Income Tax Appellate Tribunal - Mumbai
Ito Ward - 1(3), Thane, Thane vs Kalpana Pradeep Ambre, Thane on 4 June, 2018
आयकर अपील य अ धकरण, मुंबई यायपीठ, 'एच',मुंबई।
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES "H", MUMBAI ी जो ग दर संह, या यक सद य एवं ी जी. मंजूनाथ, लेखा सद य, के सम Before Shri JOGINDER SINGH, Judicial Member, and Shri G. MANJUNATHA, Accountant Member ITA NO.5156/Mum/2016 Assessment Year: 2012-13 Income Tax Officer, Smt. Kalpana Pradeep Ward-1(3), बनाम/ Ambre, Room No.10, 6th Floor, 1801, Pristine Vasant Lawns, Ashar IT Park, B-Wing, Vs. Pokhran Road No.2, Wagle Indl. Estate, Majiwada, Thane(W)-400604 Thane(W) (राज व /Revenue) ( नधा"#रती /Assessee) P.A. No.AAFPC0868D राज व क ओर से / Revenue by Shri Ram Tiwari-DR नधा"#रती क ओर से / Assessee by Shri Sobodh Ratnaparakhi ु वाई क' तार(ख / Date of Hearing :
सन 04/06/2018
घोषणा क' तार(ख/Date of Pronouncement 04/06/2018
2 ITA No.5156/Mum/2016
Smt. Kalpana Pradeep Ambre
आदे श / O R D E R
Per Joginder Singh (Judicial Member)
The Revenue is aggrieved by the impugned order dated 30/05/2016 of the Ld. First Appellate Authority, Thane, in partly allowing the claimed deduction under section 54F of the Income Tax Act, 1961 (hereinafter the Act) ignoring the date of filing of return as per section 139(4) instead of 139(1) of the Act for the purposes of depositing the capital gains in the Long Term Capital Gains scheme ignoring the provision of section 54F(4) of the Act.
2. During hearing, Shri Ram Tiwari, Ld. DR, advanced arguments, which is identical to the ground raised by explaining that the assessee purchased the gala on 01/10/2011 and sold the same in January, 2013. Thus, the claimed under section 54F was wrongly made. Reliance was placed upon the decision from Hon'ble jurisdictional High Court in Humayun Suleman Merchant vs CCIT (ITA No.545 of 2002), order dated 18/08/2016. On the other hand, the Ld. counsel for the assessee, Shri Subodh Ratnaparkhi, also relied upon the same decision by inviting 3 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre our attention to para (W) of the order. The impugned order was defended.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief are that the assessee is an individual sold industrial gala no.204 at Parvati Industiral Estate, Lower Parel, Mumbai, under agreement dated 01/10/2011 for a consideration of Rs.81 lakhs. After deducting the indexed cost of acquisition amounting to Rs.24,06,671/- claimed capital gain of Rs.56,93,329/-. The assessee purchased a residential house vide agreement dated 16/01/2013, bearing number G-2404, Vivant, Thane, for a consideration of Rs.77,92,875/-. The assessee claimed exemption to the extent of Rs.56,93,329/- under section 54F of the Act and declared nil capital gains. The assessee made the investment in purchase of new flat within the extended time granted by section 139(4) of the Act. The Ld. Assessing Officer declined the claim of the assessee for the reason that the assessee did not invest the capital gains in the capital gains account scheme before the expiry of time 4 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre provided under section 139(1) and disallowed the exemption claimed under section 54F of the Act resulted into addition of Rs.56,93,329/- to the returned income.
2.2. On appeal before the Ld. Commissioner of Income Tax (Appeal), the factual matrix was considered and considering the decision of the Tribunal in the case of Kishore H. Galaiya and further the decision from Hon'ble Punjab & Haryana High Court in the case of CIT vs Jagrati Aggarwal (2011) 339 ITR 610 along with other cases and held that the assessee invested the amount of Rs.52,38,125/- for purchasing the new asset, therefore, to this extent, extended the benefit to the assessee and restricted the disallowance to Rs.4,55,204/-. The Revenue is aggrieved and is in appeal before this Tribunal. With this factual matrix, now we shall analyze the section 54F of the Act, which is reproduced hereunder:-
"Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.
54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date 5 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,--
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45;
(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45:
Provided that nothing contained in this sub-section shall apply where--
(a) the assessee,--
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".
Explanation.--For the purposes of this section,--
"net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.
(2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-
term capital assets of the previous year in which such residential house is purchased or constructed.
(3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, 6 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such new asset is transferred. (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) ofsection 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub- section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,--
(i) the amount by which--
(a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause
(a) or, as the case may be, clause (b) of sub-section (1), exceeds
(b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid.
Explanation.--[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]"
2.3. If the aforesaid provision of the Act is analyzed section 54F (4) speaks about net consideration subject to 7 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre the provisions of sub-section (4) in case of an assessee being an individual or HUF which is not appropriated by the assessee towards the purchase of new assets made within the specified period or which is not utilized by him for the purchase or construction of new asset. According to the assessee, she filed her return on 28/03/2014 i.e. before the due date of filing of return i.e. 31/03/2014 in terms of section 139(4) and utilized the amount of long term capital gains for purchasing the residential flats vide agreement dated 16/01/2013 (registered on 29/01/2013), therefore, the claimed exemption under section 54F was rightly granted to the assessee. The case of the assessee find supports from the decision of the Tribunal in the case of Kishore H Galaiiya vs Income Tax Officer (2012) 137 ITD 229 (Mum. Trib.), another decision in CIT vs Jagrati Agarwal (2011) 339 ITR 610 ( P & H), wherein, Hon'ble Court held as under:-
" Revenue is in appeal aggrieved against an order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short the 'the Tribunal') on 13.8.2010 in respect of Assessment Year 2006-2007.
The Revenue has claimed the following substantial question of law, as arisen from the order of the Tribunal:8 ITA No.5156/Mum/2016
Smt. Kalpana Pradeep Ambre "Whether in the facts and circumstances of the case and in aw the ITAT was justified in allowing the benefit of exemption under Section 44 of the Income tax Act by wrongly interpreting Section 54 of the I.T. Act in which the due date for furnishing the return of income is mentioned as per Section 139(1) and not as per Section 139(4) of the Act?"
The assessee sold her house property for Rs. 45 lacs and claimed deduction under Section 54 of the Income Tax Act, 1961 (for short 'the Act'). The assessee was served with a otice under Section 142(1)of the Act, as to why the amount deducted be not added to her income as long term capital gain, as the assessee failed to deposit the amount in Capital Gain Account Scheme and also failed to purchase house property before the due ITA No. 176 of 2011 date of filing the return of income. The assessee contested the claim of the Revenue and asserted that she is not liable to deposit the amount in Capital Gain Deposit Scheme and that the due date of filing the return of income tax is not as specified in Section 139(1) but as specified in Section 139(4) of the Act. The Assessing Officer declined the claim of the assessee and returned finding that the assessee has concealed her particulars of income and initiated proceedings for penalty as well.
The appeal against the said order was accepted by the Commissioner of Income Tax (Appeals). It was found that the appellant has purchased new residential property on 2.1.2007 and the due date as perSection 139(4) is 31.3.2007 and thus, the assessee has complied with the provisions of Section 54 of the Act. It was held that Section 139 includes Sub Section (4) as well. The said order of the Commissioner of Income Tax has been affirmed in appeal as well.
It may be noticed that the assessee sold her residential house on 13.1.2006 for a sum of Rs. 45 lacs and purchased another property jontly with Mr. D. P. Azad, her father-in-law on 2.1.2007 for a consideration of Rs. 95 lacs. The due date of filing of return as per Section 139(1) of the Act was 31.7.2006, but the assessee filed her return on 28.3.2007 and that extended due date of filing of return as per Section 139(4) is 31.3.2007.
Section 54 of the Act contemplates that the capital gain arises from the transfer of a long term capital asset, but if the assessee within a period of one year before or two years after the date on which the transfer took place purchases residential house, then instead of the capital gain, the income would be charged in terms of provisions of Sub Section (1) of Section 54. As per Sub-Section (2), if the amount of capital gains is not ITA No. 176 of 2011 appropriated by the assessee towards the purchase of new asset within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, the amount shall be 9 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre deposited by him before furnishing such return not later than due date applicable in the case of assessee for furnishing the return of income under Sub Section (1) of Section 139 in an account in any such Bank or institution as may be specified. Relevant Sub-Section (2) of Section 54 of the Act reads as under:
"(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under Section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under Sub-Section (1) of Section 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazettee, frame in this behalf and such return shall be accompanied by proof of such deposit, and for the purposes of Sub-Section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this Sub-Section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in Sub-Section (1), then,-
(i) the amount not so utilized shall be charged under Section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid."
ITA No. 176 of 2011 The question which arises is; whether the return filed by the assessee before the expiry of the year ending with the Assessment Year is valid under Section 139(4) of the Act.
Learned counsel for the revenue has argued that the assessee was required to file return under Sub section (1) of Section 139 of the Act in terms of Sub section (2) of Section 54 of the Act. It is contended that Sub section (4) is not applicable in respect of the assessee so as to avoid payment of long terms capital gain.
On the other hand, learned counsel for the respondent relies upon a Division Bench judgment of Karnataka High Court reported as Fathima Bai vs. Income Tax Officer (2009) 32 DTR 243, where in somewhat similar circumstances, it has been held that time limit for deposit under Scheme or utilization can be made before the due date for filing of return under Section 139(4) of the Act. Learned counsel for the respondent also 10 ITA No.5156/Mum/2016 Smt. Kalpana Pradeep Ambre relies upon a Division Bench judgment of Gauhati High Court reported as Commissioner of Income Tax vs Rajesh Kumar Jalan (2006) 286 ITR
274. Having heard learned counsel for the parties, we are of the opinion that Sub-Section (4) of Section 139 of the Act is, in fact, a proviso to Sub-Section (1) of Section 139 of the Act. Section 139 of the Act fixes the different dates for filing the returns for different assesses. In the case of assessee as the respondent, it is 31st day of July of the Assessment Year in terms of clause (c) of the Explanation 2 to Sub-Section 1 of Section 139 of the Act, whereas Sub-Section (4) of Section 139 provides for extension in period of due date in certain circumstances. It reads as under: ITA No. 176 of 2011 "(4) Any person who has not furnished a return within the time allowed to him under Sub-Section (1), or within the time allowed under a notice issued under Sub-Section (1) of Section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier;
Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year". A reading of the aforesaid Sub-Section would show that if a person has not furnished the return of the previous year within the time allowed under Sub-Section (1) i.e. before 31st day of July of the Assessment Year, the assessee can file return before the expiry of one year from the end of the relevant Assessment Year.
The sale of the asset having been taken place on 13.1.2006, falling in the previous year 2006-2007, the return could be filed before the end of relevant assessment year 2007-2008 i.e. 31.3.2007. Thus, Sub- Section (4) of Section 139 provides extended period of limitation as an exception to Sub-Section (1) of Section 139 of the Act. Sub-Section (4) is in relation to the time allowed to an assessee under Sub-Section (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under Sub-Section (1) of Section 139. Therefore, such Sub-Section (4) has to be read along with Sub-Section (1). Similar is the view taken by the Division Bench of Karnataka and Gauhati High Courts in Fatima Bai and Rajesh Kumar Jalan cases (supra) respectively.
ITA No. 176 of 2011 In view of the above, we find that due date for furnishing the return of income as per Section 139(1) of the Act is subject to the extended period provided under Sub-Section (4) of Section 139 of the Act.
Consequently, the question of law is answered against the Revenue and in favour of the assessee. Thus, the present appeal is dismissed."
11 ITA No.5156/Mum/2016Smt. Kalpana Pradeep Ambre The assessee further find support from the decision in the case of ACIT vs Asha Ashok Boob (2015) 59 taxmann.com 173(Pune Trib.), Anil Kumar Omkar Singh Arora vs Income Tax Officer (2013) 37 CCH 221 (Mumbai).
Since, the assessee utilized the amount before due date of filing of return as per section 139(4) of the Act, therefore, the utilized portion in the new asset was rightly exempted under section 54F of the Act. Thus, we affirm the stand of the Ld. Commissioner of Income Tax (Appeal), resulting into dismissal of appeal.
Finally, the appeal of the Revenue is dismissed.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 04/06/2018.
Sd/- Sd/-
(G. Manjunatha) (Joginder Singh)
लेखा सद#य / ACCOUNTANT MEMBER या$यक सद#य / JUDICIAL MEMBER
मब
ंु ई Mumbai; -दनांक Dated : 04/06/2018
f{x~{tÜ? P.S/. न.स.,
आदे श क %$त'ल(प अ)े(षत/Copy of the Order forwarded to :
1. अपीलाथ1 / The Appellant
2. 23यथ1 / The Respondent.12 ITA No.5156/Mum/2016
Smt. Kalpana Pradeep Ambre
3. आयकर आय5 ु त,(अपील) / The CIT, Mumbai.
4. आयकर आय5 ु त / CIT(A)- , Mumbai
5. 7वभागीय 2 त न ध, आयकर अपील(य अ धकरण, मब ंु ई / DR, ITAT, Mumbai
6. गाड" फाईल / Guard file.
आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मब ुं ई / ITAT, Mumbai