Section 54G – Unutilised amount of capital gain deposited on or before date of filing of return u/s. 139(5) will qualify for deduction u/s. 54G.

6. [2017] 79 taxmann.com 250 (Kolkata – Trib.)

DCIT vs. Kilburn Engineering Ltd.

ITA No. : 1987 (Kol) of 2013

A.Y.: 2009-10 Date of Order: 
1^st March, 2017

FACTS 

The assessee’s industrial undertaking was situated in
Bhandup, Mumbai an urban area. Under a scheme to shift its factory to a
non-urban area, the assessee sold its land & building to HDIL under two
agreements dated 8.11.2007 and 30.1.2009 for a consideration of Rs. 115 crore.
Sale consideration was payable in instalments. 
Long term capital gain of Rs. 81,57,21,820 resulted on sale of property
at Bhandup.

For claiming deduction u/s. 54G, the amount of capital gain
not utilised for the purposes mentioned in section 54G(1) has to be deposited
in an account with a bank, in accordance with the notified scheme, and has to
be utilised for the purposes mentioned in section 54G(1). Further, such
unutilised amount of capital gain has to be deposited in an account on or
before the due date of furnishing the return of income u/s. 139 of the Act.
Section 54G(2) further provides that such deposit should be made in any case
not later than due date applicable to the assessee for furnishing return of
income u/s. 139(1) of the Act. In the original return, the assessee claimed Rs.
25,61,43,054 to be exempt u/s. 54G. Subsequently, the assessee deposited Rs. 10
crore in capital gains account on 30.3.2010. In the revised return of income
filed on 28.10.2010, the assessee claimed Rs. 35,61,43,054 to be exempt u/s.
54G.

The Assessing Officer disallowed the additional claim of
exemption of Rs. 10 crore on the ground that the deposit was made after due
date of filing return of income u/s. 139(1).

Aggrieved, the assessee preferred an appeal to the CIT(A).
The CIT(A) noted that the assessee had deposited Rs. 47,33,55,000 but has
claimed deduction of Rs. 35,61,43,054. He observed that the buyer had defaulted
in making payments to the assessee on due dates. In absence of receipt of
money, it was impossible to deposit amount in capital gain account specially
for the assessee which has come out of BIFR only because of receipt of money
from sale of land. He relied on the judgment of Kolkata Bench of the Tribunal
in the case of Chanchal Kumar Sircar vs. ITO [2012] 50 OST 289 (Kol.)
and the decision of Pune Bench of the Tribunal in the case of Mahesh
Nemichandra Ganeshwade vs. ITO [2012] 51 SOT 155 (Pune). He held that the
assessee is permitted to deposit money within the due date of filing `revised
return’ permitted u/s. 139(5) and filing a revised return subsequently. 

Aggrieved, the revenue preferred an appeal to the Tribunal.

HELD

The Tribunal observed that the Punjab & Haryana High
Court, in the case of CIT vs. Jagriti Agarwal (2011) 203 Taxman 203, has
held that if the deposit is made within the time limit mentioned in section
139(4) of the Act, deduction cannot be denied to an assessee. The Tribunal held
that since section 139(5) is akin to section 139(4), the ratio of this decision
will hold good in the context of a revised return filed u/s. 139(5) as well.
The Tribunal held the deposit of Rs. 10 crore made on 30.3.2010 to be within
the time limit mentioned in section 54G(2) of the Act.

The Tribunal also held that the decision of the ITAT Kolkata
bench in the case of Chanchal Kumar Sircar and the decision of the Pune Bench
in the case of Mahesh Nemichandra Ganeshwade support the plea of the assessee.
It noted that in these two decisions it is held the period of six months for
making deposit u/s. 54EC of the Act should be reckoned from the dates of actual
receipt of the consideration because if the assessee receives part payment as
on the date of transfer and receives part payment after six months then it
would lead to an impossible situation by asking assessee to invest money in
specified asset before actual receipt of the same. It observed that even on
this basis the order of CIT(A) deserves to be upheld.