Ramaiah Dorairaj Vs ITO (ITAT Bangalore)
Income Tax Appellate Tribunal (ITAT) Bangalore has ruled in favor of Ramaiah Dorairaj, an assessee, allowing his claim for deduction under Section 54F of the Income Tax Act, 1961, despite his failure to deposit the net sale consideration into a Capital Gains Scheme Account. The Tribunal held that if the assessee ultimately invests the net sale consideration in the construction of a new residential house within the stipulated period, the deduction cannot be denied merely for non-compliance with the interim deposit requirement.
The case has been remitted back to the Assessing Officer (AO) for fresh consideration in line with this principle, effectively providing relief to the assessee.
Background of the Case
For the Assessment Year 2013-14, Ramaiah Dorairaj filed his Return of Income, declaring income and claiming a deduction under Section 54F of the Act. Section 54F provides an exemption from long-term capital gains tax arising from the transfer of any long-term capital asset (other than a residential house) if the net sale consideration is invested in a new residential house within a specified period. Sub-section (4) of Section 54F stipulates that if the entire net consideration is not utilized for the purchase or construction of the new asset before the due date for filing the return of income, the unutilized amount must be deposited into a Capital Gains Account Scheme (CGAS) by that date.
