Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. Per Hon’ble Jhaveri, J

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 18 / 2017 Pr. Commissioner of Income Tax, Jaipur-II, Jaipur. ----Appellant Versus Smt. Uma Vijay, 8-C, 35, Pratap Nagar, Tonk Road, Jaipur PAN No. . ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.D. Mathur on behalf of Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHURJudgment Per Hon’ble Jhaveri, J. 24/05/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal preferred by the assessee. 2.Counsel for the appellant has framed the followingsubstantial questions of law for consideration of the Court: “(i)Whether in the facts and circumstancesof the case and in law, the ITAT is justified indeletingthedisallowanceofRs.1,01,44,025/- made by Assessing Officer u/s54F of the Income Act, 1961. (ii) whether in the facts and circumstancs ofthe case and in law, the ITAT is justified byholding that the assessee is entitiled fordedeuction u/s. 54F in respect of salesconsideration utilized within the extendedtime of filing of return of income u/s. 139(4)of the I.T. Act tough due date for filing returnof income should be as per time limitprescribed u/s. 139(1) of the I.T. Act.” 3.The Tribunal while considering the case of the assessee hasheld as under: “2.6 We have heard the rival contentionsand perused the materials available onrecord. It is observed that assessee has solda property situated situated at 1, AnandBhawan Gruh Nirman Sahkari Samiti, TagoreNagar Yojana Jaipur on 23.01.2012, for aconsideration of Rs.1,50,00,000/-. Theassessee computed a capital Gain ofRs.1,43,03,205/- and claimed deduction ofthe same u/s 54F of I.T. Act, 1961 forutilising the sales consideration for thepurpose of acquiring new residential House.Thus the assessee filed her return of Incomeon 14.02.2013 declaring capital Gain of Rs.NIL. The AO disallowed deduction ofRs.1,01,44,025/- on the ground that theassessee before the due date of filing ofreturn of income u/s 139(1) i.e. 31.07.2012,has invested only Rs.43,61,799/- forpurchase of residential property. The AOrejected the claim of the assesseeof depositof Rs.1,06,60,000/- in Capital Gain Accountu/s 54F(4) of the Act, which was depositedin SBI Capital Gain Account on differentdates falling after the due date of filing ofreturn of income u/s 139(1) i.e.Rs.50,00,000/-on01.01.2013,Rs.49,00,000/-on22.01.2013andRs.7,60,000/- on 12.02.2013. Therefore theAO allowed proportionate deduction u/s 54Fto the extent of Rs.41,59,180/- only(14303205*4361799/1,50,00,000/-) againstthat of Rs.1,43,03,205/-claimed by theassessee and disallowed balance ofRs.1,01,44,025/- which has been upheld bythe ld. CIT(A). There is no disputes withrespect to the facts thatthe assessee hasutilised Rs. 43,61,799/- before the due dateof filing of return of income u/s 139(1) anddeposited Rs.1,06,60,000/- in Capital GainAccount on different dates falling after thedue date of filing of return of income u/s139(1) but before filing return of incomewithin the period allowed u/s 139(4) of theAct. During the course of hearing, the ld.A.R. drew our attention to the Registeredsale Deed 23.01.2012, Photo copy of postdated cheques received for salesconsideration, return memo of the Bank,bank Statement of the assessee and statement of Capital Gain Account placed onPB page No. 23, 28 to 32, 36 to 38 and 40to 42 and explained that the salesconsideration was received vide post datedcheques dated 30.11.2012 and cheques ofRs.1,00,00,000/- were returned unpaid evenon that date and ultimately could realisedthe same on different dates between01.01.2013 to 14.01.2013 vide differentcheques/RTGS. Therefore it was not possiblefor the assessee to deposit the same inCapital Gain Account before due date offiling of return of income u/s 139(1). It isfurther submitted that the assessee as andwhen received the amount has deposited thesame in Capital Gain Account either on thesame day or within few days withoututilising the same for any other purpose. Itis noticed that the above said explanation ofthe ld. A.R. appears to us convincing to us.The ld. A.R. further relying on various caselaws submitted that the amount deposited incapital Gain Account before filing of return ofincome within the period allowed u/s 139(4)should be considered to have beendeposited before the due date of filing ofreturn of income prescribed u/s 139(1)of theAct. Now the issue for our consideration isthat whether the sales considerationinvested in Capital Gain Account within theperiod allowed u/s 139 (4) should also beconsidered to be within the period allowedu/s 139(1) of the Act. We find that theabove said issue is covered within thedecision of Hon’ble . Punjab & Haryana HighCourt in the case of CIT v. Jagriti Aggarwal,339 ITR 610, the relevant portion of thedecision of Hon’ble Court is reproduced asfollows:- 10. Having heard learned counsel for theparties, we are of the opinion that Sub-Section (4) of Section 139 of the Act is, infact, a proviso to Sub-Section (1) of Section139 of the Act. Section 139 of the Act fixesthe different dates for filing the returns fordifferent assesses. In the case of assesseeas the respondent, it is 31st day of July ofthe Assessment Year in terms of clause (c)of the Explanation 2 to Sub-Section 1 ofSection 139 of the Act, whereas Sub-Section(4) of Section 139 provides for extension inperiod of due date in certain circumstances.It reads as under: "(4) Any person who has not furnished areturn with in the time allowed to him underSub-Section (1), or within thetime allowedunder a notice issued under Sub-Section (1)of Section 142, may furnish the return forany previous year at any time before theexpiry of one year from the end of therelevant assessment year or before thecompletion of the assessment whichever isearlier; Provided that where the returnrelates to a previous year relevant to theassessment year commencing on the 1stday of April 1988, or any earlier assessmentyear, the reference to one year aforesaidshall be construed as a reference to twoyears from the end of the relevantassessment year." 11. A reading of the aforesaid Sub-Sectionwould show that if a person has notfurnished the return of the previous yearwithin the time allowed under Sub-Section(1) i.e. before 31st day of July of theAssessment Year, the assessee can filereturn before the expiry of one year fromthe end of the relevant Assessment Year. 11. A reading of the aforesaid Sub-Sectionwould show that if a person has notfurnished the return of the previous yearwithin the time allowed under Sub-Section(1) i.e. before 31st day of July of theAssessment Year, the assessee can filereturn before the expiry of one year fromthe end of the relevant Assessment Year. 12. The sale of the asset having been takenplace on 13.1.2006, falling in the previousyear 2006-2007, the return could be filedbefore the end of relevant assessment year2007-2008 i.e. 31.3.2007. Thus, Sub-Section (4) of Section 139 providesextended period of limitation as anexception to Sub-Section (1) of Section 139of the Act. Sub-Section (4) is in relation tothe time allowed to an assessee under Sub-Section (1) to file return. Therefore, suchprovision is not an independent provision,but relates to time contemplated under Sub-Section (1) of Section 139. Therefore, suchSub-Section (4) has to be read along withSub-Section (1). Similar is the view taken bythe Division Bench of Karnataka and GauhatiHigh Courts in Fathima Bai's case (supra)and Rajesh Kumar Jalan's case (supra)respectively. 13. In view of the above, we find that duedate for furnishing the return of income asper Section 139(1) of the Act is subject tothe extended period provided under Sub-Section (4) of Section 139 of the Act.’' TheCoordinate Mumbai Bench of this Tribunal inthe case of Anil Kumar Omkar Singh Aurorav. ITO, (ITA No.4648/Mum/2013 order dated 6-11-2013) following the decision of Hon’bleP&H High Court in the case of JagritiAggarwal (supra) has decided the identicalissue in favour of the assessee as follows:- 6. Only issue involves in this appeal is as towhether extended period as per section139(4) has to be considered for the purposeof utilization of amount of capital gain forthe purpose of claiming exemption u/s 54Fof the Act. The above issue is squarelycovered by the decision of Hon’ble Punjaband Haryana High Court in the case of CITV/s Ms. Jagriti Aggarwal (2011) 339 ITR 610(P&H), wherein, Their Lordships have heldthat provision of section 139(4) is not anindependent provision, but is related to timecontemplated under the provision of section13 9(1) of the Act. Accordingly, section139(4) had to be read along with sub-section (1) of section 139 and the due datefor furnishing the return of income u/s139(1) is subject to the extended periodprovided u/s 139(4). Hence, extendedperiod u/s 139(4) has to be considered forthe purpose of utilization of the capital gainamount. The ITAT, Mumbai following thedecision of the Hon’ble Punjab and HaryanaHigh Court in the case of Kishore Galaiya V/sITO (137 ITD 229) has held that when theassessee had utilized the amount which wasmore than the capital gain earned towardsconsideration of new residential house withinextended period u/s 139(4) of the Act, theclaim made by assessee for exemption u/s 54F of the Act could not be denied. 7. The similar issue had also come up beforethe Hon’ble Guwahati High Court in the caseof CIT V/s Rajesh Kumar Jalan (supra) andthe Hon’ble High Court has held that if theassessee fulfils the condition for exemptionu/s 54 within the extended time of filing ofreturn u/s 139(4) of the Act, the assessee isentitled to exemption u/s 54 of the Act. Inview of above, we hold that the assessee isentitled to claim deduction u/s 54F of theAct for utilization of sale consideration forinvestment in new residential propertywithin due date as stipulated u/s 139 of theAct. Hence, Grounds of appeal taken byassessee are allowed by reversing theorders of authorities below.’’ 54F of the Act could not be denied. 7. The similar issue had also come up beforethe Hon’ble Guwahati High Court in the caseof CIT V/s Rajesh Kumar Jalan (supra) andthe Hon’ble High Court has held that if theassessee fulfils the condition for exemptionu/s 54 within the extended time of filing ofreturn u/s 139(4) of the Act, the assessee isentitled to exemption u/s 54 of the Act. Inview of above, we hold that the assessee isentitled to claim deduction u/s 54F of theAct for utilization of sale consideration forinvestment in new residential propertywithin due date as stipulated u/s 139 of theAct. Hence, Grounds of appeal taken byassessee are allowed by reversing theorders of authorities below.’’ “2.7 We thus considering the facts of thecase and respectfully following the judicialprecedents rendered directly on the issue,hold that the assessee is entitled fordeduction u/s 54F in respect of the salesconsideration utilised within the extendedtime of filing of return of income u/s 139(4)of the Act, for purchase/construction of newresidential house and for investment inCapital Gain Account. It appears from therecords that the assessee has invested totalsumofRs.1,50,21,799/-(i.e.Rs.43,61,799/- in making payment for thepurpose of new residential house anddeposit of Rs.1,06,60,000/-in capital GainAccount ) before filing the return of incomeu/s 139(4) of the Act, which is more thanthe sales consideration of Rs.1,50,00,000/-of original assets and thus the assessee isentitled for deduction u/s54F of the Act ofwhole of the Long Term Capital Gain ofRs.1,43,03,205/- arising from the capitalassets transferred during the relevantprevious year. Hence the addition ofRs.1,01,44,025/- made to returned incomeis deleted. Thus the appeal of the assesseeis allowed.” 4.We are in complete agreement with the view taken by theTribunal and are of the opinion that no substantial question of lawis made out. 5.In that view of the matter, the appeal stands dismissed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/05