INCOME TAX ACT, 1961

Section 54F

Capital gains - Allowability of deduction under section 54F - Construction or purchase of new house property vis-à-vis investments made under Capital Gains Scheme of sale consideration -

Assessee, an individual, sold agricultural land which was inherited through her father along with others. Allegation of AO was that date of transfer of asset was on 26-8-2011 and thus, capital gains were to be assessed in assessment year 2012-13. Assessee contended that capital gains was to be assessed when major portion of sale consideration were realized, i.e., in assessment year 2013-14. AO accordingly denied exemption claimed under section 54F on allegation that assessee did not utilize sale consideration within stipulated period for acquisition of new asset. Held: Admittedly, assessee neither purchased one residential house within period of one year before date of transfer or after two years of date of transfer, nor constructed house within a period of three years. Only contention of assessee was that she made investments under Capital Gains Scheme of almost entire consideration under fixed deposits with bank. Since assessee transferred original asset on 26-08-2011 therefore, capital gain was to be assessed in year under consideration i.e. assessment year 2012-13. In order to get exemption under section 54F, assessee must have purchased new asset one year before (26-08-2010) or two years after (26-08-2013) or constructed one residential house within a period of three years (26-08-2014). Therefore, exemption as claimed by assessee under section 54F was liable to be denied.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2012-13

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