What is the time period to deposit LTCG in Capital Gains Accounts Scheme?

Q. I sold a flat in Sep'07 and intend to re-invest (jointly with mother) in another (self-occupied).1) Can the LTCG made on sale of flat be re-invested any time before due date for filing return (31-7-08) or do we have to deposit the LTCG in the capital gains account scheme before 31-03-08?

Ans. The provision under subsection 4 of section 54 of the I T Act states as under

“54(4) The amount of the net consideration 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 ”

i.e. any unspent amount should be deposited before the due date of filing of return under section 139(1) of the I.T act. As you stated in your case, rightly so by 31/7/2008. However, as per various judicial decisions the last date is not "due date for filing return u/s 139(1) but can be any other sub-sections under section 139. Thus an assessee can utilise the gain by the date of even late return filing u/s 139(4) of the I T Act which increase time by at least one and half year because the last date by which a return is to be filed is one year from the end of assessment year.

Taxkiller's view
We would recommend you to deposit any unspent amount before furnishing such return U/s 139(1) i.e. 31/7/2008 in your case, in Capital Gains Accounts Scheme.

But anyway, if there is relief from court, use it when required!


Popular posts from this blog

Proof of Leave Travel Allowance

Income Tax Provisions at a Glance