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D.C.I.T. Circle-6, Kolkata Versus M/s. Kilburn Engineering Ltd.

Eligibility of exemption u/s 54G - deposit of unutilized capital gain that was deposited in a specified account as laid down in Sec.54G(2) on 30.3.2010 by the Assessee - Held that:- As decided in case of CIT vs Jagriti Agarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] Sec.139(4) which is akin to Sec.139(5) of the Act in the present case, was part of Sec.139(1) and therefore if deposit of unutilized capital gain is made within the time limit made in Sec.139(4) of the Act, the deduction .....

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of actual receipt of the consideration, because if the assessee receives part payment as on the date of transfer and receives part payment after six months then it would lead to an impossible situation by asking assessee to invest money in specified asset before actual receipt of the same. We are of the view even on this basis the order of the CIT(A) deserves to be upheld. - Decided against revenue - ITA No.1987/Kol/2013 - Dated:- 1-3-2017 - Shri N.V.Vasudevan, JM and Shri Waseem Ahmed, AM For T .....

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rcumstances of the case, Ld. CIT(A) erred in allowing the deduction u/s 54G of the IT Act even when the deposit has not been made within the due time as provided in the Act. 3. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. There is a delay of about 12 days in filing this appeal by the revenue. The delay in filing the appeal has been explained in an affidavit filed before as one of administrative delay. The learned c .....

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crores. Sec.54G of the Act reads as follows: Exemption of capital gains on transfer of assets in cases of shifting of industrial undertaking from urban area. 54G. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset, being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situate in an urban area, effected in the course of, or in consequence of .....

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usiness in the said area ; (c ) shifted the original asset and transferred the establishment of such undertaking to such area; and (d ) incurred expenses on such other purpose as may be specified in a scheme framed by the Central Government for the purposes of this section, 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 .....

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ransfer within a period of three years of its being purchased, acquired, constructed or transferred, 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 being purchased, acquired, constructed or transferred, as t .....

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n which is not appropriated by the assessee towards the cost and expenses incurred in relation to all or any of the purposes mentioned in clauses (a ) to (d) of sub-section (1) within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for all or any of the purposes aforesaid 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 .....

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the assessee for all or any of the purposes aforesaid together with the amount, so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for all or any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within the period specified in that sub-section, then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of t .....

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.(HDIL), under two agreements dt. 08.11.2007 & dt. 30.01.2009 for a consideration of ₹ 115 Crores. The sale consideration was payable by HDIL in instalments. There is no dispute that Long Term capital gain (LTCG) of ₹ 81,57,21,820 resulted on account of sale of the property at Bhandhup and the transfer of the capital asset had taken place during the previous year relevant to AY 2009-10. To claim exemption u/s.54G of the Act, the Assessee had to comply with the conditions laid dow .....

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hich the capital gain arose, he has to deposit the unutilized for all or any of the purposes mentioned in Sec.54G(1) of the Act, 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 notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit. Such deposit of unutilized capital gain has to be deposited in the account on or before the date o .....

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.9.2009. There is another date given for filing revised return of income in Sec.139(5) of the Act, which lays down that if any person, having furnished a return under sub-section (1) of Sec.139 of the Act, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The period of one year from the end of the relevant AY .....

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f the Act to the extent of ₹ 25,61,43,054/-. The dispute in this appeal is with regard to eligibility of exemption on deposit of unutilized capital gain of ₹ 10,00,00,000 that was deposited in a specified account as laid down in Sec.54G(2) of the Act on 30.3.2010 by the Assessee. We have already seen that the first part of Sec.54G(2) gives time limit for making investment upto the time limit for filing return of income u/s.139 of the Act which includes both Sec.139(1) of the Act and .....

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eligible for exemption u/s.54G of the Act because the time limit laid down in Sec.139(5) of the Act was 31.3.2011 and the deposit of ₹ 10 crores was made on 30.3.2010. If the time limit laid down in the second part is taken into account viz., Sec.139(1) of the Act which is 30.9.2009 in the present case, than the deposit of ₹ 10 crores by the Assessee in the specified account was not eligible for exemption u/s.54G of the Act as it was made beyond the time limit. 8. The Assessing Offic .....

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and that in the circumstances, the Assessing Officer should have accepted that Revised Return of Income was filed in accordance with law and have allowed deduction as claimed therein. It was further submitted that the facts of the Assessee s case was similar to the case already been decided by ITAT, 'A' Bench, Kolkata vide consolidated order in the case of Chanchal Kumar Sircar v/s Income Tax Officer, Wd32(l), Kolkata (I.TA Nos. 1146/KoI/2011)and Chapal Sircar v/s Income Tax Officer, Wd .....

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Assessee at a later point of time and that within one month of the receipt of sale consideration the deposit into specified account was made. The appellate authority took the view that the period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of actual receipt of the consideration, because if the assessee receives part payment as on the date of transfer and receives part payment after six months then it would lead to an impossible situation by asking ass .....

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pt of compensation, as against the date of acquisition of the property denoting transfer thereof the same should be considered to be sufficient compliance for the purpose of claiming exemption u/s. 54E of the Act. Hon 'ble High Court observed that a taxing statute or any other statute has to be construed reasonably and every effort should always be made to ascertain the intention of Parliament from the words employed and, as far as possible, an interpretation which leads to absurdity should .....

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eld that if the agricultural land is purchased within a period of two years from receipt of enhancement compensation, the capital gain or no capital gain, as the case may be, will be charged under section 54B(2) of the Act. 9. The Assessee also placed reliance on the decision of the Hon ble ITAT Pune Bench "A ", Pune in the case of Shri Mahesh Nemichandra Ganeshwade v/s Incometax Officer, Wd 3(4), Pune, dated 29/03/2012 laying down identical proposition. 10. The CIT(A) agreed with the .....

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y Act but invested in specified bonds within one month of the receipt of sale consideration being part payment is eligible for exemption u/s. 54EC of the Act. It observed as under:- "9. In view of the above consistent principle adopted by Hon 'ble High Courts in respect to interpretation of a beneficial provision i.e. exemption provision under capital gains tax, we have to take similar approach in deciding the issue in hand i.e. the claim of assessee for exemption u/s. 54EC of the Act b .....

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exemption u/s. 54EC of the Act on part payment received after completion "of transaction on 02.()7.2004 and as detailed out in para 3 page 3 of this order. AO is directed accordingly. This issue of assessee's appeal is allowed. Similar are the facts in ITA No. 1146/KoI/2011 in the case of Shri Chanchal Kr. Sircar, hence AO will allow exemption in this case also. " 36. The Hon'ble ITAT Pune Bench 'A' in the case of Mahesh Nemichandra Ganeshwade v. Income-tax Officer in .....

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sultation with the Ministry of Law to the condition of making investment within six months from the date of transfer in section 54EC would support the claim of the assessee in this case also for exemption from capital gain with respect to the impugned sum of ₹ 50 lakhs invested in specified assets on 3.8.2007 and 27.10.2007. In the present case, admittedly the impugned amount of sale proceeds have been received by the assessee much after the date of transfer i. e. 12. 7.2005, so however, i .....

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pugned amount of ₹ 50 lakhs. Therefore on this aspect, assessee has to succeed. Thus, this Ground of appeal is allowed. " 37. The appellant has deposited the amount of ₹ 8,00,000,00/- on 1.12.2009; RS.71,55,000/- on 1.12.2009 and ₹ 2,50,00,000/- on 27.3.2010 and ₹ 10,00,00,000/- on 27.3.2010. The appellant has deposited ₹ 47,33,55,000/- and is requesting for deduction of ₹ 35,61,43,054/- only since the payments were received late and the buyer has default .....

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as caught in a web of financial constraints relating to shifting of plant; manufacturing and supply of machines as per order and non receipt of payment from an undertaking of Govt. of Maharashtra even after getting the land registered in the name of the buyer. In the facts and circumstances and relying upon the judgment of Hon'ble ITAT Kolkata Bench 'A' in the case of Chanchal Kumar Sircar v. Income-tax Officer, Ward-32(1) and the Hon'ble ITAT Pune Bench 'A' in the case o .....

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led for deduction of ₹ 35,61,43,054/- u/s 54G. This ground of appeal is allowed. 11. Aggrieved by the order of CIT(A), the revenue has preferred the present appeal before the tribunal. We have already seen that the first part of Sec.54G(2) gives time limit for making investment upto the time limit for filing return of income u/s.139 of the Act which includes both Sec.139(1) of the Act and Sec.139(5) of the Act. The second part of Sec.54G(2) however adds a rider that such deposit being made .....

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s 31.3.2011 and the deposit of ₹ 10 crores was made on 30.3.2010. If the time limit laid down in the second part is taken into account viz., Sec.139(1) of the Act which is 30.9.2009 in the present case, than the deposit of ₹ 10 crores by the Assessee in the specified account was not eligible for exemption u/s.54G of the Act as it was made beyond the time limit. 12. The ld. DR relied on the order of the AO. The ld. Counsel for the assessee reiterated the submissions as were made befor .....

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lized capital gain of ₹ 10,00,00,000 that was deposited in a specified account as laid down in Sec.54G(2) of the Act on 30.3.2010 by the Assessee. We have already seen that the first part of Sec.54G(2) gives time limit for making investment upto the time limit for filing return of income u/s.139 of the Act which includes both Sec.139(1) of the Act and Sec.139(5) of the Act. The second part of Sec.54G(2) however adds a rider that such deposit being made in any case not later than the due da .....

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10 crores was made on 30.3.2010. If the time limit laid down in the second part is taken into account viz., Sec.139(1) of the Act which is 30.9.2009 in the present case, than the deposit of ₹ 10 crores by the Assessee in the specified account was not eligible for exemption u/s.54G of the Act as it was made beyond the time limit. In the case of Jagriti Agarwal (supra), the Hon ble Punjab & Haryana High Court dealt with a case of deduction u/s.54 of the Act wherein similar provision as .....

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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 37 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 depos .....

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deduction cannot be denied to an Assessee. The following were the relevant observations of the Hon ble Court. Having heard learned counsel for the parties, we are of the opinion that sub-s. (4) of s. 139 of the Act is, in fact, a proviso to sub-s. (1) of s. 139 of the Act. Sec. 139 of the Act fixes the different dates for filing the returns for different assessees. In the case of assessee as the respondent, it is 31st day of July of the assessment year in terms of cl. (c) of the Expln. 2 to sub .....

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nt whichever is earlier : Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988 or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year." A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under subs. (1) i.e., before 31st d .....

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relation to the time allowed to an assessee under sub-s. (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-s. (1) of s. 139. Therefore, such sub-s. (4) has to be read along with sub-s. (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar Jalan cases (supra) respectively. In view of the above, we find that due date for furnishing the return of income as per .....

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