The order of the Bench was delivered by
N. R. S. Ganesan (Judicial Member)- Both the appeals of the assessee and the Revenue are directed against the respective order of the Commissioner of Income-tax (Appeals) for the assessment year 2011-12. I heard both the appeals together and disposing of the same by this common order.
Let us first take I. T. A. No. 327/Mds/2015 filed by the assessee.
2. Shri T. Banusekar, the learned representative for the assessee, submitted that the assessee sold a vacant land inherited from her father Shri R. Subramaniam on January 10, 2011. The assessee invested in REC Bonds in two instalments on March 31, 2011 and June 30, 2012 to the extent of Rs. 50 lakhs and Rs. 20 lakhs respectively. The assessee has also taken initiative for construction of residential house and obtained approval from the Neruperichal Panchayat Union for construction of house on July 21, 2011. The Assessing Officer, however, disallowed the investment in bonds to the extent of Rs. 24,42,300 on the ground that the same was not deposited within the time frame provided under section 139(1) of the Income-tax Act, 1961 (in short "the Act") for filing the return of income. According to the learned representative, the assessee has invested in residential property to the extent of Rs. 22.42 lakhs. In fact, the approval was obtained on July 21, 2011 from the Panchayat Union. Therefore, the disallowance made by the Assessing Officer is not justified.
3. On the contrary, Shri N. Madhavan, the learned Departmental representative, submitted that the assessee admittedly sold a property on January 10, 2011. The due date for filing of return for the assessment year 2011-12 is July 31, 2011. The assessee obtained the approval from the Panchayat Union on July 21, 2011. Therefore, the assessee could not have constructed the house before July 31, 2011. Hence, the assessee has to naturally deposit the same in the capital gains account for the purpose of claiming deduction under section 54F of the Act. Since the deposit was not made, according to the learned Departmental representative, the assessee is not eligible for deduction. The learned Departmental representative placed his reliance on the judgment of apex court in Prakash Nath Khanna v. CIT [2004] 266 ITR 1 (SC).
4. I have considered the rival submissions on either side and perused the relevant material available on record. From the material available on record it appears that the property originally belongs to one Shri Muthusamy Gounder. The assessee inherited the property on the death of her father and the same was sold on January 10, 2011. The assessee admittedly invested a sum of Rs. 50 lakhs on March 31, 2011. The Assessing Officer allowed the claim of the assessee with regard to this deposit made in REC Bonds. A sum of Rs. 20 lakhs was deposited on REC Bonds on June 30, 2012, which was disallowed by the Assessing Officer. However, the Commissioner of Income-tax (Appeals) allowed the claim of the assessee. The dispute is with regard to Rs. 24,42,000. In the casebefore us, the assessee has not deposited within the due date for filing of return of income. In fact, the assessee filed the return on February 6, 2013 within the time provided under section 139(4) of the Act. The return was not filed within the time provided under section 139(1) of the Act. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the authorities below are set aside and the entire claim of deduction under section 54F of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh and find out whether the assessee has invested the money in construction of property after getting approval of Panchayat Union and thereafter decide the issue afresh in accordance with law after giving a reasonable opportunity to the assessee.
5. Now coming to the appeal of the Revenue in I. T. A. No. 378/Mds/2015, the only issue arises for consideration is with regard to the disallowance of Rs. 50 lakhs and Rs. 20 lakhs invested in REC Bonds.
6. Shri N. Madhavan, the learned Departmental representative, submitted that the assessee claimed before the Assessing Officer that a sum of Rs. 50 lakhs was invested in REC Bonds on March 31, 2011 and another sum of Rs. 20 lakhs was invested on June 30, 2011. According to the learned Departmental representative, the investment was to be made within six months from the date of transfer. The investment was not made within the period of six months, hence, according to the learned Departmental representative, the Assessing Officer has rightly disallowed the claim of the assessee.
7. On the contrary, Shri T. Banusekar, the learned representative for the assessee, submitted that admittedly the assessee deposited in REC Bonds on June 30, 2011, which is within the due date provided for filing of return of income under section 139(1) of the Act. Since the capital gain arising out of transfer of property the assessee is eligible for exemption under section54F of the Act in case the money was deposited before the due date for filing of return of income, the learned representative submitted that investing in REC Bonds is one of the methods prescribed by the Legislature for investing the capital gain. Therefore, the Commissioner of Income-tax (Appeals) has rightly allowed the claim of the assessee.
8. I have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the property was sold on January 10, 2011 and the assessee deposited a sum of Rs. 50 lakhs on March 31, 2011 and another sum of Rs. 20 lakhs on June 30, 2011 in REC Bonds. REC Bond, admittedly, is a capital gain bond. Since the deposit was made within the due date for filing of the return of income, this Tribunal is of the considered opinion that the Commissioner of Income-tax (Appeals) has rightly allowed the claim of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
9. In the result, the assessee's appeal in I. T. A. No. 327/Mds/2015 is allowed for statistical purposes and the Revenue's appeal in I. T. A. No. 378/Mds/2015 is dismissed.
The order pronounced in the open court on 9th September, 2016 at Chennai.