Case Law Update:
Exemption u/s 54 against capital gain on sale of immovable property shall be granted even when the cheque is drawn before but cleared after the due date of filing return: Tribunal, Delhi
Arun Kumar Jain Vs. ITO
Order Date: 14.03.2018
The facts of the case were that in the P.Y. 2013-14, the Assessee sold an immovable property for Rs. 98.50 lakh purchased in the year 1998-99 at Rs. 13.45 lakh on which capital gain was created of Rs.62.39 lakhs. Further, the assessee purchased another property for which Rs. 50 lakh were paid in two installments in the month of April, 2014 and a cheque of Rs. 25 lakh was drawn against the purchaser on 30.07.2014 which was cleared on 01.08.2014.
AO denied the exemption u/s 54 treating that the cheque was not cleared within the due date of filing return i.e. 31.07.2014 as stated in the said provisions and made addition of Rs. 12.93 lakhs.
The Tribunal held that section 54 states that to claim the benefit of this section the amount of capital gain must be deposited in a bank account within the due date of filing ITR u/s 139. In this case, the AO can not make additions on the basis that the cheque was cleared after the due date although it was drawn before 31st July, 2014. Hence, the appeal was ordered in the favour of the assessee.
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