TMI Blog2020 (11) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... n period of limitation. We also note that, said notice was received by assessee on 10/09/2014, thereby complying with requirements for assuming jurisdiction by Ld.AO, within period of limitation, as observed in case of Hotel Bluemoon [ 2010 (2) TMI 1 - SUPREME COURT] - In our view, decision of Hon ble Supreme Court in case of Hotel Bluemoon will not come in support of assessee in the present facts. Accordingly Grounds 6-7 raised by assessee stands dismissed. Exemption u/s 54F - not considering deposit in capital gains account scheme - assessee declared long term capital gain at nil , after claiming indexed cost of acquisition of ₹ 6,90,120/- and claimed exemption of ₹ 97,09,800/- under section 54F, consisting of ₹ 44 lakh kept in capital gains account and 55 lakh held in PD account by income tax Department - whether the amount so deposited has been utilised for construction or purchase of house would arise only in assessment year 2016-17? - HELD THAT:- In the present facts of the case, we note that assessing officer has examined the withdrawals/deposits found in the capital gains account scheme during the year under consideration. In our view such action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Department. If the amount seized and kept in PD account is more than the liability payable by assessee, then the assessee is entitled to interest also as per the provisions of section 132B of the Act - this amount cannot be treated as equal and to advance tax for purpose of computing interest under section 234B of the act. We, therefore do not find any infirmity in the observations of Ld.CIT(A). - Decided against assessee. - ITA No.864/Bang/2017 - - - Dated:- 5-11-2020 - Shri. B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri Ramesh, C.A For the Respondent : Shri Muzaffar Hussain, Addl. CIT ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 30/01/2017 passed by Ld.CIT(A)-7, Bangalore for assessment year 2013-14 on following grounds of appeal: Concise grounds of appeal : 1. The order of the learned CIT(A) is opposed to the facts of the case and law applicable to it. 2. The learned CIT(A) erred in not allowing exemption U/s.54F of the Act as claimed. 3. The learned CIT(A) erred in not considering the deposit of ₹ 44,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .04 crores. It was also stated by assessee that he further received a sum of ₹ 55 lakh on 14/10/2012 (the date of entering into sale agreement) and the same was kept in locker. In view of the aforesaid information, revenue conducted search operation in the hands of assessee under section 132 of the Act, and seized the above said amount of ₹ 55 lakh In the bank locker. 2.1. Consequentially, assessee filed its return of income for assessment year 2013-14 on 30/07/2013 and computed long term capital gain on sale of the above said vacant site as under: Sale consideration received 1,04,00,000/- Acquired during the financial year 2009-10 by way of gift less: indexed cost of acquisition as on 01/04/1981 (₹ 30/-per sq.ft.) 81,000 x 852/100 6,90,120 97,09,880 less: exemption under section 54 97,09,880 Nil Assessee thus declared Nil capital gains. 3. Ld.AO, thereafter called upon ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot partake character of deposits made in capital gains account scheme, and rejected claim of deduction under section 54F of the said amount for following reasons: Assessee kept the cash in bank locker and it was only after detection by income tax Department, that it was offered for taxation. Amount seized and lying in PD a/c cannot partake the character of deposits made in the capital gains account scheme. Ld.AO thus rejected assessee s claim of deduction of ₹ 55 lakh under section 54F(4) of the Act. 8. Ld.AO noted that, assessee obtained the property sold by way of gift from his father vide gift deed dated 21/01/2010. He also noticed that assessee s father purchased the property on 29/04/1974 and assessee had computed indexation benefit from financial year 1981-82. Ld.AO was thus of the opinion that assessee did not adopt cost of inflation index in accordance with law. Ld.AO was of opinion that, assessee became owner of property for first time during financial year 2009-10, by virtue of gift deed executed by his father on 21/01/2010. Ld.AO was of opinion that, cost inflation index applicable for financial year 2009-10 should be adopted for computing long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of assessee that, as a sum of ₹ 55 lakh was seized by revenue, and was lying in PD account, it should be treated as being deposited in Capital Gains Account Scheme. Ld.CIT(A) was of opinion that, there is no provision, either in capital gains account scheme or under section 132B of the Act, to consider it mutually, and therefore, upheld disallowance made by Ld.AO. Before Ld.CIT(A) assessee contended that interest under section 234B of the Act should be computed after giving credit of ₹ 55 lakh seized by revenue and kept in PD account. Ld.CIT(A) rejected this argument advanced by assessee Ld.CIT(A) thus observed as under: 6.2 There is no provision either in the Capital Gain account Scheme or in the Section 132B of the Act to consider it mutually. In the instant case, this amount of ₹ 55 lakh was seized from the Bank locker of the Appellant and it was never be a part of consideration of sale of property mentioned in the sale agreement. Undoubtedly , it was a unexplained income of the Appellant and the Appellant was having no intention ever to deposit it into CG account as i) it was not .a part of sale consideration in the sale Deed and received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused submissions advanced by both sides in light of records placed before us. 19. Ld.AR placed reliance on decision of Hon ble Supreme Court in case of Hotel Bluemoon (supra), in support of his claim. 20. We note that, assessee filed its original return of income under section 139 of the Act on 30/07/2013, and notice under section 143(2) of the Act, was issued to assessee on 19/11/2013. In the notice, date of return filed by assessee for year under consideration is mentioned to be 31/07/2012 as against 30/07/2013. It is contended by Ld.AR that, no notice under section 143(2) of the Act, was issued, in relation to return of income dated 30/07/2013 filed by assessee for year under consideration. On analysing the argument advanced by Ld.AR having regard to the notices issued placed at page 55 of paper book, it is a fact that return of income for assessment year under consideration could not have been filed on 31/07/2012. And therefore in our view date of filing of return for assessment year 2013-14 mentioned in notice issued under section 143 (2) of the Act on 19/11/2013 could only be a typographic mistake. Therefore, contentions of Ld.AR cannot be appreciated. In our view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r PD account. 26. Ld.AR submitted that, assessee intended to invest entire sale consideration in construction of residential property, and therefore sum of ₹ 44 lakh was kept in capital gains account scheme on 06/11/2012. Ld.AR submitted that, assessee paid sum of ₹ 4,84,020/- to Telecom Employees Co-operative Housing Society, with intention of purchasing site, and constructing residential building, which was subsequently, refunded by BDA since site was not allotted. 27. Ld.AR submitted that, assessee thereafter, intended to buy residential property and entered into agreement for purchase, for sale consideration at ₹ 1,45,00,000/- situated at No.1740, 98 Cross, 2nd stage Kumaraswamy Layout, together with residential building constructed of 45 squares. Assessee accordingly paid advance of ₹ 21,00,000/- on 02/06/2013, which was directly transferred from capital gain account to the vendor. Ld.AR submitted that, this purchase did not materialise due to dispute on illegality of titles and accordingly, the same was cancelled. On 18/07/2013, cancellation deed was registered with Sub Registrar of Baswangudi, Bangalore. Assessee received amount paid as advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 we note that deduction is allowed for amount deposited before the due date of filing of return of income specified under section 139 of the act in the capital gains account scheme. Proviso to section 54F (4) of the Act, deals with a situation when the amount so deposited is not utilised for purchase or construction of new asset. 34. According to the proviso, the amount so not utilised is chargeable to tax under section 45 as income of the previous year in which the period of 3 years from the date of transfer of original asset expires. In our view provisions of section 54F(4) allows deduction under section 54F(1) by a deeming fiction that an amount deposited in capital gains account scheme as cost of new asset. And if the amount so deposited is not utilised for purchase or construction of new asset, then the same becomes taxable only in the previous year in which the period of 3 years from the date of transfer of original asset expires. Thus, the issue that needs to be examined is as to whether, the amount so deposited was utilised for purchase or construction of asset shall arise only in the previous year in which the period of 3 years from the date of transfer of origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with Department and was considered as part of sale consideration. Ld.AR submitted that authorities below proceeded on wrong footing as sale consideration of ₹ 1,04,00,000/- comprised of ₹ 44 lakhs and ₹ 55Lacs. It was submitted that, entire sale consideration was to be utilised for purchase of plot and construction of residential house. Ld.AR submitted that, assessee received cash of ₹ 55Lacs on the date of registration of agreement, which was kept in the bank locker. And immediately on 25/10/2012 by invoking provisions of section 132 of the Act, revenue seized the said amount. He submitted that, assessee had no intention to evade tax as the said amount, are declared as part of sale consideration on the statement recorded as well as the agreement. 40. Ld.AR submitted that, assessee had no intention to evade any tax on ₹ 55 Lacs. He submitted that, said sum was separately kept in the locker for utilising it for construction. Ld.AR submitted that, assessee when filed original return of income considered entire sale consideration to be exempt under section 54F and therefore allegation casted by revenue is baseless. He submitted that, as said amount w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d received in cash and (ii) it was kept in Bank locker but not in Bank account. Accordingly, I do not find in the merit of appeal in this issue, hence rejected. 43. Assessee has placed sale agreement at page 13-70 of paper book. We note that, at page 15 of paper book, total consideration mentioned therein, received by assessee is ₹ 1,04,00,000/-. Clause 2 of terms and condition at page 15, shows bifurcation of amounts received by assessee which includes sum of ₹ 55 Lacs in cash. Therefore we reject this observation of Ld.CIT(A) of ₹ 55 Lacs to be undisclosed. 44. The seizure of cash and keeping in PD account is a separate procedure prescribed in the act which is different from deposits made into capital gains account scheme. As observed by Ld.CIT(A) in para 6.1 of impugned order, reproduced hereinabove, amount kept in PD account is under the control of Department, while amount kept in capital gains account scheme is under the control of assessee. There is no provision under the Act, to link both the types of deposits. Assessee could avail deduction under section 54F(1) of the Act, only if the deposit is actually made in the capital gains account scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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