Dear Sir,
Capital gain from sale of Residential Property as the same could not be deposited in the “Capital Gains Account” before the due date of filing the return of income u/s 139(1) i.e.31.07.2009 as per the provisions of section 54.\
However the same has been invested in new Residential Property on 07/10/2009 in flat within the time limit prescribed U/S 139(4).The details of the Fact are as below:-
a) Date of Acquisition : 1st August, 2001(P:Y-2001-2002)
b) Cost of Acquisition : Rs. 15,11,325
c) Indexed Cost of Acquisition : Rs. 20,64,768
d) Date of Sale : 6th May, 2008 (P:Y-2008-2009)
e) Sale Consideration : Rs. 63,00,000
f) Long Term Capital Gain : Rs. 42,35,232
g) Investment in new Residential Property : Rs. 53,02,979
h) Date of New Investment : 7th October, 2009 (P:Y-2009-2010)
Section 54 stipulates that any long term capital gain, arising to an individual from sale of Residential Property shall be exempt to the extent such capital gains is invested in the
1) Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of property sold and/or
2) Construction of Residential House Property within a period of 3 years from the date of acquisition.
Where the amount cannot be utilized within the due date of filing the return of income, it shall be deposited in the “Capital gains account scheme”.
However Punjab and Haryana High Court held in the case of CIT vs. Jagtar Singh Chawla [I.T.A. No. 71 of 2012 (O&M)] that the benefit of tax exemption on long term capital gains would be available as long as the taxpayer made the new investment within the timeline of filing tax return under section 139(4) of the Act, even if not deposited in Capital Gain Account.
The ITO has rejected the request.
CAclubindia
