HIGH COURT OF DELHI
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VALMIKI J.MEHTA,J. -
(1.) THE appellant/assessee, which is a HUF, sold its agricultural land for Rs. 14,28,400/- in September, 1995 giving rise to a long term capital
gain of Rs. 9,67,412/-. The assessee claimed that the capital gain be not
charged as it was entitled to the benefit of Section 54-F of the Income
Tax Act, 1961. The assessee claimed to have purchased a three bed room
flat in Kanungo Cooperative Group Housing Society and, therefore, claimed
the entitlement for the benefit of Section 54-F of the Act. All the three
authorities below namely, the Assessing Officer (A.O), The Commissioner
Of Income Tax (Appeals) (CIT)(A) and Income Tax Appellate Tribunal
(I.T.A.T) have declined the benefit of Section 54-F to the Assessee.
(2.) THE relevant portion of Section 54-F reads as under:-
"54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section .... (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purpose or construction of the new asset before the date of furnishing the return of income under Section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of assessee for furnishing the return of income under sub-section (1) of Section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Office Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit..."
As per the claim made before the authorities below, the claim was with respect to'purchase' of a flat. This is important because Section 54-F
contains two eventualities claiming for benefit, one, is the purchase of
the residential house and second is construction of a residential house.
(3.) BEFORE us, the learned Senior Counsel Mr. S.Ganesh, on behalf of the assessee, has strongly urged that the authorities below misdirected
themselves in requiring that the purchase of the property must be paid
after the selling of the agricultural property in as much as the very
language of Section 54F contains an eventuality of purchase of the
residential house even before one year of the sale of the agricultural
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