Deduction u/s 54F can be claimed to the extent of amount of Capital Gain utilized till Filing of Income Tax Return: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the deduction under section 54F of the Income Tax Act, 1961 can be claimed to the extent of amount of capital gain utilized till the filing of the income tax return.

The Assessee sold a flat at Mahesh Cooperative Society, Vasundhra Enclave, on a total consideration of Rupees one crore and after deducting the indexed cost from the amount received from the buyer, calculated the capital gain of Rs.69,36,789/- and claimed deduction of the same u/s 54 of the Income Tax Act, 1961 on account of booking of flat from M/s. Sunworld Developer Pvt. Ltd., Sunworld, Vanalika, purchased at Rs.72,15,255/-.

However, the income tax department rejected the claim which eventually lead to a dispute as to whether the deduction under Section 54 of the Act can be claimed to the extent of amount of capital gain invested for new asset purchased or construction of new asset within the time prescribed under Section 54F(4) of the Act, till the filing of the Income Tax Return under Section 139(4) of the Act.

While relying on a catena of judgments, the Tribunal bench comprising Accountant Member Mr. R K Panda and Judicial Member Mr. N K Chaudhary observed that the deduction under section 54F of the Act can be claimed to the extent of amount of capital gain utilized till the filing of the return under Section 139(4) of the Act.

“As in the instant case, the ld. Commissioner allowed the deduction under Section 54 of the Act to the extent of Rs.57,33,088/- only which was invested/utilized by the Assessee till the due date of filing the return under Section 139(1) of the Act and therefore, respectfully following the mandates of the Hon’ble High Courts, we are inclined to allow the deduction under Section 54F of the Act to the extent of amount of capital gain invested/utilized till the filing of the return by the Assessee on 29th March, 2014 under Section 139(4) of the Act, hence ordered accordingly,” the Tribunal said.

To Read the full text of the Order CLICK HERE

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