No capital gain exemption on amount not deposited in Capital Gain account scheme prior to due date



Humayun Suleman Merchant v. Chief CIT

Decision:    Against the assessee

Capital gains–Deduction under section 54F — Failure to deposit unutilized consideration in specified accounts before due date


Assessee sold a plot of land and entered into an agreement to purchase a flat. He paid two instalments to the builder before the due date for filing of return of Income under section 139(1) and claimed deduction under section 54F. AO allowed a proportionate deduction from capital gain tax in terms of section 54F on account of assessee’s failure to deposit the unutilized consideration for purchase of the flat in specified bank accounts in accordance with the scheme of Central Government as provided under section 54F(4).


Mandate of section 54F(4). Is clear that amount which has not been utilized in construction and/or purchase of property before filing the return of income, must necessarily be deposited before that date in an account duly notified by the Central Government, so as to be exempted. As assessee had not complied with mandatory provision, AO was justified in restricting exemption under section 54F.