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Pr. Commissioner of Income Tax, Shimla Vs. Keshav Dutt Shreedhar - (High Court of Himachal Pradesh) (27 Dec 2021)

In absence of any challenge to the facts recorded by the ITAT, the question so posed by the Revenue cannot be termed as substantial question of law


Direct Taxation

In instant matter, Respondent filed his income tax return for the A.Y. 2008-09 on 30th September, 2008 and declared income of Rs. 1,66,75,690. This included income from long term capital gain of Rs. 38,61,259. An exemption under Section 54 of the Income Tax Act, 1961 (IT Act) was claimed. Assessment under Section 143(3) of the IT Act was completed and returned income was accepted.

An objection was raised by the Revenue audit that assessee (Respondent herein) had neither purchased the new residential house before 30th September, 2008 nor he had deposited capital gain amount in the capital gain deposit account scheme. On this premise, exemption allowed to the assessee was recommended to be disallowed and the capital gain account of Rs. 38,61,259 was proposed to be added back to the taxable income and charged to tax. Accordingly, the case of Respondent was reopened and assessment under Section 143(3)/147 of the IT Act was completed. The exemption claimed by the Respondent was disallowed and total income was assessed at Rs. 2,05,36,949. The Assessing Officer held that, the assessee had neither invested sale proceeds of the asset in new residential house nor he had deposited the capital gains to the capital gain account within the stipulated period.

Respondent assailed the order of Assessing Officer before CIT(A), but remained unsuccessful. CIT(A), rejected the appeal of Respondent. Respondent further assailed the order of CIT(A) before the ITAT, Chandigarh and vide order, the ITAT, Chandigarh accepted the appeal of Respondent/assessee. The instant appeal is against the order of ITAT Chandigarh.

There was substantial compliance with the provisions of Section 54 of the IT Act as the Respondent/assessee had invested an amount of Rs. 49,88,782 vide cheque drawn on ICICI bank for acquiring residential fat and the said cheque was cleared by the bank before the last date for fling of income tax return. Relying upon the judgment of Madras High Court in C. Aryama Sundaram vs. CIT, the ITAT held that, merely because the amount received by the respondent/assessee from the sale of fat was lying in deposit with Canara Bank by way of FDR and the amount invested for purchase of new fat by the Respondent/Assessee was from another account maintained by him with ICICI bank cannot be a justifiable ground to deny the benefit of Section 54(1) of the Act to Respondent/Assessee. It has further been held by the ITAT that, the Assessee having invested amount in the purchase of new asset within the specified period, the Assessee could be said to have acquired substantial domain over the property, entitling him for claim of exemption.

In absence of any challenge to the facts recorded by the ITAT, the question so posed by the Revenue cannot be termed as substantial question of law as it has no foundation in the factual matrix of the case. The ITAT, in its impugned order, has recorded that law nowhere requires existence of live link between the amount of capital gain and in the purchase of new asset, where the asset is purchased within the stipulated time of fling of return. It has further been held that law does not require the assessee to hold on to the very same money and demonstrate that the very same money is utilized in the acquisition of the asset. There is no illegality or infirmity in the impugned order passed by the ITAT, Chandigarh. No substantial question of law arises in the instant appeal, hence the same is dismissed.


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