Principal Commissioner Of Income Tax-I, New Central Revenuebuilding, Statue Circle, Jaipur (Raj v. Shri Shankar Lal Saini

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 153 / 2017 Principal Commissioner of Income Tax-I, New Central RevenueBuilding, Statue Circle, Jaipur (Raj.) ----Appellant Versus Shri Shankar Lal Saini, 480, Hanta Nagar, Near NBC, Hasanpura,Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya VijayFor Respondent(s) : Mr. Gunjan Pathak with Ms. Ishita Rawat _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 19/12/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has allowedthe appeal of the assessee and modifying the order of CIT(A) aswell as AO. 2.This court while admitting the appeal on 1.06.2017 framedfollowing substantial question of law:- “(i) Whether, the tribunal was justified in allowingthe deduction of Rs.1,60,00,000/- u/s 54B andRs.52,00,000 u/s. 54F of the Act, ignoring thespecific provisions of Section 54B(2) and 54F(4) which refers to the due date of Section 139(1)and not Section 139(4) of the Act?” 3.The facts of the case are that the assessee was picked up forscrutiny assessment and the assessment was finalized undersection 143(3) of the I.T. Act, 1961 (hereinafter referred to as theAct) vide order dated 20.03.2014. While framing the assessment,the AO declined the claim of deduction under sections 54B and54F of the Act on the ground that assessee has not deposited thenet sale consideration in the capital gain account. 4.Counsel for the appellant Mr. Singhi has taken us to theorder of the AO wherein it has been observed as under:- 5.5 I have gone through the submissions madeby the assessee but the reply filed by theassessee is not acceptable as assessee has failedto deposit the amount of net sale consideration orcapital gain in capital gain account before duedate of filing of return i.e. 31.07.2011 in theabove case as per provisions of section 139(1) ofthe I.T. Act, 1961. Assessee claimed that saleconsideration was deposited in nationalized bankas well as capital gain account. Perusal of thedocuments submitted by the assessee it is foundthat assessee has not filed any documentaryevidence in this regard. Further, the assessee hadclaimed that value of construction of houseRs.52,00,000/- including Rs.5,00,000/- inagriculture land. The contention of the assessee inthis regard is also not found acceptable asdeduction u/s 54B has already been claimed bythe assessee for Rs.1,60,00,000/- and same hasbeen discussed as above. Therefore, assessee is not entitled to claim the deduction ofRs.5,00,000/- u/s 54F. 6. In view of the above position issue of both thedeductions claimed by the assessee is decidedseparately as under:- -The provisions of section 54B(2) reads as under: “ The amount of the capital gain which is notutilized by the assessee for the purchase of thenew asset before the date of furnishing the returnof income under section 139, shall be depositedby him before furnishing such return [suchdeposit being made in any case not later than thedue date applicable in the case section 139] in anaccordance with, any scheme which the centralGovernment may, by notification in the officialGazette, frame in this behalf and such return shallbe accompanied by proof of such deposit; and, forthe purposes of sub-section (1), the amount, ifany, already utilized by the assessee for thepurchase of the new asset together with theamount so deposited shall be deemed to be thecost off the new asset.” -The provisions of section 54B(2) reads as under: “ The amount of the capital gain which is notutilized by the assessee for the purchase of thenew asset before the date of furnishing the returnof income under section 139, shall be depositedby him before furnishing such return [suchdeposit being made in any case not later than thedue date applicable in the case section 139] in anaccordance with, any scheme which the centralGovernment may, by notification in the officialGazette, frame in this behalf and such return shallbe accompanied by proof of such deposit; and, forthe purposes of sub-section (1), the amount, ifany, already utilized by the assessee for thepurchase of the new asset together with theamount so deposited shall be deemed to be thecost off the new asset.” In view of above provisions of I.T. Act it is clearthat assessee has to deposit the amount of capitalgain which has not been utilized by the assesseebefore due date of filing of return in capital gainaccount scheme, 1988. Assessee has admittedthe fact that he has failed to deposit the amountof Rs.1,60,00,000/- in capital gain account beforedue date of filing of return u/s 139(1) of the I.T.Act. Therefore, the deduction claimed by theassessee u/s 54B Rs.1,60,00,000/- is notallowable to the assessee. In view of the abovediscussion deduction claim by the assessee u/s 54B Rs.1,60,00,000/- is disallowed and added to the total income of the assessee. Penaltyproceedings u/s 271(1)(c) is being issued initiatedfor furnishing of inaccurate particular of income. 7. The provisions of section 54F(4) reads as-under: “The amount of the net consideration which is notappropriated by the assessee towards thepurchase of the new asset made within one yearbefore the date on which the transfer of theoriginal asset took place, or which is not utilizedby him for the purchase or construction of thenew asset before the date of furnishing the returnof income under section 139, shall be depositedby him before furnishing such return [suchdeposit being made in any case not later than thedue date applicable in the case of the assessee forfurnishing the return of income under sub-section(1) of section 139] in an account in any such bankor institution as may be specified in, and utilizedin accordance with, any scheme which the CentralGovernment may, by notification in the officialGazette, frame in this behalf and such return shallbe accompanied by proof of such deposit; and, forthe purpose of sub-section (1), the amount, if anyalready utilized by the assessee for the purchaseor construction of the new asset together with theamount so deposited shall be deemed to be thecost of the new asset.” In view of above provisions of I.T. Act it is clearthat assessee has to deposit the net saleconsideration amount which has not been utilizedby the assessee before due date of filing of returnin Capital Gain Account Scheme, 1988. Assesseehas admitted the fact that he has failed to depsit the amount of Rs.52,00,000/- in capital gainaccount before due date of filing of return u/s139(1) of the I.T. Act. Therefore, the deductionclaimed by the assessee u/s 54F Rs.52,00,000/-is not allowable to the assessee. In view of theabove discussion deduction claim by the assesseeu/s 54F Rs.52,00,000/- is disallowed and addedto the total income of the assessee. Penaltyproceedings u/s 271(1)(c) is being issued initiatedfor furnishing of inaccurate particulars of income. Subject to the above disussion, total income iscomputed as under:- (1) Income as disclosed in the returnRs.66,49,570/- Add: Addition as discussed in para-4 above Rs.59,04,000/- Addition as discussed in para-6 above Rs.1,60,00,000/- Addition as discussed in para-7 above -Rs.52,00,000/ Net taxable IncomeRs.3,37,53,570/- Subject to the above disussion, total income iscomputed as under:- (1) Income as disclosed in the returnRs.66,49,570/- Add: Addition as discussed in para-4 above Rs.59,04,000/- Addition as discussed in para-6 above Rs.1,60,00,000/- Addition as discussed in para-7 above -Rs.52,00,000/ Net taxable IncomeRs.3,37,53,570/- Assessed u/s 143(3) of the Income Tax Act, 1961at Rs.3,37,53,570/-. Calculation of Tax andinterest charged u/s 234A, 234B and 234C of theI.T. Act, 1961 has been shown in the enclosedITNS-150 which is also a part of the assessmentorder, accordingly demand notice and challan isissued. Penalty notice u/s 271(1)(c) is beingissued for furnishing of inaccurate particularsincome. 5.Taking into consideration, he contended that the AO hasassessed the income and capital gain benefit was not rightlygranted to the assessee. He further contended that CIT(A) hasdismissed the appeal observing as under:- (vii) It may be mentioned that in the case ofNandlal Sharma vs. ITO (Supra), the abovereferred decision of Hon’ble Supreme Court wasnot placed before the Hon’ble ITAT. In view of thedecision of the Apex Court in the case of PNKhanna V/s CIT 2004 266 ITR 1/135 Taxman 327and the decision of the Hon’ble Tribunal whichhas relied on this decision, I respectfully differwith the decision of Hon’ble ITAT in the case ofNandlal Sharma vs. ITO an it is held that the duedate as specified in the section 139 of the IT Act,1961 has to be as per section 139(1) and notsection 139(4) of the IT Act, 1961. (viii) In view of the above discussion, it is heldthat the appellant is not entitled for deductionu/s 54B and 54F of the Act and thus the action ofthe AO in not allowing deduction u/s 54B and 54Fis justified and hence the additions made by theAO are sustained. (ix) In its submission, it was the contention ofthe appellant that the AO disallowed the claim tothe extent of Rs.5,00,000/- by wronglymentioning that this is in respect of agriculturalland for which assessee has already claimeddeduction of Rs.1.60 Crore. It was stated thatthe amount of Rs.5 Lac was incurred on wirefencing of the agriculture land acquired by theassessee and small room thereon and this is partof the agriculture land itself. Even otherwise ifpart of the amount of Rs.5,00,000/- is treated asincurred on house than in various cases it has been held that wording used in sec. 54F is “aresidential house” which also permits the use ofplural by virtue of sec. 13(2) of General ClausesAct and therefore where the assessee purchasesmore than one house than also deduction isavailable. been held that wording used in sec. 54F is “aresidential house” which also permits the use ofplural by virtue of sec. 13(2) of General ClausesAct and therefore where the assessee purchasesmore than one house than also deduction isavailable. (x) I have considered the above contention of theappellant very carefully. It has been held abovethat the deduction u/s 54F could no be allowed tothe appellant and thus this contention becameonly academic. It is observed from the valuationreport filed by the appellant that the total cost ofconstruction in the house property at PlotNo.480, New Dhani, Shanti Nagar, Near KarniMata Mandir, was estimated at Rs.47 Lac onlyand not Rs.52 Lac as claimed by the appellant forclaiming deduction u/s 54F of the Act. Thecontention that Rs.5 Lac was spent on wirefencing and construction of room on theagricultural land acquired by appellant does nothold good in the absence of any documentaryevidence in this regard. The appellant relied upona number of case laws for claiming deduction u/s54F of the Act, if the appellant acquires morethan one residential house. In this regard, it maybe mentioned here that if it is presumed that theappellant has constructed a room on theagricultural land even then it is not eligible fordeduction u/s 54F of the Act on Rs.5 Lac asclaimed by it as construction of a room does nottantamount to a residential house. In order to bea residential house, the room must beaccompanied at least with kitchen and bathroom.In view of the above, the contentions of theappellant are hereby rejected. Therefore, thisground of appeal is hereby rejected. 6.However, while considering the matter, he contended thatthe tribunal has committed serious error in ignoring theobservations made by the Supreme Court in the case of P.N.Khanna vs. CIT, 266 ITR 1(SC) wherein it has been held asunder:- 12. As a result of the amendment of Section139(3) by the Taxation Laws (Amendment andMiscellaneous Provisions) Act, 1986 the power ofthe Income Tax Officer to extend time forfurnishing return was taken away w.e.f. Ist April,1987. 17. Two principles of construction - one relatingto casus omissus and the other in regard toreading the statute as a whole - appear to bewell settled. Under the first principle a casusomissus cannot be supplied by the court exceptin the case of clear necessity and when reasonfor it is found in the four corners of the statuteitself but at the same time a casus omissusshould not be readily inferred and for thatpurpose all the parts of a statute or section mustbe construed together and every clause of asection should be construed with reference to thecontext and other clauses thereof so that theconstruction to be put on a particular provisionmakes a consistent enactment of the wholestatute. This would be more so if literalconstruction of a particular clause leads tomanifestly absurd or anomalous results whichcould not have been intended by the legislature."An intention to produce an unreasonable result",said Danckwerts, L.J., in Artemiou v. Procopiou1966 (1) QB 876, "is not to be imputed to astatute if there is some other constructionavailable". Where to apply words literally would"defeat the obvious intention of the legislationand produce a wholly unreasonable result", wemust "do some violence to the words" and soachieve that obvious intention and produce arational construction. (Per Lord Reid in Luke v.IRC {1963 AC 557} where at AC p.577 he alsoobserved: "This is not a new problem, though ourstandard of drafting is such that it rarelyemerges".) 20. Another plea which was urged with someamount of vehemence was that the provisions ofSection 276CC are applicable only when there isdiscovery of the failure regarding evasion of tax. 20. Another plea which was urged with someamount of vehemence was that the provisions ofSection 276CC are applicable only when there isdiscovery of the failure regarding evasion of tax. It was submitted that since the return underSub-section (4) of Section 139 was filed beforethe discovery of any evasion, the provision hasno application. The case at hand cannot becovered by the expression "in any other case".This argument though attractive has nosubstance. 7.He relied upon the judgment in the Sh. Nand Lal Sharmavs. The ITO, Bundi, ITA No. 413/JP/2012, wherein it hasbeen held as under :- 3.7 We have heard the rival contentions andperused the materials available on record.Apropos Ground No. 1 i.e. deposit of netconsideration into capital gain account scheme on31-03-2009, we find merit in the arguments ofthe ld. AR that Section 54 refers to Section 139for the time limit to acquire eligible new asset,which includes return u/s 139(4) also i.e. timelimit of one year from the end of assessmentyear. Various judicial precedents cited above havetaken this view; respectfully following them wehold that assessee purchase of new residentialhouse is eligible for claim of exemption u/s 54.Thus ground no. 1 of the assessee is allowed. perused the materials available on record.Apropos Ground No. 1 i.e. deposit of netconsideration into capital gain account scheme on31-03-2009, we find merit in the arguments ofthe ld. AR that Section 54 refers to Section 139for the time limit to acquire eligible new asset,which includes return u/s 139(4) also i.e. timelimit of one year from the end of assessmentyear. Various judicial precedents cited above havetaken this view; respectfully following them wehold that assessee purchase of new residentialhouse is eligible for claim of exemption u/s 54.Thus ground no. 1 of the assessee is allowed. 8.He also relied upon the judgment of Kerala Judgment inXavier J. Pulikkal vs. Dy. CIT, [2016] 242 Taxman 206(KERHC), which has been confirmed by the Supreme Courtwherein it has been held as under: 7. So far as the facts of the present case, wehave already stated above, it is possible thatfacts of the other appeal considered by theTribunal along with appeal of the Revenue maybe different. The scheme for depositing capitalgain is contemplated under section 54F(4) and itdepends upon when the property of the assesseeis sold and when exactly the amounts wereinvested, whether it was invested in a residentialhouse or otherwise. All these facts have to beconsidered with reference to provisions of section54F(4) along with section 139(1) of the Act, asthe due time would be under section 139(1) onlyand not under section 139(4) of the Act. 3. Looking at the facts, we modify the impugnedby directing that the Assessing Officer shall consider the matter de novo without beinginfluenced by any observation made by the HighCourt, in accordance with law. 9.He also relied upon the decision of Supreme Court inShriniwas Cable Components Vs. State of Madhya Pradesh andothers (2012) 10 SCC 421 wherein it has been held as under: “14.InG.P.CeramicsPrivateLimitedv.Commissioner, Trade Tax, Uttar Pradesh, (2009)2 SCC 90,this Court has observed thus: "29. It is now a well-established principle of lawthat whereas eligibility criteria laid down in anexemption notification are required to beconstrued strictly, once it is found that theapplicant satisfies the same, the exemptionnotification should be construed liberally. [SeeCTT v. DSM Group of Industries (SCC para 26);” 10.He has taken us to the provisions of Section 54(2) of theIncome Tax Act which reads as under: 9.He also relied upon the decision of Supreme Court inShriniwas Cable Components Vs. State of Madhya Pradesh andothers (2012) 10 SCC 421 wherein it has been held as under: “14.InG.P.CeramicsPrivateLimitedv.Commissioner, Trade Tax, Uttar Pradesh, (2009)2 SCC 90,this Court has observed thus: "29. It is now a well-established principle of lawthat whereas eligibility criteria laid down in anexemption notification are required to beconstrued strictly, once it is found that theapplicant satisfies the same, the exemptionnotification should be construed liberally. [SeeCTT v. DSM Group of Industries (SCC para 26);” 10.He has taken us to the provisions of Section 54(2) of theIncome Tax Act which reads as under: (2) The amount of the capital gain which is notappropriated by the assessee towards thepurchase of the new asset made within one yearbefore the date on which the transfer of theoriginal asset took place, or which is not utilisedby him for the purchase or construction of thenew asset before the date of furnishing thereturn of income under section 139, shall bedeposited by him before furnishing such return[such deposit being made in any case not laterthan the due date applicable in the case of theassessee for furnishing the return of incomeunder sub-section (1) of section 139] in anaccount in any such bank or institution as may bespecified in, and utilised in accordance with, anyscheme which the Central Government may, bynotification in the Official Gazette, frame in thisbehalf and such return shall be accompanied byproof of such deposit; and, for the purposes ofsub-section (1), the amount, if any, alreadyutilised by the assessee for the purchase orconstruction of the new asset together with theamount so deposited shall be deemed to be thecost of the new asset : Provided that if the amount deposited under thissub-section is not utilised wholly or partly for thepurchase or construction of the new asset withinthe period specified in sub-section (1), then,— (i) the amount not so utilised shall be chargedunder section 45 as the income of the previousyear in which the period of three years from thedate of the transfer of the original asset expires;and (ii) the assessee shall be entitled to withdrawsuch amount in accordance with the schemeaforesaid. 10.1 He also invited our attention to the following provisions: 54B(2) (2) The amount of the capital gain which is notutilised by the assessee for the purchase of thenew asset before the date of furnishing the returnof income under section 139, shall be deposited byhim before furnishing such return [such depositbeing made in any case not later than the duedate applicable in the case of the assessee forfurnishing the return of income under sub-section(1) of section 139] in an account in any such bankor institution as may be specified in, and utilised inaccordance with, any scheme which the CentralGovernment may, by notification in the OfficialGazette, frame in this behalf and such return shallbe accompanied by proof of such deposit; and, forthe purposes of sub-section (1), the amount, ifany, already utilised by the assessee for thepurchase of the new asset together with theamount so deposited shall be deemed to be thecost of the new asset : Provided that if the amount deposited under thissub-section is not utilised wholly or partly for thepurchase of the new asset within the periodspecified in sub-section (1), then,— (i) the amount not so utilised shall be chargedunder section 45 as the income of the previousyear in which the period of two years from thedate of the transfer of the original asset expires;and (ii) the assessee shall be entitled to withdrawsuch amount in accordance with the schemeaforesaid. 54F(2) Provided that if the amount deposited under thissub-section is not utilised wholly or partly for thepurchase of the new asset within the periodspecified in sub-section (1), then,— (i) the amount not so utilised shall be chargedunder section 45 as the income of the previousyear in which the period of two years from thedate of the transfer of the original asset expires;and (ii) the assessee shall be entitled to withdrawsuch amount in accordance with the schemeaforesaid. 54F(2) (2) Where the assessee purchases, within theperiod of two years after the date of the transferof the original asset, or constructs, within theperiod of three years after such date, anyresidential house, the income from which ischargeable under the head "Income from houseproperty", other than the new asset, the amountof capital gain arising from the transfer of theoriginal asset not charged under section 45 on thebasis of the cost of such new asset as provided inclause (a), or, as the case may be, clause (b), ofsub-section (1), shall be deemed to be incomechargeable under the head "Capital gains" relatingto long-term capital assets of the previous year inwhich such residential house is purchased orconstructed. 10.2 He contended that from a bare perusal of Section s 54B(2), it is clear that investment or the benefit which he is seeking theinvestment is to be made before return u/s 139(1) is filed. Thelanguage used by the legislature in 54B(2) is very clear “shall bedeposited by him before furnishing such return not later than duedate as applicable in the case of assessee for furnishing of IncomeTax under sub-section (1) of Section 139 in an account in whichsuch bank or institution as may be specified. 11.In that view of the matter, he contended that every wordwhich has been used in sub section (2) is to be constructed verystrictly otherwise provision will be rendered nugatory andinterpretation which has been given by the tribunal will frustratethe object of the Section. 12.He also taken us to Section 54F(4) and contended that it isthe identical language which has been used in 54B(2) in that viewof the matter, the judgment of Kerala High Court (supra) isrequired to be accepted and the view taken by the tribunal isrequired to be reversed. 13.He also contended that judgment of Gauhati High Court isrequired to be viewed very seriously inasmuch as reproduction ofsub Section (2) of Section 54B is not causing breach of Section139(1) which has been ignored by the Gauhati High Court. 14.However, counsel for the respondent has contended that thefirst judgment which sought to be relied upon is prosecution caseand while considering the prosecution and the exemption, thecourt approach should be in a different direction than in case ofprosecution which is to be strictly construed whereas in the caseof exemption it is to be construed liberally. He has taken us to thefollowing findings recorded by the Tribunal: 3.4 We have heard rival contentions, perused thematerial available on record and gone throughthe orders of the authorities below. Theundisputed facts as recorded by the AO are thatthe assessee had sold two properties i.e. landsituated at Ramsinghpura, Tehsil Sanganer,Khasra Nos. 165 & 166, admeasuring 0.82Hectare on 28.12.2010 to M/s. Krishna BalaramResidency Pvt. Ltd. Jaipur jointly both his brotherShri Sedhu Ram at the consideration ofRs.3,00,00,000/- and land situated atRamsinghpura (Dholai), Tehsil Sanganer, KhasraNo. 163, admeasuring 0.70 Hectare on 3.4 We have heard rival contentions, perused thematerial available on record and gone throughthe orders of the authorities below. Theundisputed facts as recorded by the AO are thatthe assessee had sold two properties i.e. landsituated at Ramsinghpura, Tehsil Sanganer,Khasra Nos. 165 & 166, admeasuring 0.82Hectare on 28.12.2010 to M/s. Krishna BalaramResidency Pvt. Ltd. Jaipur jointly both his brotherShri Sedhu Ram at the consideration ofRs.3,00,00,000/- and land situated atRamsinghpura (Dholai), Tehsil Sanganer, KhasraNo. 163, admeasuring 0.70 Hectare on 09.02.2011 to M/s. Krishna Balram ResidencyPvt. Ltd., Jaipur jointly with his brother ShriSedhu Ram and shown total consideration ofRs.2,56,78,800/-. The assessee shown long termcapital gain of Rs.64,61,650/- after caimingdeduction u/s 54B at Rs. 1,60,00,000/- and u/s54F Rs.52,00,000/-. The AO observed that theassessee has failed to deposit the amount of netsale consideration or capital gain in capital gainaccount before the due date of filing of return i.e.31.07.2011. It was observed that the assesseeclaimed that the entire sale consideration wasdeposited in the Nationalized Bank as well as incapital gain account. However, no documentaryevidence was submitted to the AO. Therefore, theAO declined the claim of deduction under section54F and similarly the claim u/s 54F of the Act. 3.5 It is contended by the assessee that since theinvestment is made before the due date of filingof return under section 139(4) of the Act andalso before the date of filing of return on21.02.2013, the assessee is eligible for deductionu/s 54B & 54F even if he has not deposited theamount in capital gain account. In support of hiscontention, ld. Counsel for the assessee hasplaced reliance on the decision of CoordinateBench rendered in the case of Nandlal SharmaVs. ITO (2015) 122 DTR 404 (JPR) (Trib.), AshokKapasiwala vs. ITO (2015) 45 CCH 407 (Ah.)(Trib.) and the judgments of Hon’ble Punjab &haryana High Court rendered in the case of CITvs. Jagtar Singh Chawla (2013) 87 DTR 217(P&H)(HC), CIT vs. Ms. Jagriti Aggarwal (2011)64 DTR 333 (P&H)(HC) and on the judgments ofHon’ble Karnataka High Court in the ase ofFathima Bai vs. ITO (2009) 32 DTR 243 (Kar.) (HC) and in the case of CIT vs. Smt. Vrinda P.Issac (2011) 64 DTR 376 (Kar.)(HC) and alsodecision of Coordinate Bench rendered in thecase of Nipun Mehrotra vs. ACIT (2008) 110 ITD520 (Bang.)(Trib.) 3.6 The Coordinate Bench of the Tribunal whiledeciding the identical issue in the case of NandLal Sharma vs. ITO (supra) has taken intoconsideration the various judgments of Hon’bleHigh Courts referred above. Therefore,respectfully following the decision of CoordinateBenches of the Tribunal (supra), we allow theclaim of the assessee. The order of ld. CIT (A) isset aside. 15.He has relied upon the following decisions: The Commissioner of Income Tax, Rohtak vs.Shri Jagtar Singh Chawla, (2013) 259 CTR0388 (PHHC) : 8. A Division Bench of the Gauhati High Court in acase reported as Commissioner of Income Tax v.Rajesh Kumar Jalan : (2006) 286 ITR 274, heldthat only Section 139 of the Act is mentioned inSection 54(2) of the Act in the context that theunutilized portion of the capital gain on the sale ofproperty used for residence should be depositedbefore the date of furnishing the return of theIncome Tax under Section 139 of the Act and thatit would include extended period to file return interms of Sub Section 4 of Section 139 of the Act. Itwas held as under:- From a plain reading of sub-section (2) of Section54 of the Income-tax Act, 1961, it is clear that onlysection 139 of the Income-tax Act, 1961, is 8. A Division Bench of the Gauhati High Court in acase reported as Commissioner of Income Tax v.Rajesh Kumar Jalan : (2006) 286 ITR 274, heldthat only Section 139 of the Act is mentioned inSection 54(2) of the Act in the context that theunutilized portion of the capital gain on the sale ofproperty used for residence should be depositedbefore the date of furnishing the return of theIncome Tax under Section 139 of the Act and thatit would include extended period to file return interms of Sub Section 4 of Section 139 of the Act. Itwas held as under:- From a plain reading of sub-section (2) of Section54 of the Income-tax Act, 1961, it is clear that onlysection 139 of the Income-tax Act, 1961, is mentioned in section 54(2) in the context that theunutilized portion of the capital gain on the sale ofproperty used for residence should be depositedbefore the date of furnishing the return of theIncome-tax under section 139 of the Income-taxAct. Section 139 of the Income-tax Act, 1961,cannot be meant only section 139(1), but it meansall sub-sections of section 139 of the Income-taxAct, 1961. Under sub-section (4) of section 139 ofthe Income-tax Act any person who has notfurnished a return within the time allowed to himunder sub-section (1) of Section 142 may furnishthe return for any previous year at any time beforethe expiry of one year from the end of the relevantassessment year or before the completion of theassessmentyearwhicheverisearlier.9. The said judgment was relied upon by a DivisionBench of the Karnataka High Court in Fathima Baiv. ITO, ITA No. 435 of 2004 Decided on 17thOctober 2008, wherein it was held to the followingeffect:- 11. The extended due date under section 139(4)would be 31.3.1990. The assessee did not file thereturn within the extended due date, but filed thereturn on 27.2.2000. However, the assessee hadutilized the entire capital gains by purchase of ahouse property within the stipulated period ofsection 54(2) i.e., before the extended due date forreturn under section 139. the assessee technicallymay have defaulted in not filing the return undersection 139(4). But, however, utilized the capitalgains for purchase of property before the extendeddue date under section 139(4). The contention ofthe revenue that the deposit in the scheme shouldhave been made before the initial due date and not the extended due date is an untenable contention.10. A Division Bench of this Court in which one ofus (Hemant Gupta, J.) was a member, had anoccasion to consider the provisions of Section 54(2)of the Act, wherein it has been held that sub-section(4) of Section 139 of the Act is in fact aproviso to Section 139(1) of the Act. Therefore,since the assessee has invested the sale proceedsin a residential house within the extended period oflimitation, the capital gain is not payable. Thejudgments in Rajesh Kumar Jalan's case andFathima Bai's case (supra) were referred to. It hasbeen held as under:- Having heard learned counsel for the parties, weare of the opinion that sub-section (4) of Section139 of the Act is, in act, a proviso to sub-section(1) of Section 139 of the Act. Section 139 of theAct fixes the different dates for filing the returns fordifferent assesses. In the case of assessee as therespondent, it is 31st day of July, of theAssessment Year in terms of clause (c) of theExplanation 2 to sub-section 1 of Section 139 ofthe Act, whereas sub-section (4) of Section 139provides for extension in period of due date incertain circumstances. It reads as under:- (4) Any person who has not furnished a returnwithin the time allowed to him under sub-section(1), or within the time allowed under a noticeissued under subsection (1) of Section 142, mayfurnish the return for any previous year at any timebefore the expiry of one year from the end of therelevant assessment year or before the completionof the assessment whichever is earlier; (4) Any person who has not furnished a returnwithin the time allowed to him under sub-section(1), or within the time allowed under a noticeissued under subsection (1) of Section 142, mayfurnish the return for any previous year at any timebefore the expiry of one year from the end of therelevant assessment year or before the completionof the assessment whichever is earlier; Provided that where the return relates to aprevious year relevant to the assessment yearcommencing on the 1st day of April, 1988, or anyearlier assessment year, the reference to one yearaforesaid shall be construed as a reference to twoyears from the end of the relevant assessmentyear. A reading of the aforesaid sub-section would showthat if a person has not furnished the return of theprevious year within the time allowed under sub-section (1) i.e. before 31st day of July of theAssessment Year, the assessee can file returnbefore the expiry of one year from the end of everrelevant Assessment Year. 3. Fathima Bai vs. ITO, (2009) 32 DTR 0243(KARHC), it has been held as under :- 8. The section 54(2) declares that within one yearfrom the date of transfer if the capital gain is notinvested in purchase of building, he should depositthe amount in the Capital Gain Account Scheme orelse the assessee should invest the capital gainsbefore filing of return within the permitted periodunder section 139. In which event, the assesseewill not be liable to pay capital gain tax. 9. The section 139(4) declares that the assesseeshould file returns within the time prescribed, if hefails to file returns, he may file returns for anyprevious year at any time before expiry of one yearfrom the end of relevant assessment year. 4.CommissionerofIncomeTax-II,Chandigarh vs. Ms. Jagriti Aggarwal, (2011)339 ITR 0610 (PHHC), it has been held asunder : 6. Section 54 of the Act contemplates that thecapital gain arises from the transfer of a long termcapital asset, but if the assessee within a period ofone year before or two years after the date onwhich the transfer took place purchases residentialhouse, then instead of the capital gain, the incomewould be charged in terms of provisions of SubSection (1) of Section 54. As per Sub-Section (2),if the amount of capital gains is not appropriatedby the assessee towards the purchase of new assetwithin one year before the date on which thetransfer of the original asset took place, or which isnot utilized by him for the purchase or constructionof the new asset before the date of furnishing thereturn of income under Section 139, the amountshall be deposited by him before furnishing suchreturn not later than due date applicable in thecase of assessee for furnishing the return of incomeunder Sub Section (1) of Section 139 in an accountin any such Bank or institution as may be specified.Relevant Sub-Section (2) of Section 54 of the Actreads as under: (2) The amount of the capital gain which is notappropriated by the assessee towards the purchaseof the new asset made within one year before thedate on which the transfer of the original assettook place, or which is not utilized by him for thepurchase or construction of the new asset beforethe date of furnishing the return of income underSection 139, shall be deposited by him beforefurnishing such return such deposit being made inany case not later than the due date applicable inthe case of the assessee for furnishing the return ofincome under Sub-Section (1) of Section 139 in anaccount in any such bank or institution as may bespecified in, and utilized in accordance with, any (2) The amount of the capital gain which is notappropriated by the assessee towards the purchaseof the new asset made within one year before thedate on which the transfer of the original assettook place, or which is not utilized by him for thepurchase or construction of the new asset beforethe date of furnishing the return of income underSection 139, shall be deposited by him beforefurnishing such return such deposit being made inany case not later than the due date applicable inthe case of the assessee for furnishing the return ofincome under Sub-Section (1) of Section 139 in anaccount in any such bank or institution as may bespecified in, and utilized in accordance with, any scheme which the Central Government may, bynotification in the Official Gazettee, frame in thisbehalf and such return shall be accompanied byproof of such deposit, and for the purposes of Sub-Section (1), the amount, if any, already utilized bythe assessee for the purchase or construction ofthe new asset together with the amount sodeposited shall be deemed to be the cost of thenew asset: Provided that if the amount deposited under thisSub-Section is not utilized wholly or partly for thepurchase or construction of the new asset withinthe period specified in Sub-Section (1), then,-(i) The amount not so utilized shall be chargedunder Section 45 as the income of the previousyear in which the period of three years from thedate of the transfer of the original asset expires;and (ii) The assessee shall be entitled to withdraw suchamount in accordance with the scheme aforesaid. 11. A reading of the aforesaid Sub-Section wouldshow that if a person has not furnished the returnof the previous year within the time allowed underSub-Section (1) i.e. before 31st day of July of theAssessment Year, the assessee can file returnbefore the expiry of one year from the end of therelevant Assessment Year. 13. In view of the above, we find that due date forfurnishing the return of income as per Section139(1) of the Act is subject to the extended periodprovided under Sub-Section (4) of Section 139 ofthe Act. Consequently, the question of law isanswered against the Revenue and in favour of theassessee. Thus, the present appeal is dismissed. 5. In CIT vs. Vrinda P. Issac, (2011) 64 DTR0376 (KARHC), it has been held as under :- 3. The Tribunal in coming to the said conclusionthat the investment made by the assessee beingwithin the time specified under sub-section 4 ofsection 139 of the Act relied on the judgment ofthis court in the case of Fathima Bai v. ITO : (2009)32 DTR (Kar) 243. Even if two views are possible,the revisional authority had no jurisdiction toinitiate proceedings under section 263 of the Act. Itwas held that the order passed by the High Court isincorrect, which decision cannot be accepted. TheTribunal has followed the judgment of this Court asthe decision of the High Court is binding on thesubordinate Courts. If the judgment passed by thisCourt is erroneous, the revenue should havechallenged the said order. At any rate that cannotbe a ground for invoking section 263 of the Act inthe facts of this case. In that view of the matter,we do not see any merit in this appeal. Accordingly,no substantial question of law arises forconsideration. Hence, the appeal is dismissed. 6. Commissioner of Income Tax vs. RajeshKumar Jalan, (2006) 286 ITR 0274 (GUHC), ithas been held as under :- 6. From a plain reading of Sub-section (2) ofSection 54 of the Income Tax Act, 1961, it is clearthat only Section 139 of the Income Tax Act, 1961,is mentioned in Section 54(2) in the context thatthe unutilised portion of the capital gain on the saleof property used for residence should be depositedbefore the date of furnishing the return of theIncome Tax under Section 139 of the Income TaxAct. Section 139 of the Income Tax Act, 1961,cannot be meant only Section 139(1) but it means 6. Commissioner of Income Tax vs. RajeshKumar Jalan, (2006) 286 ITR 0274 (GUHC), ithas been held as under :- 6. From a plain reading of Sub-section (2) ofSection 54 of the Income Tax Act, 1961, it is clearthat only Section 139 of the Income Tax Act, 1961,is mentioned in Section 54(2) in the context thatthe unutilised portion of the capital gain on the saleof property used for residence should be depositedbefore the date of furnishing the return of theIncome Tax under Section 139 of the Income TaxAct. Section 139 of the Income Tax Act, 1961,cannot be meant only Section 139(1) but it means all sub-sections of Section 139 of the Income TaxAct, 1961. Under Sub-section (4) of Section 139 ofthe Income Tax Act any person who has notfurnished a return within the time allowed to himunder Sub-section (1) of Section 142 may furnishthe return for any previous year at any time beforethe expiry of one year from the end of the relevantassessment year or before the completion of theassessment year whichever is earlier. Such beingthe situation, it is the case of therespondent/assessee that the respondent/assesseecould fulfil the requirement under Section 54 of theIncome Tax Act for exemption of the capital gainfrom being charged to Income Tax on the sale ofproperty used for residence up to March 30, 1998,inasmuch as the return of Income Tax for theassessment year 1997-98 could be furnishedbefore the expiry of one year from the end of therelevant assessment year or before the completionof the assessment whichever is earlier under Sub-section (4) of Section 139 of the Income Tax Act,1961. 7. I.T.C. Ltd. vs. Commissioner of CentralExcise, New Delhi and Anr. (2004) 7 SCC 591(SC), it has been held as under :- 23. Presumably the phrase "badly drafted" wasused to mean that the language of the Entry wasambiguous. In case of such ambiguity 'closereasoning' will be employed - but withoutstretching the language to arrive at the onlyreasonable construction. These decisions exemplifythe general rule of statutory construction thatwords have to be construed strictly according totheir ordinary and natural meaning, particularlywhen the statute is a fiscal one irrespective of the object with which the provision was introduced. Ofcourse if there is ambiguity in the statutorylanguage, reference may be made to the legislativeintent to resolve the ambiguity. But if the statutorylanguage is unambiguous then that must be giveneffect to. The legislature is deemed to intend andmean what it says The need for interpretationarises only when the words used in the statute are,on their own terms ambivalent and do not manifestthe intention of the legislature Keshavji Ravji andCo. and Ors. V. Commissioner of Income Tax :[1990]183ITR1(SC) . 25. But there are exceptions to this rule. The firstis that the rule of strict construction does not applyto a provision which merely lays down themachinery for the calculation or procedure for thecollection of tax. 27. The second exception is: If two constructionsare possible and a strict construction would lead toan absurd result then the construction which is inkeeping with the object of the statutory provisionor in keeping with equity could be accepted. Thiswas the view expressed in Commissioner of IncomeTax. v. J.H. Gotla, Yadagiri while interpretingsection 24(2) of the Income Tax Act, 1922: "...if strict literal construction leads to an absurdresult i.e. result not intended to be subserved bythe object of the legislation found in the mannerindicated before, and if another construction ispossible apart from strict literal construction thenthat construction should be preferred to the strictliteral construction. Though equity and taxation areoften strangers, attempts should be made thatthese do not mean always so and if a constructionresults in equity rather than in injustice; then such "...if strict literal construction leads to an absurdresult i.e. result not intended to be subserved bythe object of the legislation found in the mannerindicated before, and if another construction ispossible apart from strict literal construction thenthat construction should be preferred to the strictliteral construction. Though equity and taxation areoften strangers, attempts should be made thatthese do not mean always so and if a constructionresults in equity rather than in injustice; then such construction should be preferred to the literalconstruction." 8. The C