ACIT Vs Shri. Sunil Bandacharya Joshi (ITAT Bengaluru)
In the present case, the capital asset was sold on 26.02.2011. The capital asset was purchased on 31.03.2011 and before the purchase of the capital asset the amount was deposited in mutual funds. Therefore in the considered opinion of the bench, before the date of filing of the return, not only the capital asset was purchased by the assessee on 3 1.03.2011, but also the assessee had deposited and invested an amount of Rs.15 lakhs with Canara Bank. Therefore the assessee has fulfilled all the conditions required u/s. 54F for the purposes of claiming the exemption, in our view deposit of money by the assessee inter-alia in mutual fund prior to purchase of residential house albeit will not make any difference if the assessee had purchased the residential house within the time provided by the Act . Therefore in the considered opinion of the bench, appeal of the Revenue is devoid of merit and accordingly the same is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
These are cross appeals by the Revenue and the assessee respectively, against the order of the CIT (A) -3, Bengaluru, dt. 11.01.2018, for the assessment year 2011-12.
Grounds of appeal raised by the Revenue are as under :
02. Brief facts are, the assessee filed return of income for the assessment year 2011-12 declaring total income of Rs.35,60,620/- inclusive of long-term capital gains of Rs.10,69,101/-. During the assessment year, the assessee has sold a residential site for an amount of Rs.2.29 crores. Out of the sale proceeds of Rs.2.29 crores, the assessee has invested Rs.10 lakhs in mutual funds on 24.02.2011 and Rs.2 crores was invested in mutual funds on 04.03.2011. After withdrawing the amount invested in mutual funds on 24.02.2011 and 04.03.2011, the assessee invested Rs.1,94,49,302/- as on 3 1.03.2011 with M/s. Adarsh Developers for construction of villa. The asses see had also invested Rs. 15 lakhs with Canara Bank on 19.07.2011 in accordance with 54F of the ACT . The assessee claimed exemption u/s.54F for Rs.2,04,70,779/- in the return of income wherein the assessee had declared long-term capital gains of Rs.10,69,101/-.
Case of the assessee was selected for scrutiny assessment and the AO has opined that as the assessee had invested in mutual funds of Rs.10 lakhs on 24.02.2011 and Rs.2 crores on 04.03.2011, thus the assessee has deviated and diverted the sale proceeds of the capital asset by investing in mutual funds and therefore the AO held that the assessee was not entitled to the exemption u/s.54F claimed by him for an amount of Rs.2,04,70,779/-. Feeling aggrieved by the order, the assessee preferred an appeal before the CIT (A).
03. The CIT (A) in para 7, 7.1, 7.2 and 7.3 had dealt with the issue and had allowed the exemption for Rs.1,99,21,202/- which is stated to be the investment made in the residential villa with M/s. Adarsh Developers, as against the claim of Rs.2,04,70,779/-. Therefore the Revenue is in appeal against the relief granted by the CIT (A) for an amount of Rs.1,99,21,202/- and assessee is for the relief not granted.
ITA.703/Bang/2016 : Revenue’s appeal :
04. It was the case of the Revenue before us that the assessee immediately after selling the house had invested the sale proceeds in mutual funds to the extent of Rs.10 lakhs and Rs.2 crores. Thereafter had only purchased the villa on 31.03.2011 by investing an amount of Rs.1,99,21,202/- and therefore the assessee is not entitled to the benefit of Section 54F as the money was not directly invested by the assessee into purchasing the property, rather it was invested firstly in mutual funds and thereafter in the property.
05. On the other hand the Ld. AR has submitted that the assessee had invested the amount in accordance with the provisions of Section 54F within the period provided under the Act and therefore the assessee is entitled to exemption u/s.54F of the Act.
06. We have heard the rival contentions and perused the record. Undisputedly the assessee had invested in the villa as on 3 1.03.2011 by paying Rs.1,94,49,302/0. However, the quarrel before us is that the amount is not directly invested in purchasing of the villa, rather it is routed through mutual funds. In the considered opinion of the bench what is required u/s.54F of the Act, is the following :
