the exemption of the entire long term capital gain of ₹ 64,84,686/- under Section 54 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vasan, the Ld. representative for the assessee, submitted that the assessee admittedly sold a residential flat at Santhome High Road, Chennai, on 09.03.2011 for a total consideration of ₹ 1,09,00,000/-. The capital gain computed by the assessee to the extent of ₹ 64,84,686/- was admitted by the Assessing Officer. The only dispute is with regard to claim of exemption under Section 54 of the Act. According to the Ld. representative, the assessee has utilised the amount of capital gain by way of making deposit to the builder, namely, M/s Total Environment Building Systems Pvt. Ltd. for purchase of residential flat. According to the Ld. representative, when the assessee gave deposit to the builder for purchase or construction of flat, it amounts to utilization of money as provided under Section 254(2) of the Act. When the assessee deposited money, according to the Ld. representative, the capital gain would not remain with the assessee for making deposit in Capital Gains Account. 6. Referring to the judgment of Apex Court in Fibre Boards (P) Ltd. v. CIT (2015) 376 ITR 596, the Ld. representative for the assessee submitted that what is required to be deposited in the Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, as the case may be, the cost shall be nil ; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45 ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction 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 utilised in accordance with, any scheme which the Central Government may, by noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .:- We are of the view that the aforesaid construction of section 54G would render nugatory a vital part of the said section so far as the assessee is concerned. Under subsection (1), the assessee is given a period of three years after the date on which the transfer takes place to purchase new machinery or plant and acquire building or land or construct building for the purpose of his business in the said area. If the High Court is right, the assessee has to purchase and/or acquire machinery, plant, land and building within the same assessment year in which the transfer takes place. Further, the High Court has missed the key words not utilised in sub-section (2) which would show that it is enough that the capital gain made by the assessee should only be utilised by him in the assessment year in question for all or any of the purposes aforesaid, that is towards purchase and acquisition of plant and machinery, and land and building. Advances paid for the purpose of purchase and/or acquisition of the aforesaid assets would certainly amount to utilization by the assessee of the capital gains made by him for the purpose of purchasing and/or acquiring the aforesaid assets. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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