The Income Tax Appellate Tribunal (ITAT), Chennai bench has held that the benefit of section 54 of the Income Tax Act, being a beneficial provision, cannot be denied to the assessee due to non-compliance of procedural requirements.
The assessee, an individual, and a senior citizen, received her share from the sale of an immovable property, sold on 19.10.2015. In her return of income filed for the assessment year 2016-17, she claimed deduction, inter alia, at ₹.4,33,00,000/- under section 54, being the amount utilized towards a new house purchased on 26.08.2016. During the assessment proceedings, the A.O. found that the due date for filing the return under Section 139(1) was on 05.08.2016, but, the assessee had deposited the amount in Capital Gains Accounts Scheme (CGAS) on 18.08.2016 only and finally utilized it in purchasing the new house on 26.08.2016.
Before the Tribunal, the assessee claimed that the delay of 12 days in depositing the amount in CGAS is not intentional and she has not exploited the sale consideration received from the old property for any other purposes during the period 05.08.2016 to 18.08.2016, the deduction under Section 54/54F, etc., being beneficial provisions, therefore, the exemptions available under the section should not be denied for the procedural lapses.
Allowing the plea of the assessee, the Tribunal noted that for seeking the benefit of deduction under Section 54 of the Act, the assessee should have substantially complied with section 54(1).
“In this case, the assessee should have purchased the residential house within two years from 19.10.2015, ie the date of transfer. She has utilized such a sum towards the purchase of the new house on 26.8.2016 itself. Further, she had explained the reasons for not depositing the amount in Capital Gains Accounts Scheme which is also not disputed. Since the assessee has substantially complied with section 54(1), therefore, a mere non-compliance of a procedural requirement under section 54(2) itself cannot stand in the way of the assessee in getting the benefit under section 54. Therefore, we do not find any reason to interfere with the order of the learned CIT (A),” the Tribunal said.