Exemption u/s 54F allowed though Sale proceeds deposited in Nationalised Bank not in capital gain deposit scheme

Exemption u/s 54F allowed though Capital Gain sale proceed deposited in Nationalised Bank instead of capital gain deposit scheme account

ABCAUS Case Law Citation
ABCAUS 3530 (2021) (07) ITAT

In this case appeal was filed by the assessee against the order of the CIT(A) sustaining the addition made by the Assessing Officer (AO) towards Long Term Capital Gain (LTCG) denying the benefit of deduction u/s 54F of the Income Tax Act, 1961 (the Act)

it was come to the knowledge of the Department that the assessee had sold the property giving rise to capital gain. Thereafter, in response to the notice issued u/s 148, the assessee filed return of income admitting LTCG after claiming deduction u/s 54/54F.

The assessee stated to have purchased a new house property. After due verification the assessment was completed u/s 143(3) r.w.s 147 of the Act accepting the returned income of the assessee.

However, CIT observed that the assessee had not deposited thesale consideration in the capital gains deposit account scheme as envisaged u/s 54F(4) of the Act.

Therefore, invoking revisionary power u/s 263, the CIT set aside the assessment order and directed the AO to redo the assessment in accordance with law after allowing an opportunity to the assessee of being heard.

The AO after examining the facts of the case arrived at the conclusion that the assessee had not deposited the sale proceeds in the capital gains deposit accounts scheme maintained with any Nationalised Bank as per section 54F(4) of the Act and therefore, disallowed the claim of deduction and assessed the LTCG in  the  hands  of  the  assessee.

On appeal, the CIT(A) confirmed the order of the AO by agreeing with his view by passing an ex-parte order.

Before the Tribunal, the assessee pleaded that the sale proceeds were deposited in the Nationalised Bank though it was  not  deposited in the capital  gains  scheme.

It was argued that this was a small technical mistake which had occurred due to oversight for which the assessee may not   be penalised.

The Tribunal noted that under the similar facts, the Coordinate Bench had held that if the sale proceeds are deposited in any Nationalised Bank it would suffice though not transferred to the capital gain deposit scheme account.

Accordingly, the Tribunal remitted the matter back to the file of the AO to verify whether the assessee had deposited the entire sale proceeds in any of the Nationalised Bank and if found so then the AO was directed to grant the benefit of deduction provided all the other conditions stipulated under the Act are complied with.

In the result, appeal was allowed in his favour of the assessee.

Download Full Judgment Click Here >>

• ITAT allows exemption of Rs. 25 lakhs u/s 10(10A) to non-government employees
• PCIT has revisionary jurisdiction u/s 263 over the cases passed by the NFAC or the JAO
• Appellate court interfering with MACT finding must undertake reappreciation of evidence
• When delay is not huge & involves huge monetary liability, lenient approach to be taken
• EoGM of company can not ratify diversion of fund raised by preferential issue – SC