Income Tax Exemption can’t be allowed on Failure of Deposit in Capital Gains Scheme Account before ITR Due Date: ITAT [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the income tax exemption under section 54 cannot be allowable if the assessee failed to deposit the amount in the capital gains scheme account within the due date of filing the income tax return.

As per the provisions of section 54F(4) of the Act, the amount of net consideration which was not appropriated by the assessee towards the purchase of new asset made within one year before the date on which the transfer of the original asset took place, or which was not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139 of the Act, shall be deposited by him before furnishing such return. Such deposits being made in any case not later than the due date applicable in the case of the assessee for furnishing the return under subsection (1) of section 139 of the Act in an account in any bank or institution as may be specified.

The Assessing Officer denied the exemption to the assessee by holding that the sale of the original asset took place on 27.09.2012 and the due date for furnishing the return under section 139(1) of the Act was 31.07.2013 whereas the assessee has deposited the amount into the aforesaid account on 24.07.2014 i.e. more than one year beyond the due date for furnishing the return.

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The Tribunal noted the fact that the assessee had not deposited the amount in the capital gains scheme account by the due date of filing the return of income.

“The issue arising in the present appeal is identical to the issue before the Tribunal and following the same parity of reasoning, we hold that the assessee is not entitled to the claim of deduction under section 54F of the Act as the assessee has failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income. Since this issue is settled by the Hon’ble Jurisdictional High Court, hence, the matter is being decided ex-parte the assessee. The grounds of appeal raised by the assessee are thus dismissed,” the Tribunal said.