Section 54F Benefit not available If Assessee failed to deposit the unutilized amount in Capital Gains Scheme Account: ITAT [Read Order]

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the benefit of section 54F of the Income Tax Act is not available to the assessee on failure of depositing the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income.

The assessee sold a land and received a share in sale consideration amounting to Rs.42,20,000/-. The assessment completed against the assessee was re-opened by holding that the unutilized amount of capital gain was not deposited in the Capital Gains Scheme Account.

Section 54B(1) of the Act entitled the assessee to claim the deduction in case the sale proceeds of agricultural land are reinvested in another agricultural land within a period of two years. However, section 54B(2) lays down that in case the sale proceeds are not invested, within the due date of filing of return of income u/s.139 of the Act, then the sale proceeds need to be parked in the capital gains scheme account till it is utilized for the purchase of the new agricultural land.

On appeal, the first appellate authority has sustained the order.

The Tribunal noted that though, admittedly, the assessee has utilized the amount for the purchase of agricultural land within the period of two years, but after the due date of filing the return of income.

The Tribunal noticed the High Court decisions in Humayun Suleman Merchant Vs. CCIT and the Gauhati High Court’s decision in the case of CIT Vs. Rajesh Kumar Jalan wherein the assessee was held to be not entitled to the claim of deduction under section 54F of the Act.

The Tribunal, following the above decisions, held that “In view thereof and applying the aforesaid ratio, I hold that the assessee is not entitled to claim of deduction under section 54F of the Act as the assessee has failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income. Since this issue is settled by the Hon’ble jurisdictional High Court, hence, the matter is being decided ex parte the assessee. Grounds of appeal raised by the assessee are thus dismissed.”