Usha Rani Laxmeshwar Vs National Faceless Appeal Centre (ITAT Indore)
ITAT Allows Section 54 Relief Because Procedural Lapse Cannot Override Genuine Reinvestment; Reassessment Fails Because Section 54 Benefit Cannot Be Denied for Technical Non-Compliance; Section 54 Deduction Upheld Because New House Was Purchased Within Statutory Time Limit; Capital Gain Exemption Restored Because Actual Investment Took Precedence Over Deposit Procedure.
Summary : The Indore Bench of the Income Tax Appellate Tribunal in held that exemption under Section 54 of the Income Tax Act cannot be denied merely because the assessee failed to deposit the unutilized capital gains in the Capital Gain Deposit Scheme before the due date prescribed under Section 139(1), when the investment in a new residential property was admittedly made within the statutory period of two years. The assessee had sold a jointly owned residential property in Bhopal and later purchased a new residential house in Bangalore on 06.10.2016. Although the Assessing Officer reopened the assessment and disallowed the exemption of ₹1.11 crore on the ground that the investment was made after the due date for filing the return and without depositing the amount in the Capital Gain Deposit Scheme, the Tribunal observed that the substantive condition of reinvestment within the prescribed period had been fulfilled. Relying on earlier ITAT rulings, the Tribunal held that procedural lapses cannot defeat beneficial exemption provisions and accordingly deleted the disallowance made under Section 54.
