TMI Blog2006 (8) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... ion formulated in the present case in positive - - - - - Dated:- 9-8-2006 - Judge(s) : D. BISWAS., T. NANDAKUMAR SINGH. JUDGMENT The judgment of the court was delivered by T. Nandakumar Singh J.-The appellant/Commissioner of Income-tax, Gauhati-I, preferred this appeal under section 260A of the Income-tax Act, 1961 against the common order dated April 18, 2001, passed by the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, in I.T.A. No. 328(Gau) of 1999 and I.T.A. No. 49(Gau) of 2000 for the assessment year of the assessee 1996-97. By an order of this court dated February 28, 2003, the appeal is admitted on the question: "Whether, in the facts and circumstances of the case, the assessee was entitled to claim benefit under section 54 of the Income-tax Act, 1961, on the entire amount received by him on account of sale of his house property?" The respondent/assessee is an income-tax assessee and the status of the assessee is that of an individual trading in the business of truck plying. The assessment year under consideration is 1996-97. The issue involved in the present appeal is the claim for benefit of exemption from being charged to income-tax on the sale of prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of three years of its purchase or construction, 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 gains 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 utilized 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 utilized in accordance with, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs agreed to transfer and assign their respective shares or interest in the said flat together with a car park space for a consideration of Rs. 30,00,000 (rupees thirty lakhs) in total. The Assessing Officer (for short the "AO") under his assessment order rejected the respondent/assessee's claim for exemption under section 54 of the Income-tax Act, 1961, for the reason that (a) the appellant/assessee has taken only a sub-lease of the property vide indenture of sub-lease dated January 17, 1998, in between him and M/s. Agarwal Company Ltd. and the said indenture has been executed in pursuance of the letter dated August 28, 1961, written by Shri R.K. Jalan and Smt. Anguri Devi Jalan to the said lessee; (b) the sub-lease cannot be taken as a clear purchase as per the meaning of the provisions of section 54(1) of the Income-tax Act and also that there was no transfer of property as claimed and the same was merely a sub-lease; (c) the appellant/assessee had not complied with the provisions of section 54(2) of the Income-tax Act by not depositing the unappropriated amount of capital gain in the Capital Gains Deposit Scheme, 1988, within the stipulated time of furnishing the return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal, Gauhati Bench, Gauhati. The Department also preferred an appeal against the order of the learned first appellate authority, i.e., the learned Commissioner of Income-tax dated September 24, 1999, before the learned Income-tax Appellate Tribunal, Gauhati Bench, Gauhati. By a common order dated April 18, 2001, the Income-tax Appellate Tribunal had allowed the appeal preferred by the respondent/assessee and rejected the appeal preferred by the appellant/Commissioner of Income-tax, Gauhati Bench. The basis on which the Income-tax Appellate Tribunal, Gauhati Bench, allowed the appeal preferred by the respondent/assessee is that section 54 of the Income-tax Act being the beneficial provision, it should be construed liberally to advance the object of giving benefit to the assessee by exempting the capital gain on the sale of property used for residence from being charged to income-tax and also that sub-section (2) of section 54 of the Income-tax Act, 1961, simply mentions that the unutilized portion of the capital gain on the sale of the property used for residence could be deposited by the assessee before the date of furnishing return of income-tax under section 139 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t payable to Sri Radha Krishan Jalan and Smt. Anguri Devi Jalan was shown as unsecured loans. Clause 5 of section 2(47) of the Act reads as under: 'any transaction involving the allowing of possession of any immovable property to be taken or retain in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), or, ...' 11. Therefore, for the purpose of transfer the possession of the flat in part performance of the contract under section 53A of the Transfer of Property Act is essential. Further, under the provision of section 54(1) of the Act, it is stipulated that a person is entitled to take the benefit if the purchase has been made within the stipulated period of one year before or two years after the date on which the transfer took place. In the case before us, the assessee has undisputedly entered into agreement for purchase of the flat and taken possession within one year from the date of sale of the old residential house. Therefore, we agree with the learned authorised representative of the assessee that the assessee has complied with the requirements as laid down in section 54(1) of the Act by purchasing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income-tax under section 139 of the Income-tax Act. Section 139 of the Income-tax Act, 1961, cannot be meant only section 139(1) but it means all sub-sections of section 139 of the Income-tax Act, 1961. Under sub-section (4) of section 139 of the Income-tax Act any person who has not furnished a return within the time allowed to him under sub-section (1) of section 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year whichever is earlier. Such being the situation, it is the case of the respondent/assessee that the respondent/assessee could fulfil the requirement under section 54 of the Income-tax Act for exemption of the capital gain from being charged to income-tax on the sale of property used for residence up to March 30, 1998, inasmuch as the return of income-tax for the assessment year 1997-98 could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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