Case Law Details
Deepak Bhardwaj Vs ITO (ITAT Delhi)
Only question that arises for our consideration is whether the unutilised portion of capital gains is liable for tax either in the year in which such long term capital gains arose or in the year in which the period of 3 years for such utilisation expires. Under identical facts circumstances, where the assessee had invested the long term capital gains in purchase of land towards construction of house but could not complete the construction before the expiry of 3 years as to pretend under law, the Hyderabad Bench of Tribunal in the case of Sri Prasad Nimmagadda (supra) held that on examination of section 54 and 54F of the Act, it is found that the provisions contained in section 54 including the proviso are pari materia with section 54F of the Act and the proviso to section 54 lays down that if the amount of capital gain is not utilised towards construction of residential house within a period of 3 years from the date of transfer of original asset, then, it will be charged to capital gain under section fortify of the Act in the year in which the period of 3 years from the date of transfer of the original asset expires.
FULL TEXT OF THE ITAT JUDGEMENT
Aggrieved by the order dated 29/7/2016 in appeal No. 254/2015-16/Noida by the learned Commissioner of Income Tax (Appeals)-1, Noida (“Ld. CIT(A)”), for the assessment year 2013-14, Mr Deepak Bharadwaj (“the assessee”) filed this appeal.
2. Brief facts of the case are that the assessee is an individual engaged in the business of running of tractor on hire basis and also receiving rental income from ancestral properties. On 3/5/2012 assessee sold 1 residential property for a consideration of Rs. 1.40 crores and derived the Long Term Capital Gain (LTCG) to the tune of Rs.99,77,362/-. Under sale deed dated 13/7/2012 assessee purchased a residential plot for a consideration of Rs.1,00,81, 000/- construction of a residential house. Assessee filed the return of income for the assessment year 2013-14 on 31/7/2013 declaring an income of Rs.2,25,100/-after claiming the Long Term Capital Gain (LTCG) as exemption under section 54 of the Income Tax Act, 1961 (for short “the Act”). Assessee could not construct the residential house till the expiry of the period of 3 years from the date of transfer of the old property in respect of which the exemption under section 54 of the Act was claimed and such period expired by 2/5/2015. Assessee, therefore, offered the long term capital gains of Rs. 99,77,362/-to taxation in the Assessment Year: 2016-17 since the period from the date of transfer of old property expired in the previous year 2015-16.
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