Citation Codes

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citation codes

Case Number

ITA 1885/MUM/2017

Disposition

in part

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Acts

SECTION 143 INCOME TAX ACT 1961
SECTION 54 INCOME TAX ACT 1961
ARTICLE 136 CONSTITUTION OF INDIA
ARTICLE 141 CONSTITUTION OF INDIA
sub-section (4) and (5) of section 139].

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Smart Summary

Summary of Legal Opinion: ITA No. 1885/Mum/2017 (A.Y. 2012-13) — Dr. Dharmista Mehta v. ITO-34(1)(3)

Factual and Procedural Background

This is an appeal to the Income Tax Appellate Tribunal (Mumbai Bench "D") by the assessee, Dr. Dharmista Mehta, against an order of the Commissioner of Income Tax (Appeals)-46, Mumbai dated 31.01.2017 passed under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2012-13.

Relevant procedural and factual chronology set out in the opinion:

The assessee filed her return of income on 28.07.2012 declaring total income of Rs. 3,19,812.
The case was selected for scrutiny under CASS because a large deduction under section 54 was claimed.
The assessee sold immovable property on 26.05.2011 for Rs. 1.7 crore (approx.). Long-term capital gain (LTCG) of Rs. 1,19,45,236 arose and was in issue.
The assessee purchased a new residential property on 30.04.2013 for Rs. 1,66,74,200.
The Assessing Officer (AO) observed that the assessee had neither deposited the unutilised capital gain in a Capital Gains Account Scheme (CGAS) nor purchased a house before the due date for filing the return under section 139(1) (31.07.2012), and issued a show-cause as to why Rs. 1,19,45,236 should not be taxed as LTCG.
The AO disallowed the assessee's claim under section 54. The CIT(A) affirmed the AO's order. The assessee appealed to the ITAT. The appeal was heard on 18/07/2022 and the ITAT pronounced its order on 12/10/2022.

Legal Issues Presented

Whether the assessee is entitled to exemption under section 54 of the Income Tax Act, 1961 in respect of long-term capital gains when the purchase of the new residential property was made after the due date for filing the return under section 139(1) but before the belated return date under section 139(4), and the unutilised capital gains were not deposited in the Capital Gains Account Scheme?
Whether the requirement to deposit unutilised capital gains in CGAS and the reference to section 139 in section 54(2) should be interpreted to mean the due date under section 139(1) only, or to include later dates available under other subsections of section 139 (such as 139(4))?

Arguments of the Parties

Appellant's Arguments

The assessee argued that section 54 is a beneficial provision and should be given a liberal/construction to advance its object; reliance was placed upon several judicial decisions to that effect.
The assessee contended that the CGAS deposit requirement is procedural — intended to secure that unutilised funds are preserved for investment in residential property — and that substantial compliance in fact (i.e., purchase of the new house) should not be negated due to technical non-deposit in CGAS.
The assessee relied on multiple decisions (filed in a Paper Book) holding that the relevant date for determining utilization of capital gains can extend to the date of filing a belated return under section 139(4), thereby allowing exemption if investment occurred by that date.

Respondent's / Assessing Officer's Arguments

The AO advanced a literal interpretation of section 54, pointing to the reference to section 139(1) and asserting that the deposit under the CGAS must be made by the due date under section 139(1) (i.e., before 31.07.2012 in this case), and therefore the assessee was not entitled to exemption for investments made later.
The AO was not convinced by the judicial precedents relied upon by the assessee and maintained that the statutory language restricts the time-limit to the due date under section 139(1) for CGAS deposit.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court (as stated in the opinion)
Mrs. Madhu Kaul v. CIT (ITA No. 89 of 1999) (P&H)	Cited by the assessee (filed in Paper Book) in support of entitlement under section 54.	Included among rulings considered by the Tribunal as part of the body of authorities supporting a broader interpretation favourable to taxpayers.
CIT v. Bharati C. Kothari (Calcutta High Court) [2000]	Cited by the assessee in support of claim under section 54.	Listed as one of the authorities in the Paper Book relied upon by the assessee and considered by the Tribunal in its survey of decisions.
CIT v. Ms. Jagriti Aggarwal [2011] 339 ITR 610 (P&H)	Authority relied on by the assessee for a taxpayer-favourable interpretation of section 54/54F time-limits.	Counted among decisions that the Tribunal observed support the proposition that investment for exemption can be considered up to the belated return date.
CIT v. Rajesh Kumar Jalan [2006] 286 ITR 274 (Gau)	Cited by the assessee to support entitlement under section 54.	Included in the Tribunal's list of precedents which, collectively, were considered indicative of a judicial consensus favouring the assessee's position.
CIT v. Manjula J. Shah [2013] 355 ITR 474 (Bombay)	Cited by the assessee (Paper Book) in support of exemption under section 54.	Noted by the Tribunal as part of the authorities advanced on behalf of the assessee.
Mrs. Seema Sabharwal v. ITO (ITA No. 272/Chd/2017)	Cited by the assessee in the Paper Book.	Included among the authorities relied upon by the assessee and considered by the Tribunal.
Rajendra Pal Verma v. ACIT [2019] 104 taxmann.com 303 (Mumbai Tribunal)	Relied upon by the assessee/tribunal as an authority favouring the view that the relevant date for investment can extend to the belated return.	Specifically referenced by the Tribunal as one of the decisions supporting allowance of exemption up to filing of belated return.
ITO v. Pamela Pritam Ghoseh (ITA No. 5644/Mum/2016 dated 27.07.2018)	Cited by the assessee/tribunal as supportive authority.	Noted by the Tribunal among the coordinating decisions considered.
Hasmukh N. Gala v. ITO [2017] 83 taxmann.com 149 (Mumbai Tribunal)	Cited in support of the assessee's interpretation.	Included in the Tribunal's survey of supporting decisions.
CIT v. Umayal Annamalai [2020] 118 taxmann.com 80 (Madras)	Authority cited for the proposition that exemption under section 54/54F should be considered up to the date of filing return under section 139(4).	Listed by the Tribunal as one of the decisions endorsing the assessee-favourable interpretation.
Dr. Kushagra Kataria v. CIT Circle-1(1), Gurgaon [2019] 101 taxmann.com 359/174 ITD 648 (Delhi Tribunal)	Cited as supporting the view that the filing of a belated return under s.139(4) may be the relevant date for utilization.	Noted by the Tribunal as an authority consistent with the assessee's position.
ITO v. Nilima Abhijit Tannu [2019] 106 taxmann.com 256 (Mumbai)	Authority cited in the line of decisions supporting a belated-return interpretation.	Considered by the Tribunal as part of the supporting jurisprudence.
Nand Lal Sharma v. ITO [2015] 61 taxmann.com 271 (JP.-Trib)	Authority cited to support the assessee's interpretation.	Included among the precedents relied upon in the Tribunal's survey.
CIT v. Jagtar Singh Chawla [2013] 33 taxmann.com 38/215 Taxman 154 (P&H)	Cited in support of the assessee's position.	Recorded by the Tribunal as one of the cases that favour extending the relevant date to belated return.
Fathima Bai v. ITO [2010] 32 DTR 243 (Kar)	Cited as part of supporting authorities for the assessee.	Considered by the Tribunal among the series of rulings that tend to allow exemption up to belated return.
R.K.P. Elayarajan v. Dy. CIT Circle I Vellore [2012] 23 taxmann.com 206/52 SOT 159 (Chennai)	Cited in support of the assessee's interpretation.	Included in the Tribunal's list of authorities favourable to the assessee.
ITO v. Smt. Sapana Dimri [2012] 19 taxmann.com 15/50 SOT 96 (Delhi)	Cited as supportive authority for the assessee's position.	Noted by the Tribunal as part of the jurisprudential support.
Humayun Suleman Merchant (Jurisdictional High Court decision relied upon by CIT(A))	The High Court held (as relied upon by CIT(A)) that only the amount invested before filing the return of income is eligible for exemption (interpretation favouring the AO).	CIT(A) had relied on this decision; the Tribunal considered it in evaluating the conflicting authorities.
Prakash Nath Khanna v. CIT [2004] 264 ITR 1 / 135 Taxman 327 (Supreme Court)	Interpreted statutory wording; observed that if legislature intended to cover a sub-section, the word "section 139" would have sufficed — used to interpret reference to "section 139" in section 54(2).	The Tribunal relied on the principle in this Supreme Court decision to construe the words "section 139" in section 54(2) as referring to all sub-sections and thus permitting consideration of belated returns under s.139(4).
Xavier J. Pulikkal v. Dy. CIT [2016] 242 Taxman 59 / 73 taxmann.com 34 (Supreme Court)	Supreme Court allowed the appeal and modified the Kerala High Court's reasoning concerning the time for investment; treated as an approval of the broader view regarding time available for investment for exemption.	The Tribunal treated this Supreme Court decision as a pivotal authority, concluding that it supports allowing exemption where investment was made by the date of filing a belated return under s.139(4).
Kunhayammed v. State of Kerala [2000] 245 ITR 360 / 113 Taxman 470 (Supreme Court)	Explains effect of grant of special leave and appellate jurisdiction of Supreme Court; the doctrine of merger — Supreme Court's appellate exercise vacates or merges the prior order.	The Tribunal referred to this decision to explain that the Supreme Court's allowance of an appeal has the effect of vacating or modifying the earlier High Court order relied upon by the Revenue.

Court's Reasoning and Analysis

The Tribunal set out its reasoning in a stepwise manner based on statutory text and precedents cited before it:

Textual analysis of section 54 and section 54(2): The Tribunal reproduced the object and wording of s.54 (exemption if capital gains are invested in a residential house within prescribed periods) and s.54(2) which prescribes deposit in a Capital Gains Account Scheme for amounts not utilized before the date of furnishing the return under section 139.
Interpretation of the phrase "section 139": The Tribunal examined whether the reference to "section 139" in s.54(2) was confined to s.139(1) (the normal due date) or meant all sub-sections of s.139 (including belated or revised return provisions such as s.139(4) and s.139(5)). The Tribunal observed that the wording "section 139" ordinarily encompasses all sub-sections and not only s.139(1).
Reliance on Supreme Court authority for statutory interpretation: The Tribunal relied on Prakash Nath Khanna (Supreme Court) to support the principle that the literal use of the words "section 139" can be interpreted to include its sub-sections, given the legislative wording.
Survey of judicial decisions: The Tribunal surveyed a range of decisions (High Courts, Tribunals) which it described as forming a judicial consensus that exemption under section 54/54F should be considered up to the date of filing a return under section 139(4). The Tribunal noted that many of these decisions favour the assessee's interpretation.
Treating Supreme Court authority as decisive: The Tribunal gave particular weight to the Supreme Court decision in Xavier J. Pulikkal v. Dy. CIT (2016), observing that the Supreme Court allowed the appeal, thereby modifying the Kerala High Court's contrary view. The Tribunal characterized the Supreme Court's allowance as vacating the earlier High Court reasoning relied upon by the Revenue.
Doctrine of appellate effect: The Tribunal invoked the principle explained in Kunhayammed v. State of Kerala regarding the effect of the Supreme Court's allowance of appeals (i.e., appellate scrutiny and effect on earlier orders) to reinforce why the Supreme Court's decision should be treated as settling the issue where it addressed it.
Conclusion from combined analysis: On the textual reading of s.54(2), the survey of authorities, and the Supreme Court's pronouncement in Xavier, the Tribunal concluded that the assessee was entitled to claim exemption under section 54 to the extent of amount invested in the new residential property up to the date of filing a belated return under section 139(4).
Application to facts: The Tribunal found that the assessee had purchased a new house on 30.04.2013 for Rs. 1,66,74,200, which was prior to the s.139(4) deadline noted by the Tribunal (31.03.2014), and that this amount exceeded the LTCG of Rs. 1,19,45,236. On that basis, the Tribunal set aside the CIT(A)'s order and vacated the disallowance of the exemption under section 54.

Holding and Implications

Final Holding: APPEAL ALLOWED.

The Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and vacated the disallowance of the assessee's claim for exemption under section 54 in the amount of Rs. 1,19,45,236. The Tribunal held that the assessee was entitled to claim exemption under section 54 to the extent she had invested in the purchase of the new residential property up to the date of filing a belated return under section 139(4).

Direct effects on the parties:

The assessee's claim for exemption of Rs. 1,19,45,236 under section 54 is allowed by the Tribunal.
The CIT(A)'s order sustaining the AO's disallowance is set aside; the AO is directed to give effect to the Tribunal's conclusions.

Broader implications (as reflected in the opinion):

The Tribunal's decision relied on existing judicial authorities, including a controlling pronouncement of the Supreme Court (Xavier J. Pulikkal), and a statutory interpretation grounded in Prakash Nath Khanna. The opinion applied the existing body of precedent to the facts of this case rather than laying down a novel legal principle beyond those authorities.

Disposition

The appeal filed by the assessee was allowed. The order was pronounced in open court on 12 October 2022 by the Bench comprising Shri Aby T Varkey (Judicial Member) and Shri Gagan Goyal (Accountant Member).

Availability of Source Material

This summary is based exclusively on the text of the provided ITAT order in ITA No.1885/Mum/2017 (A.Y. 2012-13). No additional facts, authorities, or inferences beyond what the opinion itself states have been introduced.

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DHARMISTA MEHTA, MUMBAI v. ITO 34(1)(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI BENCH "D", MUMBAI

BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND

SHRI GAGAN GOYAL, ACCOUNTANT MEMBER

ITA No. 1885/Mum/2017 (A.Y. 2012-13) Dr. Dharmista Mehta

22/5, Walchand Terraces,

Opp. A.C. Market, Tardeo, Mumbai - 400043.

PAN: AAFPM5272R ...... Appellant Vs.

ITO-34(1) (3),

Income Tax Office Building, Pratyakshakar Bhavan,

BKC, Bandra (East), Mumbai-400051. ..... Respondent Appellant by : Sh. Satish Mody

Respondent by : Smt. Mahita Nair, CIT-DR Date of hearing : 18/07/2022

Date of pronouncement : 12/10/2022

ORDER

PER GAGAN GOYAL, A.M:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-46, Mumbai [hereinafter referred to as ['CIT(A)'] dated 31.01.2017 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ['the Act'] for the Assessment Year (AY) 2012-13. The assessee has raised the following grounds of appeal:

"Based on the facts and circumstances of the case and in law, the Appellant respectfully submits that the Ld. Income Tax Officer - 34(1)(3), Mumbai (the 'AO) and the Commissioner of Income Tax (Appeals) - 46, Mumbai (the 'CIT(A)) have in their orders, erred on the following grounds which are without prejudice to each other.

1. In not allowing the benefit of Section 54 of the Income Tax Act, 1961 (the Act) while computing long term capital gain on sale of property merely on the ground that the appellant had failed to deposit the amount in the Capital Gains Account Scheme and also failed to purchase the house property before the due date of filing of return of income as per Section 139(1) of the Act.

2. In rejecting the explanation, clarification and reliance on the judicial precedence of the various courts submitted by the appellant relating to that Section 54 of the Act being the beneficial provision, it should be construed liberally to advance the object of giving the benefit to the Appellant.

3. In failing to understand that the requirement to invest in a bank account under the Capital Gains Account Scheme is a procedural requirement to ensure investment is made in a residential house as claimed in the return of income. Merely because of the technical breach/ non-compliance, the benefit due to the Appellant by the legislature cannot be denied particularly when substantive compliance was made.

The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Income Tax Appellate Tribunal to decide this appeal according to law."

2. Brief facts of the case are that assessee has filed her return of income on 28.07.2012 declaring total income of Rs. 3,19,812/-. The case was selected for scrutiny under CASS to examine large deduction claimed under section 54 of the Act. During the course of proceeding, it was observed by Assessing Officer (AO) that assessee has sold immovable property on 26.05.2011 for Rs. 1.7 Cr. and purchased a new property on 30.04.2013 for Rs. 1.66 Cr.

3. It is also observed that assessee has failed to deposit the amount in Capital Gains Accounts Scheme (CGAS) and also failed to purchase House Property before the due date of filing of return as per section 139(1) of the Act i.e. 31.07.2012. Based on these observations, AO issued a show-cause that why Rs. 1, 19, 45,236/- should not be taxed under the head "Long Term Capital Gain (LTCG)".

4. During the course of hearing, assessee relied upon the judgment in the case of CIT Vs. Miss. Jagriti Aggarwal (2011) 339 ITR 610 (P&H) and CIT Vs. Rajesh Kumar Jalan (2006) 286 ITR 274 (Gau.) to substantiate its claim under section 54 of the Act. Whereas AO relied upon the literal interpretation of section 54 of the Act which speaks about section 139(1) only. AO was not convinced with the argument advanced by the assessee in her favour and disallowed the claim of the assessee. Being aggrieved, assessee preferred an appeal before the Ld. CIT (A)-46, Mumbai.

5. Ld. CIT (A) also affirmed the view of AO. Against this order of Ld. CIT (A), assessee preferred this appeal before us. We observed that certain facts are not under challenge from both the sides i.e. (1) amount of LTCG arisen (2) Nature of Capital Gain & (3) Availability of section 54 to the assessee subject to our final decision on the issue of entitlement of section 54 of the Act.

6. During the course of hearing, ld. counsel of the assessee filed a Paper Book (PB) and in support of his contentions filed following Rulings of Jurisdictional Bench of ITAT as well as other Co-ordinate Bench and Hon'ble High Courts as under:

i. Mrs. Madhu Kaul Vs. CIT in ITA No. 89 of 1999 order dt. 17.01.2014 (P&H)

ii. CIT Vs. Bharati C. Kothari [2000) 160 CTR 0165 (Cal. HC).

iii. CIT Vs. Ms. Jagriti Aggarwal [2011] 339 ITR 610 (P&H).

iv. CIT Vs. Manjula J. Shah [2013] 355 ITR 474 (Bom).

v. Mrs. Seema Sabharwal Vs. ITO in ITA No. 272/Chd/2017 for AY 2013-14.

vi. Rajendra Pal Verma Vs. ACIT [2019] 104 taxmann.com 303 (Mum. Trib.)

vii. ITO Vs. Pamela Pritam Ghoseh in ITA No. 5644/Mum/2016 dated 27.07.2018.

viii. Hasmukh N. Gala Vs. ITO [2017] 83 taxmann.com 149 (Mum. Trib.)

7. Ld. CIT(A) relied upon the decision of Hon'ble Jurisdictional High Court in the case of Humayun Suleman Merchant in ITA No. 545 of 2002 dated 18.08.2016 after considering various other judgements on the time available for investment, the Court has adjudicated a similar issue- time limit upto which the invested amount is to be considered for exemption u/s.54F. The condition of 54(2) & 54F(4) are identical with respect to the time limit except that 54F required entire sale proceeds to be invested and 54 stipulates only the amount of capital gain to be invested. All other conditions of time lines are identical. The Court has held that only the amount invested before filing return of income is eligible for exemption.

8. Section 54 of the Income-tax Act, 1961 ("Act") provides for exemption of capital gains arising to a specified assessee from transfer of a long term capital asset to the extent capital gains are invested in a residential house within a prescribed period. The said exemption is available if the residential house is purchased or constructed within the prescribed period of one year before or two

years after (in case of purchase); or three years after (in case of construction) the date of transfer of the long-term capital asset.

9. Invariably, a person is not able to utilize the entire amount of capital gains on or before the due date of filing of return for the year in respect of which such capital gains arose. Such a situation is addressed by sub-section (2) by providing for deposit of unutilized funds in a Capital Gains Account Scheme before the prescribed date so that an assessee may not lose upon the exemption of unutilized funds. Section 54(2) reads as under:

"The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : ……"

10. Section 54(2) provides for an interesting proposition that the amount of capital gains which is not appropriated by the assessee for prescribed purposes within one year before; or on or before the due date of filing of return of income under section 139, shall be deposited in the capital gains account scheme. It needs to be emphasized that the literal reading of section 54(2) provides for the two dates i.e. the due date under section 139 and the due date under section

139(1). Pertinently, section 139 cannot be said to mean only section 139(1), but it means all sub-sections of section 139.

11. It may be noted that the aforesaid provision mandates that the period of utilization or appropriation of the capital gains in purchase or construction of the new residential house is to be considered till the due date under section 139 [which also covers sub-section (4) and (5) of section 139]. However, for the purpose of taking the benefit of Capital Gains Account Scheme, the time limit for making such deposit has been prescribed to be till the due date under section 139(1) [see the text of section 54(2) as contained in the parenthesis].

12. In other words, the sub-section (2) clearly provides a pigeonhole in the sense that the investment by way of purchase or construction, without resorting to the Capital Gains Account Scheme, can be made till the date of belated return under section 139(4) or revised return under section 139(5) as the wordings used in section 54(2) is "section 139", and not section 139(1), which covers all sub- sections of section 139". The Supreme Court, in the context of interpretation of provisions of 276CC, in Prakash Nath Khanna v. CIT [2004] 135 Taxman 327/264 ITR 1 (SC) had observed that "…Had the Legislature intended to cover sub-section

(4) also, use expression "section 139" alone would have sufficed." Therefore, in terms of the decision of the Supreme Court, since the legislature in section 54(2) used the words "section 139" only, the interpretation as discussed above seems plausible.

13. Section 54(2) is a subject matter of extensive litigation. Further, the view of various High Courts and Tribunals of the country in the following cases clearly outlines that the judicial consensus is that the exemption to be allowed in regard

to the amount invested in purchase or construction of the residential house under section 54 or 54F is to be considered till the date of filing return of income under section 139(4) of the Act. Reliance in this regard has been placed on the following decisions:

1. CIT v. Smt. Umayal Annamalai [2020] 118 taxmann.com 80 (Mad.)

2. Dr. Kushagra Kataria v. Cit, Circle-1(1), Gurgaon [2019] 101 taxmann.com 359/174 ITD 648 (Delhi - Trib.)

3. Rajendra Pal Verma v. Assistant Commissioner of Income Tax, Mumbai [2019] 104 taxmann.com 303 (Mum.)

4. ITO v. Nilima Abhijit Tannu [2019] 106 taxmann.com 256 (Mum.)

5. Nand Lal Sharma v. ITO [2015] 61 taxmann.com 271 (JP.-Trib)

6. CIT v. Jagtar Singh Chawla [2013] 33 taxmann.com 38/215 Taxman 154 (Punj. & Har.)

7. CIT v. Ms. Jagriti Aggarwal [2011] 339 ITR 610/203 Taxman 203/15 taxmann.com 146 (Punj. & Har.)

8. CIT v. Rajesh Kumar Jalan [2006] 157 Taxman 398/286 ITR 274 (Gau.)

9. Fathima Bai v. ITO [2010] 32 DTR 243 (Kar.)

10. R.K.P. Elayarajan v. Dy. Cit Circle I Vellore [2012] 23 taxmann.com 206/52 SOT 159 (Chennai) (URO)

11. ITO v. Smt. Sapana Dimri [2012] 19 taxmann.com 15/50 SOT 96 (Delhi)

14. Interestingly, none of the decisions referred above rely upon a binding precedent of the Supreme Court which has settled this issue. The aforesaid interpretation has been approved by the Hon'ble Supreme Court in the case of Xavier J. Pulikkal v. Dy. CIT [2016] 242 Taxman 59/73 taxmann.com 34 when the Hon'ble Apex Court, while allowing the civil appeal, modified (or so to say -

reversed) the reasoning of the Kerala High Court in the underlying order reported in [2016] 242 Taxman 206 (Kerala). The Kerala High Court held as under:

"So far as the facts of the present case, we have already stated above, it is possible that facts of the other appeal considered by the Appellate Tribunal along with appeal of the revenue may be different. The scheme for depositing capital gain is contemplated under Section 54F (4) and it depends upon when the property of the assessee is sold and when exactly the amounts were invested, whether it was invested in a residential house or otherwise. All these facts have to be considered with reference to provisions of Section 54F (4) along with Section 139 (1) of the Act, as the due time would be under Section 139(1) only not under Section 139(4) of the Act."

15. Tribunal, as a matter of fact, has accorded one more opportunity to the appellant assessee to place on record relevant facts for consideration and if his case were to be different from the facts of the other case and makes a vast difference altogether. So far as provisions of law are concerned, it is always open to him to place such facts before the Assessing Officer for consideration. However, Assessing Officer while applying the provisions of law, to the facts of a case without interdependent on facts of the other case has to consider the same. With these modifications, we dispose of the appeal directing the Assessing Officer to dispose of the matter in the light of the above observations."

16. It is to be noted that the Hon'ble Supreme Court, in (2016) 242 Taxmann 59 (SC) (supra), while remanding the matter for de-novo consideration to the assessing officer has clearly modified the aforesaid observations of the Hon'ble Kerala High Court. The purported effect of the decision of the Hon'ble Supreme Court is that it has modified the "modifications" made by the Kerala High Court in the civil appeal after granting the SLP under Article 136 of the Constitution of India. Pertinently, the Supreme Court has allowed the appeal of the assessee and

the effect of allowing an appeal by the Hon'ble Apex Court is to vacate a preceding order of the Kerala High Court containing a specific position taken by the Revenue. Also, the Supreme Court has to be understood to have differed in law with the Kerala High Court. The following verdict of the Hon'ble Supreme Court in the case of Kunhayammed v. State of Kerala [2000] 113 Taxman 470/245 ITR 360 supports the aforesaid proposition:

"Once a special leave petition has been granted, the doors for the exercise of appellate jurisdiction of this Court have been let open. The order impugned before the Supreme Court becomes an order appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court."

17. It is also submitted that the order passed by the Hon'ble Supreme Court, albeit in brief, is the declaration of law in terms of Article 141 of the Constitution of India, the exemption needs to be allowed if the amount is invested on or before the due date of filing of return under section 139(4).

18. We have deliberated at length the issue under consideration i.e. the entitlement of the assessee's claim of exemption under section 54. In our considered view in the backdrop of the facts of the case considered in the light of judicial pronouncements relied upon by the Revenue and by the assessee,

particularly the ratio laid down by the Hon'ble Supreme Court of India in the matter of Xavier J. Pulikkal v. Dy. CIT [2016] 242 Taxman 59/73 taxmann.com 34, It can be safely be concluded that the assessee in the case before us is entitled to claim exemption under section 54 to the extent she had invested towards the purchase of new residential property under consideration upto the date of filing of belated return under section 139(4) i.e. 31.03.2014. In the case before us assessee purchased new property well before the deadline given in section 139(4) i.e. 30.04.2013 for Rs. 1,66,74,200/-. Which we find is much in excess of LTCG of Rs. 1,19,45,236/-. We therefore, in terms of our aforesaid observations set-aside the order of the CIT(A) and vacate the disallowance of the assessee's claim of exemption under section 54 of Rs. 1,19,45,236/- as was sustained by him.

19. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 12^thday of October, 2022. Sd/- Sd/-

(ABY T VARKEY) (GAGAN GOYAL)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, िदनांक/Dated: 12/10/2022 SK, Sr.PS

Copy of the Order forwarded to:

1. अपीलाथ /The Appellant ,

2. ितवादी/ The Respondent.

3. आयकर आयु (अ)/ The CIT(A)-

4. आयकर आयु CIT

5. िवभागीय ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai

6. गाड फाइल/Guard file.

BY ORDER,

//True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai

DHARMISTA MEHTA, MUMBAI v. ITO 34(1)(3), MUMBAI

Summary of Legal Opinion: ITA No. 1885/Mum/2017 (A.Y. 2012-13) — Dr. Dharmista Mehta v. ITO-34(1)(3)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent's / Assessing Officer's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Disposition

Availability of Source Material

DHARMISTA MEHTA, MUMBAI v. ITO 34(1)(3), MUMBAI

Comments