· During the year assessee sold land for a consideration of Rs.20,00,000/- on 09.12.2003. Assessee thereafter purchased land for construction of a residential house on 29.07.2004 for an amount of Rs.3,50,000/-.
· The AO disallowed the claim of assessee for deduction u/s 54F by stating that the assessee had not deposited the unutilized amount in a specified bank account, as per the provisions of section 54F(4) of the Act.
· The CIT(A) took note of the fact that assessee had deposited an amount of Rs.2,60,000/- in the relevant account before the due date of filing the return of income, and thus, allowed the assessee’s claim of deduction to that extent. However, since the balance amount of Rs.13,90,000/- was deposited after the due date of return of income, the CIT(A) did not allow the assessee’s claim of deduction u/s 54F for the said amount.
· The Tribunal observed that the construction of the residential house was completed by the assessee within the period of three years from the date of transfer, as is required by section 54F(1) of the Act.
· The Tribunal was of the view that if the assessee has invested the entire consideration in construction of the residential house within three years from the date of transfer, he cannot be denied deduction u/s 54F on the ground that he did not deposit the said amount in capital gain account scheme before the due date prescribed u/s 139(1) of the Act.
· The Tribunal further considered the judgment of Hon’ble Karnataka High Court in the case of CIT v. K. Ramachandra Rao [2015] 230 Taxman 334 and thus, directed the AO to allow the claim of assessee for deduction u/s 54F of the Act.
For further reading, refer the attachment.
Further Reading