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54B and 54F if amount is deposited after the due date u/s 139(1)

54B and 54F will be allowed even if the amount is deposited after the due date of return u_s 139(1)

Capital gains relief u/s. 54B and section 54F if amount is deposited after the due date u/s 139(1)

Capital gains relief u/s. 54B and section 54F will be allowed under capital gain account scheme (CGAS) even if the amount is deposited beyond the due date of filing tax return section 139(1) but within the due date of filing belated tax return u/s. 139(4).

In case of Principal Commissioner of Income Tax vs. Shri Shankar Lal Saini, High Court held that capital gains relief u/s. 54B and Section 54F can be allowed even though the capital gain proceeds are deposited by assessee within the due date of filing belated tax return u/s. 139(4) and not within due date of Section 139(1).

Principal Commissioner of Income Tax
vs.
Shri Shankar Lal Saini
19th December, 2017

Assessee allowed capital gains relief u/s. 54B and Section 54F though he had deposited un-utilised net sale consideration in the capital gain account scheme (CGAS) beyond the due date of Section 139(1) but within the due date of filing belated tax return u/s. 139(4).
 
The assessee had sold two properties and claimed exemption u/s. 54B of R1.6 Cr and u/s. 54F of R52 lakhs. The AO declined the claim of exemption u/s. had not deposited the net sale consideration in the capital gain account [CGAS] before due date of filing of return u/s. 139(1). The assessee claimed that the entire sale consideration was deposited in the specified capital gains account before the due date of filing of belated return u/s. 139(4), and hence he was eligible for exemption u/s. 54B and 54F. The CIT(A) ruled against the assessee, however, the ITAT ruled in favour of the assessee. Aggrieved, Revenue filed an appeal before the HC.
 
The Revenue relied on Kerala HC ruling in the case of Xavier J. Pulikkal [[2016] 242 Taxman 206 (KERHC)] wherein it was held that for claiming benefit u/s. 54F(4) due date would be considered u/s. 139(1) only and not u/s. 139(4). Revenue contended that every word in sub-Section (2) of Section 54B and Section 54F has to be construed very strictly otherwise provision will be rendered nugatory. HC agreed with the assessee that while considering the provisions related to prosecution, the provisions are to be very strictly construed whereas in the case of exemption and other benefits, they are to be construed very liberally.
 
HC rejected Revenue’s contention that investment was to be made before the return filing due date u/s. 139(1) otherwise it will render the provision nugatory. HC remarked that since three High Courts have taken the view and the Tribunal has followed the Karnataka High Court which has followed the earlier Gauhati judgment which has been independently supported by the Punjab & Haryana High Court, the present issue is required to be answered in favour of assessee.
 
HC, thus, ruled that capital gains relief u/s. 54B and Section 54F can be allowed even though the capital gain proceeds are deposited by assessee within the due date u/s. 139(4) and not within due date of Section 139(1).
 

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