Case Law Details

Case Name : Mrs. Kamal Murlidhar Mokashi Vs. ITO (ITAT Pune)
Appeal Number : ITA No.939/PUN/2016
Date of Judgement/Order : 19/08/2019
Related Assessment Year : 2011-12

Mrs. Kamal Murlidhar Mokashi Vs. ITO (ITAT Pune)

Capital Gain-Purchased 4 Adjacent Residential Flats- Can Claim Exemption U/S 54F (With Provisions of Section 54F)

In this article I will discuss some clarification (with the judgment of a recent case law) regarding the provisions of Section 54F i.e. Exemption from Capital Gain on purchase of Residential House.

But before discussing that let us first know what are the provisions of Section 54F and to whom it is applicable.

1. Eligible Assessee: Individual / HUF

2. Conditions:

  • There must be a transfer of Long Term Capital Asset, not being a residential House.
  • Transfer of plot of land is also eligible for exemption.
  • The Assessee should

A) Purchase one Residential House situated in India within a period of 1 year before or 2 years after the date of transfer.

B) Construct one Residential House in India within 3 years from the date of transfer.

C) If such investment is not made before the date of filing of return of income, then such amount ha to be deposited in Capital Gain Account Scheme. Amount utilized by the assessee and the amount deposited in CAGS shall be deemed to be the cost of the asset.

  • The assessee should not own more than one house on the date of transfer.
  • The assessee should not –

A) Purchase any other residential house within a period of 2 years or

B) Construct any other residential house within a period of 3 years from the date of transfer of the Asset.

3.Quantum of Exemption

  • Cost of New House > Net Sale consideration, entire capital gain is exempt.
  • Cost of New House < Net Sale Consideration,

Exemption Amount =   LTCG × Cost of new Residential House ÷ Net Sale Consideration

Notes:

  • If the assessee purchases new residential house within 2 years or constructs new house within 3 years, then the amounted exempted u/s 54F earlier deemed to be taxable as LTCG in the PY in which such residential house is purchased or constructed.
  • If the New House (on which 54F exemption claimed) is transferred within 3 years then

A) Capital Gain would arise on such transfer.

B) Exemption u/s 54F claimed earlier would be taxable as LTCG.

Now under the recent case law some provisions got clarified with the judgment.

Mrs. Kamal Murlidhar Mokashi vs. ITO (ITAT Pune); ITA No.939/PUN/2016; Date of Pronouncement- 19/08/2019; Assessment Year-2011-12

Capital Gains- Exemption u/s 54F – Conditions precedent – For the purposes of Sec 54F, date of allotment letter by the builder is the date of acquisition by assesse – Assessee having purchased four adjacent flat located on the same floor of the building was entitled to relief u/s 54F – Purchase of new flats by assesse in the joint name of her son will also not disqualify for the benefit Sec 54F – Assessee having made entire investment in new house before filing of return u/s 139(4) was eligible for exemption u/s 54F and was not required to make deposit in Capital Gain Account.

Held: With respect to purchase of four flats, it is an undisputed fact that the flats were booked by the assessee vide allotment letter Dated 12th July, 2011 when the building was under construction. The entire payment for the purchase of the flats has been made upto September, 2012 i.e. upto the date of filing of return of Income. The date of issuance of allotment letter by the builder is the date of acquisition of property.

As far as the issue of deduction on four flats purchased by the assesse is concerned, the submission of the Assessee that all the four residential flats are adjacent flats located on the same floor of the building. Fact that the residential house consists of several independent units cannot be the reason for denying the claim of deduction u/s 54F.

As far as the issue of purchasing flats in joint name is concerned, it is the assessee’s contention that the entire amount of consideration towards purchase of flats was invested by the assesse and no amount was contributed by her son and further the name of the son was included as the joint owner to avoid legal complication as the assesse is an old lady. New residential house need not be purchased by the assesse in his own name or exclusively in his name.

As far as the issue not depositing the unutilized portion of amount subject to capital gains in capital gain account scheme is concerned, it is fact that assesse had not filed the return u/s 139(1) but had filed the return of income withn the time limit prescribed u/s 139(4) which was upto 31st 2013. It is assessee’s case that prior to filing of IT return, assesse had utilized the entire sale proceeds in acquisition of the new residential house. The aforesaid contention of the assesse has not been controverted by Revenue. Assessee is eligible for deduction u/s 54F.

Conclusion: Assessee having got allotted four adjacent residential flats on the same floor within time prescribed, purchased the new flats in joint name with her son and having invested the entire capital gains for acquiring new flats before filing return u/s 139(4) is eligible for exemption u/s 54F.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (A) – 9, Pune, dated 29.01.2016 for A.Y. 2011-12.

2. The relevant facts as culled out from the material on record are as under :-

Assessee is an individual and stated to be having income from agriculture and other sources. Assessee filed her return of income for A.Y. 2011-12 on 19.03.2013 declaring total income of  Rs.1,27,530/-. The return of income was initially processed u/s 143(1) of the Act. Thereafter, notice was issued u/s 148 of the Act on 24.04.2014 which was duly served on the assessee. Thereafter, the case of the assessee was taken up for scrutiny and assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dt.13.02.2015 and the total income was determined at Rs.1,11,19,444/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dated 29.01.2016 (in appeal No.PN/CIT(A)-9/ITO Wd.8(3)/751/2014-15) dismissed the appeal of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us and has raised the following grounds :

“1. In the facts and circumstances of the case and m law, the learned C.I.T.[A] has grossly erred in assessing in the hands of the appellant the Long Term Capital Gains of Rs.1,09,91,914.00, on transfer of leasehold rights in Plot of land bearing No.97/22 in Sector 6 at Moshi PradhikaranTaluka Haveli District Pune. The aforesaid decision being patently illegal, bad in law, arbitrary, perverse and devoid of merits the same may please be vacated.

2. In the facts and circumstances of the case and in law, the learned C.I.T. [A] has grossly erred in rejecting the relief to the appellant u/s 54 F of the I.T. Act 1961. The said relief may please be granted to the appellant.

3. The various reasons given by the learned Assessing Officer as well as the learned C.IT. [A] in rejecting the claim of the appellant u/ s 54 F the I.T. Act 1961 being patently illegal, bad in law, arbitrary, perverse and devoid of merits the same may please be vacated and it may please be held that the Long Term Capital Gains on transfer 0 leasehold rights in Plot of land bearing No.97/22 in Sector 6 at Moshi Pradhikaran Taluka Haveli District Pune by the appellant work out to NIL.”

3. Before us, at the outset, Ld.A.R. submitted that he does not wish to press ground No.1. In view of the aforesaid fact, ground No.1 of the assessee is dismissed.

4. Ground Nos.2 and 3 being inter-connected are considered together.

4.1. During the course of re-assessment proceedings, AO noticed that assessee had sold a land on 20.04.2010 to M/s. Nakoda Buildcon for a consideration of Rs.1,10,00,000/- and the amount received on sale of land was invested in purchase of four flats and accordingly a deduction of Rs.1,09,91,914/- u/s 54F was claimed by the assessee. During the course of re-assessment proceedings the assessee was asked to justify her claim of deduction in view of the fact that assessee had not filed the return of income within the stipulated period u/s 139(1) of the Act, had not invested the amount in Capital Gain Account Scheme as mandated u/s 54F(4) of the Act. The submissions made by the assessee were not found acceptable to the AO. AO has noted that assessee was asked to produce the documents to justify the four flats purchased by the assessee were used as one single residential house but assessee could not produce any evidence. AO was therefore of the view that assessee had purchased the flats for commercial purpose i.e., giving them on rent. AO also noted that the four flats that were purchased by the assessee were from M/s. Sairaj Builders & Developers, which was a partnership firm in which the sons of the assessee were the partners and the flats were purchased in the joint names i.e., in the name of assessee and her son. AO therefore concluded that the purchase of four flats was a decorative transaction to avoid the income-tax. Considering the aforesaid facts, AO denied the claim of deduction u/s 54F of the Act to the assessee. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who upheld the order of AO.

Aggrieved by the order of Ld.CIT(A), assessee is now before us.

5. Before us, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and further submitted that assessee had sold rights in land vide registered sale deed dated 20.04.2010 to M/s. Nakoda Buildcon for a total consideration of Rs.1,10,00,000/-. On 12.07.2011 assessee had booked four flats for Rs.1,03,60,000/- on the first floor of the project of M/s. Sairaj Builders and Developers and the allotment letter to this effect was issued by the builder. He submitted that the total cost of four flats were fixed at Rs.1,03,60,000/- and out of which Rs.69,14,588/- was paid to the builder upto the date of receipt of allotment letter. By 31.07.2011 which is the due date for filing of return u/s 139(1) of the Act, assessee had paid total consideration of Rs.69,14,588/-. The balance consideration of Rs.40,93,000/- towards acquisition of four flats was paid between 01.08.2011 and 12.09.2012 and by 12.09.2012 the entire consideration of Rs.1,10,07,588/- was paid for the acquisition of the flats. He submitted that the construction of residential project was completed by the Builder and copy of the completion certificate dated 15.03.2013 is placed at Page 21 of the Paper Book. He submitted that on 19.03.2013 assessee had entered into registered agreement towards the purchase of four flats. Assessee had filed return of income u/s 139(4) of the Act on 19.03.2013 and till that date, since the payment for purchase of flats was made, assessee had claimed deduction u/s 54F of the Act.

6. With respect to the contention of the Revenue that assessee had not furnished any evidence about the four flats being used as a ‘single residential house’, he submitted that all the residential flats were adjacent flats which were located at the same floor. He submitted that the entire first floor of the project was acquired by the assessee. He further submitted that the contention of the Revenue that deduction u/s 54F of the Act can be allowed only in respect of one flat in view of the amendment to Sec.54F(1) of the Act is not tenable as the amendment to Sec.54F(1) of the Act whereby the word ‘a residential house’ has been replaced with ‘one residential house’ is prospective and is only applicable from A.Y. 2015-16 and prior to A.Y. 2015-16, the assessee was eligible to claim deduction u/s 54F of the Act in respect of the adjacent units located on the same floor of the building.

7. With respect to the Revenue’s contention that the purchase of flats by the assessee from M/s. Sairaj Builders & Developers is a decorative transaction entered into only to avoid the tax, Ld.A.R. submitted that M/s. Sairaj Builders and Developers is a separate legal entity distinguishable from the assessee and its partners. He submitted that assessee had entered into agreement with M/s. Sairaj Builders and Developers, the agreements were registered and assessee had paid substantial amount of stamp duty and registration charges of more than Rs.6 lakhs for getting the title of the property in her name. He further submitted that section does not put any embargo to the effect that the new house cannot be acquired from a related party. He submitted that no evidence has brought on record by the Revenue to demonstrate that the transactions are sham and was entered into with an intention to avoid tax.

8. With respect to the Revenue’s contention that assessee had purchased flats in joint name along with her son, Ld.A.R. submitted that the entire funds for purchase of flats has been made from the account of assessee and no amount has been paid by her son and that assessee being a senior citizen, her son’s name was included in the Purchase Deed so as to avoid legal complications after the demise of assessee. He further submitted that section does not mandate that the new house should be acquired solely and exclusively in the name of assessee. He also placed reliance on the following decisions wherein it has been held that when the entire amount has been invested by the assessee, then deduction cannot be denied solely on the ground that the name of the son of the assessee was also added in the Purchase Deed as joint owner.

i) Director of Income Tax (IT) Vs. Jennifer Bhide [349 ITR 80 (Kar)]

ii) Vishwasrao M. Patil Vs. ITO [ITA No.1563/PUN/2012] dated 22.01.2016.

9. With respect to the Revenue’s contention that since the assessee had sold the original asset on 20.04.2010, the time limit of two years to purchase new house was 20.04.2012 and since the assessee had acquired the new house vide agreement dated 19.03.2013 i.e., after the stipulated time, the assessee is not eligible to claim deduction u/s 54F of the Act, he submitted that the new flats were booked by the assessee vide allotment letter dated 12.07.201 with the builder when the building was under construction and the entire payment was made by September, 2012. He submitted that the commencement certificate for the impugned project was 06.01.2011 whereas the completion certificate was issued on 15.03.2013. He submitted that since the new flats were booked by the assessee vide allotment letter dt.12.07.2011 when the building was under construction, then in view of the CBDT Circular No.471 dated 15.10.1986, the transaction of booking flat vide allotment letter is to be considered in the nature of ‘construction’ of house for the purpose of Sec.54F of the Act and not purchase. In support of his contention that when assessee had booked new flat, building was under construction and when the substantial consideration was paid within two years, the deduction u/s 54F of the Act is to be allowed in respect of the entire cost of the new flat, he relied on the following decisions :

i) CIT Vs. Bharati C. Kothari [244 ITR 352 (Cal)]

ii) CIT Vs. J.B. Hilla Wadia [216 ITR 376 (Bom)].

iii) Shashi Verma Vs. CIT [224 ITR 106 (MP)].

Ld.A.R. further submitted that the Hon’ble Bombay High Court in a recent decision in the case of PCIT Vs. Vembu Vaidyanath in ITA No.1459/2016 dated 22.01.2019 has held that the date of allotment be considered to be the date on which the purchaser of property can be said to have been acquired the property even though the agreement with the builder was executed on later date.

10. With respect to Ld.CIT(A)’s reason for rejection of claim that assessee had only paid Rs.69,14,588/- to the builder upto 31.07.2011 being the due date of filing of return u/s 139(1) of the Act, he submitted that assessee had filed the return u/s 139(4) of the Act on 19.03.2013 though the time limit prescribed u/s 139(4) of the Act was 31.03.2013. He submitted that since prior to the filing of return of income, assessee had utilized the entire sale proceedings for investment for acquisition of new residential house, assessee was not required to deposit the amount in capital gain account scheme. In support of the contention that time limit for making investment in Capital Gain Account Scheme is the due date of filing return u/s 139(4) of the Act and not the due date of filing return u/s 139(1) of the Act, he placed reliance on the following decisions :

i) CIT Vs. Rajesh Kumar Jalan [286 ITR 274 (Gau)].

ii) CIT Vs. Jagriti Aggarwal [339 ITR 610 (P&H).

iii) Fathima Bai Vs. ITO [32 DTR 243 (Kar)].

He further submitted that the decision in the case of Humayun Suleman Merchant Vs. CCIT reported in 387 ITR 421 relied upon by the Ld. D.R. cannot come to the rescue of the Department and on the contrary, it favours the assessee as the facts are distinguishable because in that case assessee had filed return u/s 139(1) of the Act and the un-utilized amount of capital gains was not invested by the assessee in the Capital Gain Account Scheme before filing of such return. In the present case, he submitted that assessee had filed the return of income u/s 139(4) of the Act and the entire amount of sale consideration was utilized for investment in construction of new house before the filing of return u/s 139(4) of the Act. He further submitted that in the aforesaid decision in Para 6 sub-para (v) and (w), the Hon’ble High Court had expressed its agreement with the view taken by the Hon’ble Gauhati High Court in the case of Rajesh Kumar Jalan (supra). He further submitted that the distinguishing factor in the case of Humayun Suleman Merchant (supra) vis-à-vis and Rajesh Kumar Jalan (supra) has also been noted by the Hon’ble ITAT Pune in the case of Ramrao D. Pimple Vs. ITO in ITA No.473/PN/2015 dated 30.10.2017. He also placed on record the copy of the aforesaid decision. He therefore, considering the aforesaid submissions, submitted that AO be directed to grant deduction u/s 54F of the Act. Ld. D.R. on the other hand, supported the order of lower authorities.

11. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to denial of the claim of deduction u/s 54F of the Act. The claim of deduction has been denied to the assessee inter-alia for the following reasons :

(a) Assessee has claimed deduction for 4 flats purchased by her and not a single flat.

(b) The flats were purchased in joint name i.e., of the assessee along with her son.

(c) Assessee had purchased the flat beyond the period of two years prescribed under the provisions.

(d) Unutilized portion of the amounts subject to capital gains tax was not deposited in capital gain account scheme as mandated u/s 54F(4) of the Act.

(e) The purchase of flats by the assessee was from a family firm.

The action of AO of denying the claim of deduction was upheld by Ld.CIT(A). With respect to purchase of four flats, it is an undisputed fact that the flats were booked by the assessee vide allotment letter dated 12.07.2011 when the building was under construction. The entire payment for the purchase of flats has been made upto September 2012 i.e., upto the date of filing of return of income. It is Revenue’s contention that the assessee had acquired the new asset only when the agreement was entered into on 19.03.2013 i.e., after the stipulated period. We find that recently Hon’ble Bombay High Court in the case of Vembu Vaidyanath (2019) 413 ITR 248 (Bom) after considering the CBDT Circular No.471 dated 15.10.1986 and Circule No.672 dated 16.12.1993 has held that the date of issuance of allotment letter by the builder is the date of acquisition of property.

12. As far as the issue of deduction on four flats purchased by the assessee is concerned, the submission of the assessee that all the four residential flats are adjacent flats located on the same floor of the building has not been controverted by the Revenue. We further find that the Hon’ble Madras High Court in the case of Trilokchand and Sons Vs. ITO reported in (2019) 413 ITR 189 has held that so long as the assessee has purchased one more residential house out of the sale consideration for which the liability to the capital gain tax u/s 45 arises, assessee was entitled to deduction thereunder on the entire investment. We further find that Hon’ble Delhi High Court in the case of CIT Vs. Gita Duggal reported in (2013) 357 ITR 153 has held that the fact that residential house consists of several independent units cannot be the reason for denying the claim of deduction u/s 54/54F of the Act.

13. As far as the issue of purchasing flats in joint name is concerned, it is the assessee’s contention that the entire consideration towards the purchase of flats was invested by the assessee and no amount was contributed by her son and further the name of the son was included as joint owner to avoid legal complication as the assessee is an old lady. The aforesaid submissions have not been controverted by the Revenue. We find that Hon’ble Karnataka High Court in the case of DIT Vs. Mrs. Jennifer Bhinde reported in (2012) 349 ITR 80 has observed that to attract Sec.54 and Sec.54EC of the Act, what is the material is investment of sale consideration in acquiring the residential premises or constructing a residential premises or investing the amounts in the bonds. It further observed in the entire section of 54, the requirement that purchase to be made or the construction to be put up by the assessee is in the name of the assessee is not expressly stated. We further find that the Hon’ble Delhi High Court in the case of CIT Vs. Kamal Wahal reported in 351 ITR 4 has also held that the new residential house need not be purchased by the assessee in his own name or exclusively in his name.

14. As far as the issue of not depositing the unutilized portion of  amount subject to capital gains in capital gain account scheme is concerned, it is fact that assessee had not filed the return u/s 139(1) of the Act but had filed the return of income within the time limit prescribed u/s 139(4) of the Act which was upto 31.03.2013. It is assessee’s case that prior to filing of income tax return, assessee had utilized the entire sale proceeds in acquisition of the new residential house. The aforesaid contention of the assessee has not been controverted by Revenue. We find that Hon’ble Punjab and Haryana High Court in the case of CIT Vs. Ms. Jagriti Aggarwal (supra) has held that benefit of Sec.54 of the Act is allowable when the assessee has acquired the new asset before filing of return of income. We further find that the Co-ordinate Bench of the Tribunal in the case of Ramarao Dhondiba Pimple Vs. ITO (supra) after considering the decisions of Hon’ble Gauhati High Court in case of CIT Vs. Rajesh Kumar Jalan reported in 286 ITR 274 and CIT Vs. Ms. Jagriti Aggarwal (supra) and the decision of Hon’ble Bombay High Court in the case of Humayun Suleman Merchant Vs. CCIT (supra) has held that assessee is eligible to claim exemption in respect of investments made before filing of return of income. We further find that the Tribunal has noted that in the case of Humayun Sulemn Merchant (supra), the Hon’ble Bombay High Court has not disapproved the ratio laid down in the case of Rajesh Kumar Jalan (supra) but the claim was rejected on the peculiar facts of the case and the relevant findings of the Co-ordinate Bench of the Tribunal are as under :

“8. We have heard the submission made by representatives of rival sides and have perused the orders of authorities below. The ground no. 1 raised in the appeal by assessee is against rejecting assessee’s claim of exemption Rs.71,56,000/- u/s. 54B of the Act on the ground that investment has been made after due date for filing return of income u/s. 139(1) of the Act. It is an undisputed fact that assessee has invested Rs.71,56,000/- in three properties in August, 2012 i.e. after due date for furnishing return of income u/s. 139 (1) of the Act had elapsed. The Assessing Officer rejected assessee’s claim of exemption in respect of aforesaid investment for the reason that as per the provision of section 54B(2), the assessee should have invested/deposited the amount before the due date for fur the due date for furnishing return of in nishing return of income under s come under sub-section section (1) of Section 139 of the Act.

9. The Hon’ble Gauhati High Court in the case of CIT Vs. Rajesh Kumar Jalan (supra.) while considering assessee’s claim of exemption u/s. 54 where the assessee had deposited unutilized portion of capital gain in the specified scheme after the stipulated time for furnishing return of income u/s. 139(1) of the Act has expired held:

“6. From a plain reading of sub-s (2) of s. 54 of the IT Act, 1961, it is clear that only s. 139 of the IT Act, 1961, is mentioned in s. 54(2) in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the income-tax under s. 139 of the IT Act. Sec. 139 of the IT Act, 1961, cannot be meant only as s. 139(1) but it means all sub-sections of s. 139 of the IT Act, 1961. Under sub-s.(4) of s. 139 of the IT Act any person who has not furnished a return within the time allowed to him under sub-s. (1) of s. 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Such being the situation, it is the case of the respondent/assessee that the respondent/assessee could fulfil the requirement under s. 54 of the IT Act for exemption of the capital gain from being charged to income-tax on the sale of property used for residence upto 30th March, 1998, inasmuch as the return of income-tax for the asst. yr. 1997-98 could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier under sub-s. (4) of s. 139 of the IT Act, 1961.”

10. The Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Ms. Jagriti Aggarwal (supra.) while considering the issue, whether the assessee is eligible for claiming benefit of exemption u/s. 54, if capital gain amount is deposited/invested after due date of furnishing return of income u/s. 139(1) but before the due date of furnishing return of income u/s. 139(4) held :

“10. Having heard learned counsel for the parties, we are of the opinion that sub-s. (4) of s. 139 of the Act is, in fact, a proviso to sub-s.(1) of s. 139 of the Act. Sec, 139 of the Act fixes the different dates for filing the returns for different assessees. In the case of assessee as the respondent, it is 31st day of July of the assessment year in terms of cl. (c) of the Expln. 2 to sub-s. (1) of s. 139 of the Act, whereas sub-s. (4) of s. 139 provides for extension in period of due date in certain circumstances. It reads as under :

“(4) Any person who has not furnished a return with the time allowed to him under sub-s (1), or within the time allowed under a notice issued under sub s.(1) of s. 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier:

Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988 or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.”

11. A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-so (1) i.e., before 31st day of July of the assessment year, the assessee can file return before the expiry of one year from the end of the relevant assessment year.

12. The sale of the asset having taken place on 13th Jan., 2006, falling in the previous (sic-assessment) year 2006-07, the return could be filed before the end of relevant asst. yr. 2007-08 (sic-2006-07) i.e. 31st March, 2007. Thus, sub-so (4) of s. 139 provides extended period of limitation as an exception to sub-so (1) of s. 139 of the Act. Sub-so (4) is in relation to the time allowed to an assessee under sub-so (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-so (1) of s. 139. Therefore, such sub-so (4) has to be read along with sub-so (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar Jalan cases (supra) respectively.”

11. The Hon’ble Punjab & Haryana High Court in another case CIT Vs. Jagtar Singh Chawla reported as 33 com 38 following the ratio laid down in the case of Rajesh Kumar Jalan (supra.) allowed assessee’s claim of exemption u/s. 54F where the assessee paid substantial amount of sale consideration for residential house within extended period of filing return of income u/s. 139(4) of the Act.

12. In the case of Humayun Suleman Merchant Vs. CCIT (supra.), we find that the Hon’ble Bombay High Court has not disapproved the ratio laid down in Rajesh Kumar Jalan case. However, the assessee’s claim of exemption u/s. 54F was rejected therein as the ratio laid down in Rajesh Kumar Jalan’s case was not applicable on the facts and circumstances of that particular case. Relevant extract of the findings and observation of Hon’ble Jurisdictional High Court reads as under:

“(v) Lastly and in the alternative, it is submitted by Mr. Chatterji, that as the entire amount has been paid to the developer/builder before the last date to file the return of Income under Section 139 of the Act, the exemption is available to the appellant under section 54F(4) of the Act. In support, the decision of Gauhati High Court in Rajesh Kumar Jalan’s case (supra.) is relied upon. The Gauhati High Court in the above case was concerned with the interpretation of Section 54 of the Act. It construed the provision of sub-Section (2) of Section 54 of the Act which is identically worded to sub-section (4) of Section 54F of the Act The Court in the aforesaid decision held that the requirement of depositing before the date of furnishing of return of Income under Section 139 of the Act has not to be restricted only to the date specified in Section 139(1) of the Act but would include all sub-section of 139 including sub-section (4) of the Act. On the above basis it concluded that if the amount is utilized before the last date of filing of the return under section 139 of the Act then the provision of Section 54(2) of the Act would not hit the assessee before it. It is not very clear in the above case whether the amounts were utilized before the assessee filed its return or not.

(w) However, the factual situation arising in the present case is different. The return of income is admittedly filed on 4th November, 1996. In terms of Section 54F(4) of the Act as interpreted by the Gauhati High Court in Rajesh Kumar Jalan’s case (supra.) the amounts subject to capital gain on sale of the capital asset for purpose of exemption, has to be utilized before the date of filing of return of income. In this case 4th November, 1996 is the date of filing the return of Income. It is not disputed that on 4th November, 1996 when the return of income was filed, the entire amount which was subject to capital gain tax had not been utilized for the purpose of construction of new house nor were the unutilized amounts deposited in the notified Bank Accounts in terms of Section 54F (4) of the Act before filing the return of income. It is also to be noted that in line with the interpretation of Gauhati High Court on Section 54F(4) of the Act, the Assessing Officer had taken into account all amounts utilized for construction of a house before filing the return of income on 4th November, 1996 for extending the benefit of exemption under Section 54F of the Act. Therefore, in the present facts, the decision of the Gauhati High Court in Rajesh Kumar Jalan’s case (supra) would not apply so as to hold that the appellant had complied with the Section 54F(4) of the Act.”

13. In the present case, the assessee has claimed exemption u/s. 54B of the Act. We observe that the provision of sub section (2) of Section 54, provision of sub section (2) of section 54B and provisions of sub section (4) of Section 54F are perimeteria. The judgments on which the ld. AR has placed reliance are rendered with reference to claim of exemption u/s. 54/54F. Since provisions of sub section (2) of section 54 and 54B and (4) of section 54F are identical, therefore, ratio laid down by the various Hon’ble High Courts would apply to provisions of section 54B (2) as well. Thus, in the light of facts of the case and various decisions as discussed above, we find merit in ground No. 1 raised by the assessee in appeal and the same is accepted. The assessee is eligible to claim exemption u/s. 54B in respect of investment made towards purchase of agriculture land within the time limit for filing return of income specified under section 139(4).”

Before us, Revenue has not pointed to any contrary binding decision in its support. In view of the aforesaid facts and relying on the aforesaid decisions, we are of the view that assessee is eligible for deduction u/s 54F of the Act. We therefore direct the AO to grant deduction. Thus, the grounds of the assessee are allowed.

15. In the result, the appeal of the assessee is allowed.

Order pronounced on 19th day of August, 2019.

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