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TMI Blog2014 (11) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has filed the return of income for the assessment year 2005-06 on 30-01-2006 declaring the total income of Rs. 5,56,960/- wherein he claimed long term capital gain exemption under Section 54F of the Income Tax Act, 1961 (hereinafter referred to as 'the Act' for short). The Assessing Authority passed an order dated 6-12-2007, under Section 143(3) of the Act recalculating the computation of income filed by the assessee and held that the long term capital gain exemption has to be disallowed. He also imposed interest under Sections 234B and 234C of the Act. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals)-I, Bangalore (hereinafter referred to as 'the First Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is not utilized either for purchase of a property or construction of a residential house, the said amount shall be charged under Section 45 of the Act as income of the previous year in which period of three years from the date of transfer of the original asset expires. Therefore the authorities erred in assessing the said income for the assessment year 2005-06. 5. Per contra, learned counsel for the Revenue argued in support of the order passed by the Tribunal. 6. This Court had an occasion to consider the identical issue in respect of a case falling under Section 54(2) of the Act in the case of the CIT v. Khoobchand M. Makhija [2014] 223 ITR 189 (Mag.)/43 taxmann.com 143 (Kar.). Paragraph 21 of the said judgment reads as under: "21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set expires. Therefore, the contention that immediately after the purchase of the new asset in the relevant year, the unutilized capital gains should have been offered to tax, is untenable. That is precisely what the authorities have held." 7. Section 54F(4) of the Act is pari materia with Section 54(2) of the Act. Therefore, what follows is that when the statute prescribes expressly when the capital gain is to be offered to tax. It shall be treated accordingly. If the said amount is deposited in a Nationalized Bank as required under law, in capital gain account the deposit is construed as investment in new asset. Subsequently if the amount deposited is not utilized the entire capital gain or the unutilized capital gain chargeable under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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