Proviso appended to Section 58[4][f] has to be read as a whole along with the Clauses [a] and [b] therein which would explain the real intendment of the phrase “not utilized wholly or partly”

Withdrawal allowed subject to deduction of Tax

Unutilized capital gain to tax as per Section 54 F(4)

Withdrawal of unutilized amount from the Capital Gain Account Scheme after 3 years – interpretation of the phrase ‘wholly or partly’ employed in the proviso

Unutilized capital gain amount under Section 54 F[4] has to be charged under Section 45 as income of the previous year

Entitlement to the withdrawal of the amount deposited under Sub-Section (4) of Section 54F of the Act under the capital gain account subject to deduction of tax –

HELD THAT: Proviso appended to Section 58[4][f] has to be read as a whole along with the Clauses [a] and [b] therein which would explain the real intendment of the phrase “not utilized wholly or partly”. In the context, the proviso to Section 54 F[4] becomes an integral part of the enactment acquiring the tenor and colour of the main provision. To make the provision workable, the arguments of the petitioner that the Clauses [a] and [b] of the proviso need not be addressed to, cannot be countenanced for the reasons aforesaid. Thus, it can be held that on reading of the provision as a whole along with Clauses [a] and [b] to the proviso, the intention of the Legislature would be gathered that the unutilized capital gain amount under Section 54 F[4] has to be charged under Section 45 as income of the previous year, after the expiry of three years from the date of sale of the capital asset which in the present case is the assessment year 2016-17.

In the circumstances, the assessee is entitled to the withdrawal of the amount deposited under Sub-Section (4) of Section 54F of the Act under the capital gain account subject to deduction of tax applicable to the case on hand. The respondent shall consider the petitioner’s application in Form– G submitted in terms of the observations made hereinabove. With the aforesaid observations and directions, writ petition stands disposed of.

KARNATAKA HIGH COURT

PROF. P.N. SHETTY VERSUS OFFICE OF THE INCOME TAX OFFICER WARD-1, UDUPI

WRIT PETITION No.13541/2018 (T – IT)