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TMI Blog2024 (10) TMI 1560X X X X Extracts X X X X X X X X Extracts X X X X ..... ), NFAC has erred in sustaining addition of Rs. 1,00,00,000/- made by the assessing officer by applying provisions of section 54F(4) of the Act. 3. That on the facts and circumstances of the case, the action of the Ld. CIT(A) and Ld. Assessing Officer led to double addition of Rs. 100,00,000/-on account of withdrawal from capital gain account scheme u/s 54F(4) of the Act. 4. The appellant craves to add, alter or delete any of the grounds of appeal during the course of appellate proceedings." 2. Succinctly stated, the assessee had e-filed his return of income for A.Y.2018-19 on 29.09.2018, declaring an income of Rs. 2,31,69,120/-. Thereafter, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. The A.O. while framing the assessment observed that the assessee had disclosed Long Term Capital Gain (LTCG) of Rs. 3,01,89,200/- in his return of income. The A.O. on a perusal of the details observed that the assessee in A.Y.2016-17 had sold a capital asset on which he had earned LTCG of Rs. 9,90,32,248/-. It was further observed by him that the assessee had deposited a sum of Rs. 6 crore in his bank account opened under the Capital Gain Account Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, assessment order, submission filed by the appellant and the available documents on record. All the grounds are being dealt together. The appellant, Shri Harshad Chaudhary, legal heir of Late Shri Digambar Madhav Chaudhary, filed an appeal against the assessment order passed under section 143(3) of the Income-tax Act, 1961, by the National e-Assessment Centre for the Assessment Year (AY) 2018-19. The primary issue in dispute is the addition of Rs. 1 crore under the head "Capital Gains" made by the Assessing Officer (AO). 5.2 The appellant contended that: 1. The addition of Rs. 1 crore to the total income was erroneous as the amount was already taxed in AY 2019-20, leading to double taxation. 2. The AO failed to appreciate that the amount withdrawn from the Capital Gains Account Scheme was correctly offered to tax as per the provisions of section 54F(4) of the Act. 3. The appellant was within his rights to withdraw the amount from the Capital Gains Account Scheme and pay taxes on it in installments. 5.3 Upon perusal of the submissions made by the appellant, the assessment order, and the relevant provisions of the Income-tax Act, 1961, the following observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1 crore for the construction/purchase of a residential house within the stipulated period. As per the proviso to section 54F(4), the unutilized amount should be charged to tax in the year the period of three years expires, which is AY 2018-19 in this case. Hence, the addition of Rs. 1 crore to the total income for AY 2018-19 is justified. The appellant relied on judicial precedents to argue that the withdrawals should be taxed in the respective years of withdrawal. However, these precedents do not override the clear provisions of section 54F(4), which mandate that the unutilized amount should be taxed in the year the three-year period expires. The AO's action is in line with the legislative intent and the provisions of the Act. The appellant's claim of double taxation is misplaced. The AO's addition of Rs. 1 crore in AY 2018-19 is based on the clear provisions of section 54F(4). The appellant's decision to offer the amount to tax in AY 2019-20 does not alter the fact that, as per the Act, the amount should be taxed in AY 2018-19. There is no double taxation as the correct assessment year for taxing the unutilized amount is AY 2018-19. 5.5 Based on the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where (a) the assessee,- (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property" Explanation.-For the purposes of this section,- "net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount by which- (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid." (emphasis supplied by us) It transpires on a careful perusal of the aforesaid statutory provision that the same contemplates that the net consideration received by the assessee on transfer of its capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited in the CGAS, 1988 is not utilized wholly or partly for the purchase or construction of the "new asset" within the specified period, then the amount deposited in the CGAS, 1988 shall be brought to tax in the hands of the assessee u/s. 45 of the Act, as his income of the previous year, in which the period of three years from the date of the transfer of the original asset expires. 11. As per the aforesaid mandate of law, the amount parked by the assessee in the CGAS account, which had not been utilized for the purchase or construction of the new residential house within the prescribed period, has to be brought to tax in the previous year, in which the period of three years from the date of the transfer of the original asset expires. As in the present case before us, the assessee had transferred the "capital asset: i.e the unlisted shares and securities of HDIPL on 29.07.2015 for a consideration of Rs. 9,54,14,386/- [Rs.7,26,51,511/- (+) Rs. 2,27,62,875/-] and had, inter alia, claimed exemption u/s. 54F of the Act of Rs. 6 crore that was deposited by him in Capital Gain Account Scheme, 1988, therefore, the period of three years from the date of transfer of the aforesaid "origi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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