Due date for sec. 54 of i t act.

Vibhor Pandey (FINAL) (106 Points)
Replied 18 November 2011

Dear Kalpesh,

It Is Given u/s 54 That It The New Asset Is Not Aquired Upto The Due Date Of Submission Of Return Of IncomeThen The Taxpayer Will Have To Deposit The Money In "Capital Gain Deposit Account scheme" With A Nationalised Bank.

It Is Mentioned In Our Question That The Person Purchased The Res. House On Dec. 2010.In This Situation He Had To Deposit The Sum In Capital Gain A/c Before July 31,2010 In Order To Avail Deduction U/s 54.

You Mentioned That He Didnt Deposit money In "any Bank" Before July,31 2010.It Must Be A "Nationalised Bank" In Which Money Is Deposited.Even That Person Deposited Money In Capital Gain A/c Before July 31,2010 And It Is Not A Nationalised Bak Deduction Will Not Availble U/s 54.

Filling Return On Feb,11 Is Not Material.

So, Deduction u/s 54 Is Not Available To That Person.

KALPESH GOHIL (Chartered Accountant) (52 Points)
Replied 26 November 2011

Dear Vibhor,

thank for your reply.

If you read section 54, carefully it has been specified in sub section (2) of sec. 54 that if capital gain is not utilised for purchase or construction of new asset before date of filling the return of income u/s. 139 than and than only you have to deposit that amount in nationalised bank before due date specified u/s. 139(1)

In given case investment has been made before due date specitifed u/s. 139. ie. Sec. 139(4) and return is also fillied after investment.

In sec.54(2) first part, it is no where specifically written sec.139(1). it has only mentioned only sec. 139

pls. comment.

Z ( ) (2965 Points)
Replied 26 November 2011

"Now My quarry is that a person has invested long capital gain in new residentila property, but it was after due date of filling a return u/s 139(1) and he has not deposited LTCG in capital gain scheme account in any bank before July 31, 2010, however he has utilised this amount before filling the return of income u/s. 139 of the act, i.e. withing the period prescribe u/s. 139."

????

Was the return filled u/s 139(4) *Belated return"?

Returned is to be filled u/s 139(1) i.e due date for availing exemption.

Vikas (CA) (1135 Points)
Replied 27 November 2011

Dear Kalpesh,

Sec.139(1) speaks about the due date for filing of income tax return;

Sec.139(4) speaks about the period within which the belated income tax return can be filed. It does not speak about the due date for filing of income tax return, instead speaks about the belated return.

Hence time limit will be calculated as per Sec.139(1) & not 139(4)....

And as far as the case is concerned, the exemption will not be available, and since, it itself is a belated return, the same can not be revised under Sec.139(5), as only a retun filed under Sec.139(1) / 142(1), can be revised.

Hence, it is a risk now taken.

Resham (Carpe Diem !!!) (6535 Points)
Replied 29 November 2011

if we quote the direct section w.r.t. this case:

Sec 54(2)

(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139

i.e. the return shouldn't be filed under 139(4), but only under sec 139(1) for claiming the exemption.

Conclusion : the assessee cannot claim an exemption as he hasn't complied with the provisions. he has neither invested the money nor deposited the same in Nationalised Bank before due date as per 139(1).

Max Payne (employed) (2574 Points)
Replied 29 November 2011

Guwahati High Court in case of CIT vs Rajesh Kumar Jalan [2006] 286 ITR 274 held that section 139 mentioned in section 54F (4) will not only include section 139(1) but will also include all subsection of section 139.

But this is not regarded as precedent, since the section 54F(4) makes reference to section 139(1), which has been overlooked (?) by the HC. The view of HC appears to be at odds with the IT Act.

Similar provision is contained in Section 54 also.

Hence, as per the position correctly explained by resham, the assessee cannot claim section 54 benefit for deposit made within 139(4) limit.

KALPESH GOHIL (Chartered Accountant) (52 Points)
Replied 07 January 2012

Recent judgement has delived with this regard, presenting for the sake of discussion

Exemption u/s 54 from capital gains available even if the investment in new house property is made before due date of filing belated tax returnu/s 139(4). Assessee not required to make separate deposit in capital gains scheme before due date of filing tax return u/s 139(1)

CIT v Jagriti Agrwal (Ms) (2011) BCAJSept . P. 397(P&H) (High Court). / (2011) 203 Taxman 203

The assessee Ms Jagriti Aggarwal, soldher house property in FY 2005-06. The assessee made investment in new house property in Jan 2007 i.e. before due date for filing of the belated returnu/s 139(4). The Assessing Officer (AO)denied the claim for exemption on the ground that the assessee did not deposit sale proceeds in Capital Gains Accounts Scheme (the scheme) before the due date of filing tax return u/s 139(1). On the other hand assessee contended that she was not required to deposit any amount in the scheme, as she had purchased a new house property before the due date of filing belated tax return u/s 139(4).A Division bench of Punjab & Haryana HC, while ruling in favour of the assessee, observed that the sub-section(4) of Section 139 of the Act was in fact, a proviso to sub-section (1) of Section 139 of the Act. HC held that subsection (4) provided for extension of due date mentioned in Sec 139(1) to the end of assessment year in certain circumstances. The HC further observed that such provision is not an independent provision, but relates to time contemplated under Sub-Section (1) of Section 139. Therefore, such Sub-Section (4) has to be read alongwith Sub-Section (1). Accordingly HC allowed exemption u/s 54 since a new house property was purchased before the due date of filing belated return u/s139(4), though no deposit in Capital gains scheme was made before due date of filing return u/s 139(1), The HC relied on decisions of Karnataka HC in Fatima Bai (2009) 32 DTR 243 and Gu-wahati HC in Rajesh Kumar Jalan(2006) 286 ITR 274.

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