CG Exemption Available If Investments Under ITR Filing Deadline

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), held that Capital gain exemption could not be refused when an investment is made within the due date of filing Income Tax Returns (ITR).

The taxpayer, Munish Babaji Sawant sold a residential flat, but the capital gain that comes from the flat sale was not shown in the income return since the taxpayer considered that the gain was waived under section 54 of the Income Tax Act.

The assessing officer sees that the taxpayer does not display the capital gains in his calculation of the income including the income return and on the taxpayer’s side there would be a failure to deposit the capital gains in the capital gains account policy prior to the last date of filing the income return u/s 139(1).

Sub-Section (4) of Section 139 of the Act is, in fact, a proviso to Sub-Section (1) of Section 139 of the Act. Section 139 of the Act would bridge distinct dates for furnishing the returns for distinct taxpayers.

A reading of the mentioned sub-section is displayed when the individual does not file the return for the former year in the given time under Sub-Section (1) Le prior to the 31st day of July of the assessment year then the taxpayer is enabled to furnish the return prior to the expiry of 1 year from the finish of the related assessment year.

The Tribunal of Amit Shukla, Judicial Member sees that “I hold that if the investment under Section 54 has been made within the time limit of date specified under Section 139(4), the exemption cannot be denied. Thus, the claim of exemption under Section 54 is allowed to the Assessee.”