Smt. Sita Khandelwal Vs ACIT (ITAT Lucknow)
Income Tax Appellate Tribunal (ITAT) Lucknow has dismissed the appeal of Smt. Sita Khandelwal against the denial of exemption under Section 54 of the Income Tax Act. The dispute arose as the Assessing Officer (AO) disallowed the exemption, citing that the investment in the new residential property was made after the due date prescribed under Section 139(1) of the Act. The assessee had sold a jointly owned property, with her share amounting to ₹1.03 crore, and had claimed an exemption of ₹88 lakh by investing in a new property. However, as the investment was not made within the prescribed timeframe or deposited in a capital gains account, the AO rejected the claim, a decision later upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].
The assessee argued that the exemption should be granted since the investment was made before filing the belated return under Section 139(4). She contended that judicial precedents had recognized the extended time limit for exemption under Section 54. However, both the AO and CIT(A) ruled that the due date for investment should be considered under Section 139(1), not 139(4). It was also observed that the capital gains amount was transferred to M/s Kiran Enterprises instead of being deposited in a capital gains account, further violating the provisions of Section 54.
