Capital gain taxable in the year in which the period of 3 years from the date of transfer of the original asset expires

 

Exemption u/s 54F – Assessment Year in which the amount is taxable where the assessee had not constructed the house property within the period of 3 years – it will be charged to capital gain in the year in which the period of 3 years from the date of transfer of the original asset expires

 

Exemption u/s 54F – Assessment Year in which the amount is taxable where the assessee had not constructed the house property within the period of 3 years

 

HELD THAT:- Where the assessee had invested the long term capital gains in purchase of land towards construction of house but could not complete the construction before the expiry of 3 years as to pretend under law in the case of Sri Prasad Nimmagadda [2013 (5) TMI 74 – ITAT HYDERABAD] held that on examination of section 54 and 54F it is found that the provisions contained in section 54 including the proviso are pari materia with section 54F and the proviso to section 54 lays down that if the amount of capital gain is not utilised towards construction of residential house within a period of 3 years from the date of transfer of original asset, then, it will be charged to capital gain under section fortify of the Act in the year in which the period of 3 years from the date of transfer of the original asset expires.

 

In the case of Vegesina Kamala [2016 (3) TMI 88 – ITAT VISAKHAPATNAM] the contention of the Commissioner of Income Tax that as per section 54F only unutilised portion of sale consideration is taxable in the previous year in which the period of 3 years expires from the date of sale of original asset, but the investment made in the vacant site has to be taxed in the year in which capital gain arose has expressly been rejected by the Tribunal and the Tribunal held that a since the assessee had offered to capital gain the long term capital gains after completion of 3 years from the date of sale of original asset, it was in accordance with law.

 

Difficult to uphold the addition and direct the assessing officer to the addition if the assessee offered the long term capital gains to tax in the assessment year 2016-17. Subject to these observations, for the limited purpose of verification, we set aside the issue to the file of the learned Assessing Officer to grant exemption for the Assessment Year: 2013-14 if the assessee offered the long term capital gains to tax in the Assessment Year: 2016-17 – Appeal of the assessee is allowed.

ITAT DELHI

 

DEEPAK BHARDWAJ VERSUS INCOME TAX OFFICER, WARD-1 (3) , NOIDA

 

ITA No. 4684/Del/2016