Case Law Details
Prof. P.N. Shetty Vs ITO (Karnataka High Court)
Conclusion: Unutilized capital gain amount under Section 54F had to be charged under Section 45 as income of the previous year, after the expiry of three years from the date of sale of the capital asset as per proviso appended to Section 54F and withdrawal of amount was permitted subject to deduction of tax.
Held: Assessee had sold two properties and out of the sale consideration a certain amount was deposited in the Capital Gain Account Scheme, (CGAS) 1988. The return of income was filed and exemption was claimed under Section 54F. In the meantime, assessee had purchased a flat before the expiry of three years from the date of the transfer of the capital asset. AO issued the notice to bring the unutilized capital gain to tax as per Section 54 F(4) after the expiry of three years from the date of transfer of the original capital asset. It was held proviso appended to Section 54F[4] has to be read as a whole along with the Clauses [a] and [b] therein which would explain the real intendment of the phrase “not utilized wholly or partly”. To make the provision workable, the arguments of assessee that the Clauses [a] and [b] of the proviso need not be addressed to, cannot be countenanced for the reasons aforesaid. Thus, it can be held that on reading of the provision as a whole along with Clauses [a] and [b] to the proviso, the intention of the Legislature would be gathered that the unutilized capital gain amount under Section 54 F[4] had to be charged under Section 45 as income of the previous year, after the expiry of three years from the date of sale of the capital asset which in the present case was the assessment year 2016-17. Assessee was entitled to the withdrawal of the amount deposited under Sub-Section (4) of Section 54F under the capital gain account subject to deduction of tax applicable to the case on hand.
Please become a Premium member. If you are already a Premium member, login here to access the full content.