INCOME TAX ACT, 1961

Section 54

Capital gains - Exemption under section 54 - Amount contributed by assessee's husband towards reinvestment in new house property -

Assessee filed return of income and against the said return of income, assessment was completed by ACIT by passing order under section 143(3) by restricting capital gains under section 54 to Rs. 79,13,000 as against the claim of Rs. 1,74,45,939 on the ground that new house was bought by assessee not out of sale proceeds of original asset but out of funds provided by spouse. CIT(A) directed AO to allow exemption to extent of amount deposited in Capital Gains Scheme Account and confirmed the denial of benefit under section 54. Held: On mere reading of provisions of section 54, it would be clear that statute had not laid down condition for assessee in order to get benefit of section 54, actual sale consideration received on sale of original asset should be utilized for acquisition of new house property. Only condition required to be fulfilled is that assessee should purchase a new house property within a period of one year before or after the date on which the transfer of his property took place or he should have constructed a house property within a period of two years after the sale of original asset. Benefit under section 54 could not be denied on the ground that sale proceeds of original asset sold was not utilized for the purpose of purchase of new asset. Accordingly, AO was directed to allow benefit under section 54 to the extent of investment made in new house.

REFERRED : Bajaj Tempo Limited v. CIT (1992) 196 ITR 0188 (SC) : 1992 TaxPub(DT) 1271 (SC) CIT v. Kapil Kumar Agarwal (2016) 382 ITR 0056 (P&H) : 2016 TaxPub(DT) 1124 (P&H-HC), CIT v. Rajesh Kumar Jalan (2006) 286 ITR 0274 (Gau) : 2006 TaxPub(DT) 1793 (Gau-HC) and ITO v. K.C. Gopalan (1999) 107 Taxman 0591 (Ker) : 2000 TaxPub(DT) 0850 (Ker-HC)

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT