S.54 Exemption not available if Payments are made on or before IT Returns Due Date: ITAT [Read Order]

State Govt Employees - Sports Goods - India - IGST - Taxscan

In ITO vs. Leelavati Paattamahadei, the Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) held that exemption under Section 54EC of the Income Tax Act, 1961 will be available to the assessee if the payments are made on or before the due date as per section 139(4) of the Act.

The Assessee showed a long-term capital gain of Rs. 1.03 Crores arising from the transfer of land & building. The assessee claimed deduction under Section 54EC towards subscription of some bonds and under section 54 towards the purchase of new flat. The Assessing Officer (A.O) found that the assessee had paid the total consideration in advances and installments from 6th February 2014 to 17th March 2015. The A.O opined that the assessee will qualify for the deduction u/s.54 on account of purchase of new flat at Bhubaneswar only if the payments were made on or before the due date as applicable u/s.139(1) i.e. on or before 31.7.2013. Consequently, the claim of deduction was disallowed and the same was added to the income of the assessee.

Before the Commissioner of Income Tax (Appeals) (CIT(A)) the assessee contended that due date is to be taken as applicable under section.139(4) of the I.T. Act, 1961 which is one year from the end of the assessment year i.e. 31.3.2015. It was submitted that the entire payment was made before 41.4.2015 and therefore, the assessee is eligible to claim deduction u/s.54 of the I.T. Act, 1961. The CIT(A) accepting the contentions of the assessee, allowed the appeal. Aggrieved, the Revenue appealed before the ITAT.

The Bench comprising of Judicial Member Pavan Kumar Gadale & Accountant Member N.S. Saini found that the Departmental Representative (D.R) had simply relied on the order of the A.O and had failed to bring out any specific error in the order of the CIT(A). It observed that the D.R could not place any material record to refute the findings of the CIT(A). Rejecting the appeal of the Revenue, the bench upheld the order of the CIT(A).

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