TMI Blog2020 (1) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain is not utilised in construction of house property and when it is so utilised for construction of house property, then there is no need to make a deposit in the specified bank account. The decisions rendered in the context of section 54F of the Act will also apply to section 54 of the Act, because both the sections are in pari materia the same, on the aspect of deposit of unutilized capital gain in specified bank account. In view of the aforesaid decisions of the Hon'ble Karnataka High Court, we are of the view that the assessee is entitled to deduction u/s. 54 - Decided in favour of assessee. - ITA No.260/Bang/2019 - - - Dated:- 30-12-2019 - Shri N.V. Vasudevan, Vice President And Shri D.S. Sunder Singh, Accountant Member For the Appellant : Smt. Suman Lunkar, CA For the Respondent : Smt. R. Premi, Jt. CIT(DR)(ITAT) Bengaluru. ORDER PER N.V. VASUDEVAN, VICE PRESIDENT The above appeal by the Assessee is against the order dated 31.12.2018 relating to assessment year 2013-14. 2. The only issue that arises for consideration in this appeal is as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Admittedly, the assessee had not made deposit of capital gain in the specified bank account as required u/s. 54(2) of the Act. Sec.54 of the Act reads thus: Profit on sale of property used for residence. 54. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, 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,- ( i ) if the amount of the capital gain is greater than the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the transfer of the original asset expires; and ( ii ) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 5. It was the plea of assessee that when the capital gain is utilized in purchasing the new asset within a period of two years from the date of transfer, there was no requirement of deposit of capital gain in the specified bank account. In this regard, the assessee has placed on the decision of the Hon'ble Karnataka High Court in the case of Fathima Bai v. ITO, 32 DTR 233 (Kar) wherein it was held that when the capital gain is invested in purchase of new asset within a period of two years from the date of transfer, there was no requirement to deposit capital gain in specified bank account and on that ground deduction u/s. 54 cannot be denied to the assessee. The AO, however, rejected the plea of the assessee for deduction for the reason that assessee failed to comply with the requirements of section 54(2) of the Act. 6. On appeal by the assessee, the CIT(Appeals) confirmed the action of the AO with the following relevant observations:- 5. I have considered the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired before filing the return of income U/s 39, the capital gain amount which is not utilized is to be deposited in the capital gain account by the assessee before furnishing the return of the income (such deposit being made in any case not letter than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139). After fulfilling this condition the assessee is eligible to purchase new property within two years of the date of transfer of asset. In the instant case the assessee has not deposited any amount in the capital gain account. The assessee's claim (the claim for exemption u/s. 54 in the return of Income filed is towards site purchased) of exemption u/s 54 on the property purchased jointly vide sale deed dated 31.10.2014, though his submission dated 03/03/2016, is not acceptable. 5.3 The facts of the case law relied upon by the assessee is totally different from the facts of the instant case and hence the ratio of the decisions relied upon by Hon'ble Courts is not applicable in this case. 6. In view of the discussions made in the above paras, the assessee has very clearly no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as the other conditions of Sec.54 of the Act are satisfied. 6. As far as the first ground on which deduction u/s.54 of the Act was denied to the Assessee viz., non-compliance of the provisions of section 54(2) of the Act i.e., not depositing the unutilized capital gain in a designated bank account within the due date prescribed u/s.139 of the Act, it is not disputed that the assessee did not deposit the unutilized long term capital gain in the designated bank account as per section 54(2) of the Act. Nevertheless, he has completed the purchase of a new asset within a period of two years from the date of transfer. In such circumstances, courts have taken a view that there is no requirement to satisfy the condition u/.s 54(2) of the Act. In this regard the learned counsel for the Assessee has relied on the decision of the Hon ble Karnataka High Court in the case of Pr.CIT Vs. R.Srinivas ITA No.384/2015 judgment dated 2.11.2015 wherein the Hon ble Karnataka High Court following the decision in the case of Fathima Bai Vs. ITO (2009) 32 DT 243 (Karn.) held that if the capital gain is utilized in purchase of new asset within the time permitted by Sec.54 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
