TMI Blog2018 (1) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sec. 139(1) and 139(4) was 31.07.2009 and 31.03.2011 respectively). He acquired a new flat on 21.11.2009 out of proceeds of term deposit and such acquisition was within two years from the date of sale of original capital asset. Thus he satisfied the primary requirement of Sec.54(1). Although the failure of the assessee to deposit the sale proceeds in a Capital Gains Account Scheme, 1988 for intervening period was undoubtedly a technical default, he should not be penalized for the same because he satisfied the real intent as well as essence of the provisions by depositing the sale proceeds in FDR since beginning, not using it for any other purpose and investing the sale proceeds in acquisition of a new house within statutory period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermining total income of ₹ 19,56,220/-. 5. During the year under consideration, the assessee offered long term capital gains and also claimed exemption u/s.54F. Ld. A.O computed the LTCG at ₹ 13,52,276/-. The assessee had also claimed exemption u/s.54 against this LTCG and stated that his contribution in purchase of new flat was ₹ 30,40,000/-. On verification of details filed during assessment proceedings. AO observed that the assessee had not purchased new flat within stipulated time and accordingly, show cause notice was issued to the assessee. In response, assessee submitted explanation which was rejected by the Ld. A.O. and he accordingly, denied the claim of exemption u/s.54. 6. By the impugned order, CIT(A) con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of original asset shall be dealt with as follows: (1) If the long term capital gain from transfer of original asset is more than the investment in new residential house, the difference between long term capital gain and investment in new residential house shall be taxable u/s.45. (2) If the long term capital gain from transfer of original asset is less than investment in new residential house, the long term capital gain shall be NIL. (e) However, if the assessee has sold the new house within 3 years from date of its construction or purchase, in the first situation described in (1) above, the cost of new asset shall be taken as NIL for computing capital gain on transfer of new asset and in the second situation describ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le proceeds in FDR instead of the Capital Gain Account Scheme, 1988 and acquired the house within specified period by investing the sale proceeds, he has satisfied the spirit of Sec.54(1) and therefore, he should not be denied the benefit for technical violation as provided u/s.54(2) of the Act. 9. From the record, we found that the assessee sold his flat on 2nd April, 2008 for a consideration of ₹ 30,40,000/-, The entire sale proceed was invested in term deposit on 07.04.2008 because he was under bonafide belief that it would meet the requirements of Sec.54 i.e. investment of sale proceeds in a bank account and its investment in a house within two years from the date of transfer of original asset. The Return of Income was filed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the Legislature or the purpose with which the said provision has been incorporated in the Act is also very clear that the assessee should be given some relief. Though it has been very often said that common sense is a stranger and an incompatible partner to the Income-tax Act and it is also said that equity and tax are strangers to each other, still this court has often observed that purposive interpretation should be given to the provisions of the Act. In the case of Oxford University Press v. CIT [2001] 3 SCC 3591 this court has observed that a purposive interpretation of the provisions of the Act should be given while considering a claim for exemption from tax. It has also been said that harmonious construction of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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