5 Section 54 – Investment made upto due date of filing return u/s. 139(4) of the Act qualifies for deduction u/s. 54 provided the investment is made upto date of filing of return of income.

      Anita Ajay Shad vs. ITO

       ITA No. 3154 (Ahd.) of 2015

       A.Y.: 2011-12      Date
of Order: 18^th September, 2017

FACTS

During the previous year
relevant to assessment year 2011-12, a long term capital gain of Rs. 35,23,326
arose to the assessee, an individual, on transfer of an immovable property
jointly owned by her. The assessee claimed that a sum of Rs. 35 lakh was exempt
u/s. 54 on the ground that the assessee has deployed the consideration for
purchase of a new residential house. The assessee made the following
investments towards purchase of a new residential property –

#    Rs.
15 lakh before 31.7.2011 (being due date for
filing ROI u/s. 139(1)

#    Rs.
5 lakh before actual date of filing ROI (being 25.8.2011); and

#    Rs.
15 lakh between Sept. 2011 to Dec. 2011  (which
is within the time limit available under section
139(4) of the Act).

While assessing the total
income of the assessee, the Assessing Officer (AO) denied the claim for
deduction u/s. 54 on the ground that the assessee has not invested capital gain
before filing return of income and the tax payer has not acquired the new
property before filing return of income.

Aggrieved, the assessee
preferred an appeal to CIT(A) who observed that the assessee has invested the
gains after furnishing the return of income. He, held that the assessee is
entitled to claim partial exemption u/s. 54 of the Act.

Aggrieved, the assessee
preferred an appeal to the Tribunal where, on behalf of the assessee, it was
contended that the investment made is within the due date stipulated u/s.
139(4) of the Act and that the property was acquired and put to use within a period
of two years from the date of transfer of original asset and therefore,
qualifies for exemption u/s. 54 of the Act.

HELD

Section 54(2) enjoins that
the capital gain is required to be appropriated by the assessee towards
purchase of a new asset before furnishing of return of income u/s. 139 of the
Act. Alternatively, in the event of non-utilisation of capital gains towards
purchase of new asset, the assessee is required to deposit the capital gains in
specified bank account before the due date of filing of return of income u/s.
139(1) of the Act. Any payment towards purchase subsequent to the furnishing of
return of income (25.8.2011 in the instant case) but before the last date
available to file the return of income u/s. 139(4) of the Act is irrelevant.
Such subsequent payments after filing of return are required to be routed out
of deposits made in capital gain account scheme. Thus, the plea of the assessee
that utilisation of capital gain can be made before   the  
extended   date for filing of
return of income  u/s. 139(4) of the Act
even after filing of return do not coincide with the plain language employed in
section 54(2) of the Act. Nonetheless, the capital gain employed towards
purchase of new asset before the actual date of furnishing return of income
either u/s. 139(1) or  u/s. 139(4) of the
Act will be deemed to be sufficient compliance of section 54(2) of the Act.

The Tribunal observed that
the legislature in its wisdom has used the expression section 139 for purchase,
etc. of new asset while on the other hand, time limit u/s. 139(1) has
been specified for deposit in the capital gain account scheme. When viewed
liberally, the distinction between the two different forms of expression of
time limit can yield different results. A beneficial view may be taken to say
that section 139 being omnibus would also cover extended time limit provided
u/s. 139(4) of the Act. Thus, when an assessee furnishes return subsequent to
due date of filing return u/s.139(1), but within the extended time limit u/s.
139(4), the benefit of investment made upto the date of furnishing return of
income u/s. 139(4) cannot be denied on such beneficial construction. However,
any investment  made after   the 
furnishing of return of income but before extended date available u/s.
139(4) would not receive beneficial construction in view of unambiguous and
express provision of section 54(2) of the Act. The suggestion on behalf of the
assessee on eligibility of payments subsequent to furnishing of return of
income is not aligned with and militates against the plain provision of law as
stated in section 54(2) of the Act.

Since there was ambiguity
on record as to whether the other joint owner of the property purchased by the
assessee has also availed exemption in respect of investment made from joint
account and if yes, to what extent, the Tribunal set aside and remanded back to
the file of AO for the limited purpose of verification of the extent of claim
made by the other joint owner.

The appeal filed by the
assessee was allowed.