Case Law Details

Case Name : Shri Kasi Viswanathan Ramnathan Vs ITO (ITAT Chennai)
Appeal Number : ITA No. 2040/Chny/2017
Date of Judgement/Order : 29/05/2020
Related Assessment Year : 2012-13
Courts : All ITAT (7458) ITAT Chennai (300)

Shri Kasi Viswanathan Ramnathan Vs ITO (ITAT Chennai)

The issue under consideration is whether the denial of exemption under section 54F by CIT(A) is justified in law?

In the present case, assessee has claimed the exemption u/s 54F in the return including the amount which had not been utilized before 31.07.2012. But later the assessee utilized the entire sale consideration in the construction of the building within the time limit specified under Section 54F. But still CIT(A) disallowed the exemption u/s 54F.

ITAT after observing the facts of the case, stated that mere non compliance of a procedural requirement u/s 54(2) itself cannot stand in way of assessee in getting benefit under Section 54, if he is, otherwise, in a position to satisfy that mandatory requirement under Section 54(1) is fully complied with within time limit prescribed therein. Therefore, ITAT direct the A.O. to allow the total investments made by the assessee under Section 54F of the Act after satisfying whether the impugned investment was utilized for the construction of the house within the time limit specified under Section 54F of the Act.

Accordingly, the appeal of assessee is treated as allowed.

FULL TEXT OF THE ITAT JUDGEMENT

The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-4, Chennai in ITA No.47/205-16/A.Y2012-13/CIT(A)-4, dated 27.06.2017 for the assessment year 2012-13.

2. Shri Kasi Viswanathan Ramnathan, the assessee is a salaried The assessee along with legal heirs received his share on sale of property made on 23rd December, 2011, but he received on the consideration on 16.01.2012. The assessee acquired a land for  ₹.59,95,000 on 05.03.2012 and constructed a residential property on the same within the time stipulated under Section 54F of the Act and claimed deduction under Section 54F in the return filed for assessment year 2012-13. The A.O restricted the exemptions to the expenses incurred till 31.07.2012, as the assessee failed to invest unutilized portion in Capital Gains Deposit Scheme. Aggrieved against the order of Ld. A.O., the assessee preferred an appeal before the CIT(A). The learned CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal before the Tribunal.

3. The Ld. A.R. submitted that assessee invested the capital gains within the time stipulated under Section 54F of the Act. The assessee out of abundant caution also filed his return of income within the due date specified under Section 139(1) of the Act claiming exemption under Section 54F of the Act including the amount which had not been utilized before 31.07.2012. The assessee utilized the entire sale consideration in the construction of the building within the time limit specified under Section.54F of the Act. The Ld. A.R. relied on the following case laws:

i) Hon’ble Karnataka High Court in the case of C.I.T Vs. Shri K.ramachandra Rao reported in [2015] 56 taxmann.com 163(Karnataka)

ii) Mumbai Tribunal in the case of Kishore, [2012] 24 taxmann.com 11

iii) Hon’ble Madras High Court in the case of Venkata Dilip Kumar [2019] 111 taxmann.com 180(Madras)

Further, the Ld. A.R. pleaded that the assessee’s appeal be allowed.

4. Per contra, Ld. D.R. supported the orders of the lower authorities.

5. We have heard the rival submissions and perused the material available on record. After examining the facts and case laws relied on by the assessee, we find that mere non compliance of a procedural requirement under Section 54(2) itself cannot stand in way of assessee in getting benefit under Section 54, if he is, otherwise, in a position to satisfy that mandatory requirement under Section 54(1) is fully complied with within time limit prescribed therein. Therefore, we direct the A.O. to allow the total investments made by the assessee under Section 54F of the Act after satisfying whether the impugned investment was utilized for the construction of the house within the time limit specified under Section 54F of the Act.

6. In the result, the appeal of assessee is treated as allowed for statistical purposes.

Order pronounced on 29th May, 2020 at Chennai.

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