No denial of Capital Gains Deduction for Non-Deposit in Capital Gains Account Scheme: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) of Delhi bench ruled that  capital gain deduction shall be available even if not deposited in capital gain account scheme.

The Assessee Sarita Gupta is a resident individual. When an Information was received by the Assessing Officer indicating that in the year under consideration, the assessee had sold an immovable property for a consideration of Rs.62,06,000/-. Based on such information, the Assessing Officer reopened the assessment under section 147 of the Act.

In course of assessment proceedings, the Assessing Officer called upon the assessee to furnish the details of the properties sold and the resultant capital gain. In response, the assessee furnished all the details relating to the property sold and the capital gain arising out of such property.

After verifying all the details, the Assessing Officer accepted the return of income filed by the assessee and accordingly completed the assessment. Thereafter the PCIT call for the assessment records and found that the capital gain amount was not deposited in the capital gain account scheme during the interim period till its utilization in purchase/construction of new property.

Accordingly after verifying the submission of the assessee the PCIT set aside the assessment order with a direction to disallow the deduction claimed under section 54 of the Act.

Aggrieved by the order the assessee filed an appeal before the tribunal.

The ITAT bench while adjudicating the issue observed that during the course of assessment proceedings, the Assessing Officer has thoroughly examined the issue of sale of the immovable property and the resultant capital gain arising from such sale. Further all the relevant details regarding the capital gain exemption the AO verified.

Furthermore the revisionary authority has not expressed any doubt regarding the quantum of capital gain arising at the hands of the assessee and also the fact that such capital gain was invested in purchase/construction of residential house within the time limit prescribed under section 54(1) of the Income Tax  Act.

The revisionary authority has only deemed the assessment order to be incorrect and detrimental to Revenue's interests because the capital gain was not placed in the capital gain account system.

Accordingly, the ITAT bench of Saktijit Dey, ( Vice-President ) and M. Balaganesh, ( Accountant Member )  observed that capital gain deduction shall be available even if not deposited in  capital gain account scheme thus the bench held that that exercise of power under section 263 of the Income Tax  Act to revise the assessment order in the instant case is invalid.

Sankalp Malik, counsel appeared for the assessee and Subhra Jyoti Chakraborty appeared for the revenue.

To Read the full text of the Order CLICK HERE

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