Exemption under s 54F

The assessee is entitled to exemption under s 54F on investment of net consideration from transfer of depreciable asset under Capital Gains Deposit Account Scheme — as held by DelHC in CIT v Rajiv Shukla — In favour of: The Assessee ; ITA No. 620 of 2011

CIT v Rajiv Shukla

High Court of Delhi

ITA No. 620 of 2011

A K Sikri and M L Mehta, JJ

Decided on: 8 April 2011

Counsel appeared:

Ms Prem Lata Bansal, Sr Adv with Mr Deepak Anand, Adv. for the appellant

Mr Piyush Kaushik, Adv. for the respondent

Judgment

1. In the assessment year 2007-08, in the return filed by the assessee, herein, had shown long

term capital gain on sale of property and also claimed benefit of deduction under section 54F

of the Income Tax Act on the ground that it had purchased the same property in Mumbai from

the said long term capital gain. The details in this respect are as under:-

The assessee had sold one flat at Defence Colony, New Delhi for a consideration of

Rs.1,04,00,000/-. The said flat was purchased on 17.12.1999 for Rs.20 lakhs, stamp duty of

Rs.1,60,000/- was paid on 14.08.2006 when the Sale Deed was executed and the said flat was

used as an office on which, depreciation was claimed year to year. As on 31.03.2006, WDV

was declared by the assessee at Rs.10,62,882/-. The Assessing Officer further noticed that the

assessee had declared the capital gain at Rs.91,77,118/- (Rs.1,04,00,000-Rs.10,62,882-

Rs.1,60,000) and had claimed deduction under section 54F treating the capital gain as Long

Term Capital Gain, stating that he had booked one flat with Chamber Constructions Pvt. Ltd.,

Mumbai for a sum of Rs.2,71,55,555/-, the possession of which was given on 11.09.2008. It

was further stated that the assessee had paid a sum of Rs.1crore through cheque to M/s

Chamber Constructions (P) Ltd. Assessee also stated that the capital gain of Rs.91,77,118/-

was eligible for deduction under section 54F as the amount had been invested in Capital Gain

Deposit Account Scheme under section 54F.

2. However, Assessing Officer rejected the claim of the assessee under section 54F on the

ground that the assessee had not produced any evidence showing investment in Capital

Deposit Account Scheme under section 54F and that the flat sold by him was a depreciable

asset. As per provisions of section 50, the capital gain arising from transfer of depreciable

asset shall be deemed to be the capital gain arising from transfer of short term capital asset

and, therefore, deduction under section 54F was not available. Accordingly, AO made an

addition of Rs.91,77,118/- under the head ?Short Term Capital Gain.

3. In appeal, the CIT(A) deleted the addition and order of the CIT(A) is confirmed by ITAT.

On perusal of the order of the Tribunal, we find that it has relied upon the judgment of

Bombay High Court in the case of CIT v. ACE Builders Pvt. Ltd. 281 ITR 210. This decision

of the Bombay High Court was followed by the same Court in CIT v. M/s Delite Tin

Industries in ITA 1118/2008 dated 26th September, 2008. Against the order passed in Delite

(supra) proceedings, Revenue had preferred Special Leave Petition which has also been

dismissed by Supreme Court 21st August, 2009.

4. We have gone through the judgment of Bombay High Court in the aforesaid two cases.

Learned counsel for the respondent has also submitted that even Gauhati High Court has

taken identical view in CIT v. Assam Petroleum Industries (P.) Ltd. (2003) 262 ITR 587.

5. We do not find any reason to take a different view. In these circumstances, we are of the

opinion that no substantial question of law arises for consideration.

6. Accordingly, the present appeal is dismissed.