CIT vs. Jagtar Singh Chawla (P&H High Court)

DATE: (Date of pronouncement)
DATE: April 2, 2013 (Date of publication)

Click here to download the judgement (jagtar_singh_chawla_54F_time_limit_deposit.pdf)

S. 54F: Deposit in capital gains account scheme by s. 139(4) due date sufficient

The assessee sold property on 20.06.2006 (AY 2007-08) for a consideration of Rs. 2.24 crores. The said amount was not invested in the capital gains account scheme by the due date of filing the return u/s 139(1) (31.07.2007) and was instead used to purchase a new residential house on 31.3.2008. The assessee claimed exemption u/s 54F which was denied by the AO & CIT(A) on the basis that u/s 54F(4) the amount of the consideration which is not appropriated for purchase of the new asset before the date of furnishing the return of income u/s 139 had to be deposited in the “capital gains account scheme” before the due date for filing the return of income u/s 139(1). On appeal by the assessee, the Tribunal allowed the claim. On appeal by the department to the High Court, HELD dismissing the appeal:

Though s. 54F(4) provides that the amount not appropriated towards purchase of the new asset has to be deposited in the capital gains account scheme before the due date for filing the return u/s 139(1), sub-section (4) of s. 139 is in the nature of a proviso to s. 139(1). S. 139(4) provides that a person who has not furnished a return within the time allowed to him under s. 139(1) may furnish the return 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. For AY 2007-08, the last date for filing the return u/s 139(4) is 31.3.2009. This extended time limit is available for making deposit in the capital gains account scheme. As the assessee had invested the consideration in purchase of a new house before that date, the exemption has to be allowed (Jagriti Aggarwal 339 ITR 610 (P&H), Rajesh Kumar Jalan 286 ITR 274 & Fathima Bai (Kar) followed)

3 comments on “CIT vs. Jagtar Singh Chawla (P&H High Court)
  1. T V S RAGHAVAN says:

    If the assessee repays the housing loan taken by him from the sale proceeds and invest remaining amount(less than capital gain by 26 lacs) whether the amount repaid will be considered as reduction in the sale proceeds?
    The relevant facts are:The assessee has booked a flat costing Rs 90 lacs in FyY2008-09 in an under construction project.The assessee has paid initially rs 7 lacs and further payment started only in 2011-12.The assessee has sold his flat for 90 lacs and a capital gain in this sale is arrived at 33.54 lacs.The assessee has paid back loan on the sold property Rs 26 lacs and utilised the remaining amount for payment of installment for the new flat.Please advise how much capital gains tax the assessee has to pay.

  2. K E B RANGARAJAN says:

    Dear Sri Raghavan,
    Repayment of loan taken w.r.t sold property is absorbed in the cost of the sold property and would not count for investment out of capital gains for the purposes of exemption.

  3. Mr. Raghavan, The facts of your case is not clear. Pl. confirm the whether the same flat which was booked in f/year 2008-09 has been sold in f/year 2011-12 and further confirm whether that has been sold for rs. 90.00 lacs only, then how a capital gain of Rs. 33.54 lacs may be arrived therein. Pl. clerify the entire facts in detail, so that proper reply may be answered of your quaries.

    sunil gogra, fca

Leave a Reply

Your email address will not be published. Required fields are marked *