By JAGDISH T. PUNJABI | DEVENDRA JAIN | TEJASWINI GHAG
Chartered Accountants
15
[2019] 104 taxmann.com 303 (Mum.)
Rajendra Pal Verma vs. ACIT
ITA No. 6814/Mum/2016
A.Y.: 2013-14
Dated: 12th March, 2019
Section 54 – Investment, for
purchase of new residential house, made up to date of filing of revised return
of income qualifies for exemption u/s. 54
FACTS
The
assessee e-filed his return of income for A.Y. 2013-14 on 31.03.2013.
Thereafter, he revised his return on 15.11.2014. In the course of assessment
proceedings, the A.O. observed that the assessee had sold a residential flat
and had claimed the entire long term capital gain of Rs. 1.75 crores as exempt
us. 54 of the Act.
The A.O.
observed that the assessee entered into an agreement dated 29.12.2014 with the
builder for the purchase of a new residential house. The agreement provided
that the construction of the house would be completed by September, 2017. The
A.O. also observed that the assessee had
neither invested the capital gains in the purchase of a new house, nor
had he deposited the amount in a capital gains account as required by section
54(2). Accordingly, the A.O. disallowed the claim for exemption u/s. 54 of the
Act.
Aggrieved,
the assessee preferred an appeal before the CIT(A) who allowed the exemption to
the extent of investment made for purchase of new residential house up to the
due date of filing of the return of income as envisaged u/s. 139(1). He
restricted the claim of exemption to Rs. 83.72 lakhs. Still aggrieved, the
assessee preferred an appeal to the Tribunal.
HELD
The
Tribunal, on examining the provisions of section 54, observed that on a plain
and literal interpretation of section 54(2), it can be gathered that the
conscious, purposive and intentional wording provided by the legislature of
“date of furnishing the return of income u/s. 139” cannot be
substituted and narrowed down to section 139(1) of the Act. It held that the
date of furnishing the return of income u/s. 139 would safely encompass within
its sweep the time limit provided for filing the “return of income” by the
assessee u/s. 139(4) as well as the revised return filed by him u/s. 139(5).
The
Tribunal noted that the question as to whether an assessee would be eligible to
claim exemption u/s. 54 to the extent he had invested in the new residential
property up to the date on which he had filed the revised return of income had
been looked into by a co-ordinate bench of the Tribunal in the case of ITO
vs. Pamela Pritam Ghosh [ITA No. 5644(Mum.) of 2016, dated 27.06.2018].
The Tribunal in that case had observed that the due date for furnishing the
return of income according to section 139(1) was subject to the extended period
provided under sub-section (4) of section 139.
The Tribunal held that the assessee was entitled to claim exemption u/s.
54 to the extent he had invested towards purchase of new residential property
up to the date of filing revised return u/s. 139(5) [on 15.11.201]. As the
assessee had invested Rs. 2.49 crores towards purchase of the new residential
house up to that date (date of filing of revised return u/s. 139(5)) which is
in excess of long term capital gain, the entire long term capital gain was held
to be exempt u/s. 54. The appeal filed by the assessee was allowed.
Corrigendum: In
the March 2019 issue of BCAJ, in the feature Tribunal News – Part A, the line “The
appeal filed by the Revenue was dismissed by the Tribunal” appearing on
page 56 in the decision at Serial No. 31 – should correctly read as “This
ground of appeal filed by the revenue was allowed by the Tribunal.”
