Section 54F exemption not allowed for unutilised amount not deposited in specified bank account

Brief of the case:

• The Hon’ble Bombay HC in the above stated case held that when the wordings of law are quite clear then law should be applied in its letter and no space could be made for logical or beneficial or constructive interpretation.
• Therefore, when the section 54F(4) clearly set a condition for claiming the exemption , the non-compliance would lead to denial of exemption , section being very clear here provide no room for beneficial or constructive interpretation.

Facts of the case:

• Assessee on 29^th April,1995 sold a plot of land in Mumbai for a consideration of Rs.85,33,250/-.On 16th July, 1996, the assessee entered into an agreement to purchase a flat for a consideration of Rs.69,60,000/-.The assessee paid two installments of Rs.10,00,000/- each on 17th July, 1996 and 23rd October, 1996 to the developer / builder i.e. before the due date for filing of return of Income under Section 139(1) of the Act i.e. 31st October, 1996.

• On 1st November, 1996 the assessee paid to the developer a further installment of Rs.15,00,000/- for purchase of flat pursuant to the agreement dated 16th July, 1996.
• During the course of assessment proceedings the AO allowed the exemption only in respect of 35 lacs pad to builder before 31^st Oct,1996 (i.e. due date of furnishing of return) , AO denied exemption of 15 15 lacs paid to developer on 1^st Nov ,1996 (i.e after due date of furnishing of return).
• As per AO , the assessee was required to park the sum of Rs. 15 lacs to be invested in house property in the specified capital gain account as the investment was made after return due date. Having failed to do so the assessee is not eligible to claim exemption in respect of such sum.
• Upto the tribunal stage the order of AO was upheld , aggrieved assessee is now in appeal before High court.

Held by Hon’ble Bombay HC: