SECTION 54F DEDUCTION MAY BE ALLOWED EVEN IF THE AMOUNT IS NOT DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME: ITAT CHENNAI

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SECTION 54F DEDUCTION MAY BE ALLOWED EVEN IF THE AMOUNT IS NOT DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME: ITAT CHENNAI

03/06/2023

SECTION 54F DEDUCTION MAY BE ALLOWED EVEN IF THE AMOUNT IS NOT DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME: ITAT CHENNAI

The assessee filed his return of income on 20.06.2016 for the assessment year 2016-17 declaring an income of ₹.9,88,060/-. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961.

Thereafter, the case was selected for scrutiny under CASS and notice under section 143(2) of the Act was issued on 04.08.2017 and duly served on the assessee. After following due procedure, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 21.12.2016. In the assessment order, the Assessing Officer has noted that the assessee has sold the property in survey No. 98/4A2 at Injambakkam village for a consideration of ₹.60,00,000/- and also claimed sale expenses of ₹.9,220/-. The assessee had also received ₹.2,00,00,000/- for the property of 2.09 acres in survey No. 226/1, 226/2A, 2269B situated in Sembakkam village in Thiruporur panchayat union. The assessee has claimed deduction under section 54F in respect of property purchased for consideration of 2,00,00,000/- on 04.10.2017. After considering the explanations of the assessee against the show-cause notice, the Assessing Officer has denied the claim of deduction under section 54F of the Act on the ground that the assessee has not fulfilled the procedural requirement laid down by the law of depositing into the capital gain account scheme with a nationalized bank before the due date of furnishing of return. Accordingly, the Assessing Officer assessed the income at ₹.1,99,22,230 by taking capital gains at ₹.1,89,34,171/-. On appeal, by considering the submissions of the assessee as well as various case law, the ld. CIT(A) confirmed the disallowance of the deduction claimed under section 54F of the Act.

Held That Even though the assessee has not invested the sale proceeds in Capital Gain Account Scheme, but complied with the conditions under section 54F(1) of the Act by purchasing an independent house for a consideration of ₹.2 crores by executing sale agreement on 09.01.2016 by paying advance of ₹.50 lakhs and the remaining amount of ₹.1.50 crores was paid on the date of registration of sale deed on 04.10.2017, which are not in dispute. The provisions of section 54F of the Act are beneficial provisions and are to be considered liberally in the aspect of limitation period. But, the investment in residential property is must which the assessee has proved with evidence and complied before the lower authorities. Under the above facts and circumstances of the case and respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Smt. Umayal Annamalai (supra), we set aside the order of the ld. CIT(A) and direct the Assessing Officer to allow the deduction section 54F of the Act to the assessee.

In the result, the appeal filed by the assessee is allowed.

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