Capital gain: Exemption u/s. 54F: A. Y. 2007- 08: Sale of agricultural land and residential house on 20-06-2006: No deposit in capital gains account: Paid substantial amount and took possession of residential house on 30- 03-2008: Paid balance amount of Rs. 24 lakh on 23-04-2008: Assessee entitled to exemption u/s. 54F:

On 20-06-2006, the assessee sold an agricultural land and a residential house for Rs. 2,16,00,000/- and Rs. 8,25,000/- respectively. In the A. Y. 2007- 08, the Assessing Officer disallowed the assessee’s claim for exemption of long-term capital gain of Rs. 76,85,829/- on the ground that the sale proceeds were not deposited in the specified capital gains account before the due date for filing the return u/s. 139(1) of the Income-tax Act, 1961. The assessee claimed that on 20-06-2006 itself the assessee had written a letter to the bank to deposit the said amount in the capital gains account, but the said amount was deposited in a “flexi general account”, which is a saving as well as fixed deposit account. Assessee purchased a residential house from the sale proceeds and took possession on 30-03-008. A substantial amount was paid before 31-03-2008 and the balance amount of Rs. 24 lakh was paid on 23- 04-2008. The Tribunal allowed the assessee’s claim on the ground that the assessee has purchased the residential house within the period prescribed for filing return of income u/s. 139 of the Act.

On appeal by the Revenue, the Punjab and Haryana High Court upheld the decision of the Tribunal, and held as under:

“i) In the present case, the assesee has proved the payment of substantial amount of sale consideration for purchase of a residential property on or before 31-03-2008, i.e. within the extended period of limitation of filing of return. Only a sum of Rs. 24 lakh was paid out of total sale consideration of Rs. 2 crore on 23-04-2008, though possession was delivered to the assessee on execution of the power of attorney on 30-03- 2008.

ii) Since the assessee has acquired a residential house before the end of the next financial year in which sale has taken place, therefore, the assessee is not liable to pay any capital gains tax. Such is the view taken by the Tribunal.

iii) In view of the above, we do not find any merit in the present appeal. Hence, the same is dismissed.”