Case Law Details
Sh. Vijay Chaudhary Vs ITO (ITAT Delhi)
Whether the assessee invests the entire sales consideration in construction of a residential house within three years from the date of transfer can he be denied exemption under Section 54F on the ground that he did not deposit the said amount in capital gains account scheme before the due dated prescribed under Section 139(1) of the IT Act?
As is clear from Sub Section (4) in the event of the assessee not investing the capital gains either in purchasing the residential house or in constructing a residential house within the period stipulated in Section 54F(1), if the assessee wants the benefit of Section 54F, then he should deposit the said capital gains in an account which is duly notified by the Central Government. In other words if he want of claim exemption from payment of income tax by retaining the cash, then the said amount is to be invested in the said account. If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated therein, then Section 54F(4) is not at all attracted and therefore the contention that the assessee has not deposited the amount in the Bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct.
In the present case, the assessee has purchased the residential plot from the sale proceeds of the earlier residential house. The sale proceeds were utilized for construction of residential house with the three years itself. The decision of the Hon’ble Karnataka High Court is apt in the present case as the Hon’ble High Court held that it is not a pre-condition to invest the money in the specified Central Govt. Scheme of the sale proceeds if the property is purchased and constructed for residential purposes. Though the Ld. DR tried to distinguish the factual matrix but the same is not tenable as the ratio and the facts determined by the Hon’ble Karnataka High Court are similar to the present assessee’s case as well. Therefore, the appeal of the assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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