AMIT BAJAJ ADVOCATE

A reading of the provisions contained in Section 54F(1), as it stood at the relevant point of time, shows that exemption from payment of tax on the capital gains arising on thetransfer of any long-term capital asset not being a residential house is available to an assessee being a Hindu Undivided Family or an individual, if the long-term capital gain is invested in purchasing a residential house or constructing the residential house within the time stipulated therein. Proviso to sub section (1) states that the exemption contemplated under sub section (1) would not be available where an assessee owns a residential house as on the date of thetransfer and that the income from the residential house is chargeable under the head “income from house property”. The Finance Act, 2001 amended the proviso with effect from 2001-02 to permit exemption under Section 54F, even if the assessee has owned one residential house as on the date of transfer, other than the new asset, or purchase in investments any residential house other than the new asset within a period of one year or three years as the case may be, but after the date of transfer of the original asset and the income from such residential house other than the one owned on the date of transfer of the original asset is chargeable under the head “income from house property”.

In the instant case, it is found that the eligible new asset was not purchased within one year before the date on which thetransfer of the original asset took place. Thus, the amount which is not utilized by the assessee for the purchase of new asset before the date of furnishing the return of income under section 139 was required to be deposited as per the provisions of sub-section (4) for availing deduction under section 54F in respect of those amounts also. In other words, as per the plain language employed in the above sub-section (4), only the amount which was actually utilized by the assessee for the purpose of purchase of the new residential house before the date of furnishing of the return of income under section 139 shall only be eligible forcomputation of deduction under section 54F(1). It is found that in the instant case it is not in dispute that the return of income for the relevant year was filed by the assessee on 9-1-2009, which is the date of furnishing of return of income under section 139 by the assessee. Thus, it is held that considered view, the amount utilized by the assessee for purchase of new residential house before 9-1-2009 qualifies for consideration with reference to which deduction under section 54F(1) is to be computed. Thus, the Commissioner (Appeals) was not justified in holding that only the amount which was utilized by the assessee before 31-3-2008 only qualifies for deductionunder section 54F. The assessee claimed that Rs. 15 lakh was utilized by him for the purchase of new residential flat on or before 9-1-2009. The orders of the lower authorities on this issue is, therefore, set aside and the Assessing Officer is directed to verify the amount which was invested by the assessee before the date of furnishing of return of income under section 139 by the assessee and, thereafter, allow the deduction under section 54F(1) with reference to the said amount as per law. Needless to mention that he shall allow reasonable and proper opportunity of hearing to the assessee before adjudicating the issue afresh.