By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi, Chartered Accountants
fiogf49gjkf0d
Sections 54F – Exemption is available even if borrowed funds are used for investment.
Facts
For the relevant assessment year, the assessee’s claim for exemption u/s. 54F was denied by the Assessing Officer on the ground that the assessee’s deposit in the `Capital Gains Accounts Scheme’ included borrowed funds. The CIT(A) upheld the disallowance.
Held
The Tribunal, relying on the decisions in the following cases, allowed the exemption u/s. 54F :
a. Muneer Khan V. ITO (2010) 41 SOT 504 (Hyd.)
b. Sita Jain V. Asst. CIT (IT Appeal Nos.4754, 4755 and 5036 (Delhi) of 2010, dated 20-5-2011
c. Bombay Housing Corpn. vs. Asst. CIT (2002) 81 ITD 545 (Mum.) d. Mrs.Prema P.Shah vs. ITO (2006) 100 ITD 60 (Mum.)
The Tribunal noted as under :
The capital gains earned by the assessee can be utilised for other purposes and as long as the assessee fulfils the condition of investment of the equivalent amount in the asset qualifying for relief u/s.54F by securing the money spent out of the capital gains from other sources available to him, either by borrowing or otherwise, he is eligible for relief u/s. 54F in respect of the entire amount of capital gains realised.
In this case, even though part of those capital gains were utilised for other purposes, the assessee made deposits of the amounts equivalent to the capital gains in Capital Gains Account Scheme, by borrowing the amount equivalent to such utilised funds. Therefore, he is entitled to relief u/s. 54F as ultimately the assessee deposited the requisite amount in the Capital Gains Account Scheme within the time stipulated by the statute.
