DIRECT TAXES CIRCULAR

SECTION 54/54F l EXEMPTION OF RESIDENTIAL HOUSE PROPERTY

429. Exemption from capital gains arising from transfer of a house property used for residence - Whether available to Hindu undivided families

1. A question has been raised whether the relief provided under section 54 in respect of capital gains arising from the transfer of a house property used for residence on fulfilment of certain conditions is available to a Hindu undivided family. In other words, whether a Hindu undivided family which transfers any house property; which was being used by it for residence of its members during the two years immediately preceding the date of transfer and purchases a new house property within one year of the date of transfer or constructs a new house property within two years (now three years) from the date of transfer, is entitled to relief provided in section 54 in respect of the capital gains arising on the transfer of the said house property.

2. We have been advised that the language of the section, particularly the expression “was being used by the assessee or a parent of his mainly for purposes of his or the parents’ own residence” cannot be interpreted so as to extend the relief to Hindu undivided family also. It is, therefore, clarified that the relief under section 54 is available only to the individual transferring house property and fulfilling the conditions mentioned in the section and not to the Hindu undivided family.¹

Instruction : No. 1081 [F. No. 207/20/76-IT(A-II)], dated 3-8-1977.

430. Assessee retained more than one house for the purpose of his own or parents’ own residence and has used them for such residence from time to time - Whether capital gains arising on transfer of each of such houses should qualify for exemption

Section 54 lays emphasis on the use of the property mainly for the purpose of assessee or his parents’ own residence. ²If an assessee has retained more than one house for the purpose of his own or the parents’own residence, and has used them for such residence, and not for any other purpose, the capital gains arising on transfer of each of such house would qualify for exemption under section 54, provided the other conditions spelt out therein are fulfilled.

Letter : No. 207/24/76-IT(A-II), dated 25-3-1977.

431. Capital gains from long-term capital asset - Investment in a flat under the self-financing scheme of the Delhi Development Authority - Whether to be treated as construction for the purposes of capital gains

1. Sections 54 and 54F provide that capital gains arising on transfer of a long-term capital asset shall not be charged to tax to the extent specified therein, where the amount of capital gain is invested in a residential house. In the case of purchase of a house, the benefit is available if the investment is made within a period of one year before or after the date on which the transfer took place and in case of construction of a house, the benefit is available if the investment is made within three years from the date of the transfer.

2. The Board had occasion to examine as to whether the acquisition of a flat by an allottee under the Self-Financing Scheme (SFS) of the D.D.A. amounts to purchase or is construction by the D.D.A. on behalf of the allottee. Under the SFS of the D.D.A., the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking the delivery of possession is only a formality. If there is a failure on the part of the D.D.A. to deliver the possession of the flat after completing the construction, the remedy for the allottee is to file a suit for recovery of possession.

3. The Board have been advised that under the above circumstances, the inference that can be drawn is that the, D.D.A. takes up the construction work on behalf of the allottee and that the transaction involved is not a sale. Under the scheme the tentative cost of construction is already determined and the D.D.A. facilitates the payment of the cost of construction in instalments subject to the condition that the allottee has to bear the increase, if any, in the cost of construction. Therefore, for the purpose of capital gains tax the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to be paid in instalments does not affect the legal position stated above. In view of these facts, it has been decided that cases of allotment of flats under the Self-Financing Scheme of the D.D.A. shall be treated as cases of construction for the purpose of capital gains.

Circular : No. 471 [F. No. 207/27/85-IT(A-II)], dated 15-10-1986.

JUDICIAL ANALYSIS

Explained in - In CIT v. Mrs. Hilla J.B. Wadia [1993] 69 Taxman 114 (Bom.), it was observed that the Board had stated in Circular No. 471, dated 15-10-1986 that when an allotment letter is issued to an allottee under this scheme on payment of the first instalment of the cost of construction, the allotment is final unless it is cancelled. The allottee, thereupon, gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking delivery of possession is only a formality. The Board has directed that such an allotment of flat under this scheme should be treated as cost of construction for the purpose of capital gains.

Explained in - The above two circulars (dated 15-10-1986 and 16-12-1993) were explained in Mrs. Seetha Subramanian v. ACIT [1996] 59 ITD 94 (Mad. - Trib.) with the following observa-tions :

“. . . The assessee also relied upon certain circulars issued by the CBDT. One of the circulars was [Circular No. 471, dated 15th October, 1986. This was issued by the CBDT clarifying the position that where an assessee acquires a flat by an allotment under the self-financing scheme of the Delhi Development Authority, the allotment itself is sufficient compliance for getting the benefit under section 54F, even though the assessee has not paid all the instalments due under the said scheme. Later by another Circular No. 672, dated 16th December, 1993, the CBDT has issued clarification extending the same benefits for acquisition of houses or flats on allotment under similar schemes. Therefore it was contended that the intention of the Legislature was to invest in the acquisition of a residential house and completion of construction or occupation is not required. We find force in the argument of the learned counsel for the assessee. The said intention is very clear from the two circulars issued by the CBDT, where it was held that an assessee is entitled to the benefit of sections 54 and 54F, if an assessee gets an allotment under the self-financing scheme and pays the first instalment of the cost of the construction. From that it is clear that in order to get the benefit under section 54F the assessee need not complete the construction of the house and occupy the same. . . .” (p. 98)

Applied in - In Smt. Shashi Varma v. CIT [1997] 224 ITR 106 (MP), the above circular was relied on, and the Court observed :

“This clinches the matter and it was not proper for the Tribunal to have ignored the circular because it has a persuasive value and it was in the nature of granting relief. Therefore, the Tribunal should have considered the circular sympathetically and granted the relief. . . ” (p. 108)

432. Whether allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and construction are similar to those of DDA, should be treated as cases of construction for purposes of sections 54 and 54F

1. Attention is invited to Board’s Circular No. 471, dated 15-10-1986. It was clarified therein that cases of allotment of flats under the Self-Financing Scheme of the Delhi Development Authority (DDA) should be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act. The Board has since received representations that even in respect of allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and construction are similar to those of Delhi Development Authority, a similar view should be taken.

2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of Board’s Circular No. 471, dated 15-10-1986 (Sl. No. 428), such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act.

Circular : No. 672, dated 16-12-1993.

433. Whether capital gain arising from transfer of a self-occupied residential house would be entitled to exemption

1. Section 54 of the Income-tax Act provides for exemption in respect of capital gain arising from the transfer of a long-term capital asset, being a residential house, the income of which is chargeable under the head ‘Income from house property’ if the conditions laid down in the said provision are fulfilled.

2. Under section 23(2) of the Income-tax Act, as amended by the Finance Act, 1986, the annual value of one house in the occupation of the owner for purposes of his own residence is taken as nil. A question has been raised whether capital gain arising from the transfer of such a house property would be entitled to exemption under section 54 of the Act.

3. The question appears to have been raised because of the words italicised in para 1 above. As the annual value of a self-occupied house would be taken to be nil by virtue of section 23(2) of the Act, an Assessing Officer may take the plea that the income of such a house is not chargeable under the head ‘Income from house property’.

4. The Board is of the view that such a construction of the aforesaid provision in section 54 of the Act is not correct. Income from a self-occupied residential house is chargeable under the head ‘Income from house property’ even though in certain circumstances such income may be computed at nil or at a negative figure by virtue of section 23(2) read with section 24 of the Act.

5. Thus, a person shall be entitled to claim exemption under section 54 of the Act even in respect of a self-occupied residential house.

Circular : No. 538, dated 13-7-1989.

434. Whether, in cases where the residential house is constructed within the specified period, the cost of such residential house can be taken to include the cost of the plot also

1. Sections 54 and 54F provide for a deduction in cases where an assessee has, within a period of one year before or two years after the date on which the transfer of a capital asset takes place, purchased, or has within a period of three years after that date constructed, a residential house. The quantum of deduction is itself dependent upon the cost of such new asset. It has been represented to the Board that the cost of construction of the residential house should be taken to include the cost of the plot as, in a situation of purchase of any house property, the consideration paid generally includes the consideration for the plot also.

2. The Board has examined the issue whether, in cases where the residential house is constructed within the specified period, the cost of such residential house can be taken to include the cost of the plot also. The Board are of the view that the cost of the land is an integral part of the cost of the residential house, whether purchased or built. Accordingly, if the amount of capital gain for the purposes of section 54, and the net consideration for the purposes of section 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction under section 54/54F, provided that the acquisition of plot and also the construction thereon, are completed within the period specified in these sections.

Circular : No. 667, dated 18-10-1993.

435. Taxability of unutilised deposit under the Capital Gains Accounts Scheme, 1988 in the hands of the legal heirs of the assessee

1. Under sections 54, 54B, 54D, 54F and 54G of the Income-tax Act, 1961, capital gain is not chargeable to tax if the amount of capital gain or net consideration has been utilised for specified purposes by the assessee within the stipulated period laid down in the relevant section. These provisions also provide for the deposit in specified Banks, etc., of the amount of capital gain which is not utilised by the assessee for the acquisition of new assets before the date of furnishing the return of income under section 139(1). The amount of capital gain already utilised for the acquisition/construction of new asset together with amount deposited is deemed to be the cost of new asset and, consequently, this amount is not chargeable to capital gain in the year of transfer of asset. The provisions of sections 54, 54B, 54D, 54F and 54G further provide that if the amount deposited is not utilised wholly or partly for the prescribed purposes, within the period specified, the amount not so utilised shall be charged under section 45 as the income of the financial year in which the period of two/three years (as prescribed in the relevant section) from the date of transfer of the original asset expires.

2. A question has been raised regarding the taxability of the unutilised deposit amount in the case of an individual who dies before the expiry of the stipulated period.

3. The matter has been considered by the Board and it is clarified that in such cases the said amount cannot be taxed in the hands of the deceased. This amount is not taxable in the hands of legal heirs also as the unutilised portion of the deposit does not partake the character of income in their hands but is only a part of the estate devolving upon them.

Circular : No. 743, dated 6-5-1996.

436. Text of Scheme framed under sub-section (2) of sections 54, 54B, 54D, 54F and 54G and sub-section (4) of section 54F

NOTIFICATION 1

In exercise of the powers conferred by sub-section (2) of section 54, sub-section (2) of section 54B, sub-section (2) of section 54D, sub-section (4) of section 54F and sub-section (2) of section 54G of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby frames the following Scheme, namely :—

1. Short title, commencement and application - (1) This Scheme may be called the Capital Gains Accounts Scheme, 1988.

(2) It shall come into force on the date of its publication in the Official Gazette.

(3) It applies to all assessees who are eligible for exemption under section 54, 54B, 54D, 54F or 54G of the Income-tax Act, 1961 (43 of 1961).

2. Definitions - In this scheme, unless the context otherwise requires,—

(a) “account” means a deposit account under this Scheme;

(b) “Account-A” means Deposit Account-A mentioned in paragraph 4 of this Scheme;

(d) “Act” means the Income-tax Act, 1961 (43 of 1961);

(e) “Deposit Office” means any branch or branch office of the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), or of a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or of a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), authorised by the Central Government, by notification in the Official Gazette, to receive deposit and maintain account of the depositor, under this Scheme;

(f) “‘depositor” means an assessee who is eligible to make a deposit under section 54, 54B, 54D, 54F or 54G of this Act;

(g) all other words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act;

(h) “Form” means a form appended to this Scheme.

3. Deposits how to be made - A deposit or deposits may be made under the provisions of section 54 or section 54B or section 54D or section 54F or section 54G of the Act by any depositor intending to avail of the benefit under the said section or sections of the Act, as the case may be, in accordance with the provisions of this Scheme.

4. Types of deposits - (1) There shall be two types of deposit accounts, namely—

(i) “Deposit Account-A”, and

(ii) “Deposit Account-B”.

(2) The deposit made under Account-A shall be in the form of “savings deposit” and subject to the other provisions of this Scheme withdrawals under this account can be made from time to time by the depositor.

(3) The deposit made under Account-B shall be in the form of “term deposit” with an option to the depositor to keep the deposit as cumulative or non-cumulative deposit. Except as provided under paragraph 7 and paragraph 9, withdrawals under this account can be made only after the expiry of the period for which the deposit under this account has been made and accepted.

(4) Such deposits may be made in one lump sum or in instalments at any time on or before the due date of furnishing the return of income under sub-section (1) of section 139 of the Act as is applicable in the case of the depositor.

5. Application for opening account - (1) Every depositor who is desirous of opening an account or accounts, as the case may be, under this Scheme for the first time, shall apply to the deposit office in Form A or as near thereto as possible, in duplicate and tender the amount of deposit payable in the manner specified in sub-paragraph (4) and a depositor intending to avail of the benefit under more than one section of the Act, as referred to in paragraph (3), shall make separate applications in the same manner, for opening account or accounts under each of such sections.

(2) While applying under sub-paragraph (1) the depositor shall exercise his option as to whether the amount is to be deposited in Account-A or in Account-B or in both the accounts, and in case of the depositor exercising his option to open Account-B, the depositor shall also exercise his option as to whether the deposit is to be made as cumulative or non-cumulative deposit as referred to in sub-paragraph (3) of paragraph 4.

(3) On receipt of an application under sub-paragraph (1), the deposit office shall open an account or accounts in the name of the depositor as opted by him under sub-paragraph (2).

(4) The payment of amount of deposit shall be made by the depositor either in cash or by crossed cheque or by draft alongwith the application.

(5) Every subsequent deposit shall be made into the deposit office at which the account stands in the same manner as stipulated in sub-paragraph (4).

(6) If the deposit is made by a cheque or a draft then, subject to such cheque or draft being realised, the effective date of deposit for the purpose of claiming exemption under the Act will be the date on which the cheque or draft is received by the deposit office alongwith the application under sub-paragraph (1) or sub-paragraph (5), as the case may be.

(7) The interest on the amount of deposit shall accrue and will be calculated subject to the provisions of paragraph (8), with effect from the date of deposit in cash or the date of realisation of the proceeds of the cheque or the draft tendered by the depositor.

(8) In the case of deposit under Account-A, the deposit office shall issue a pass book to the depositor wherein all amounts of deposits, withdrawals, together with interest due, shall be entered over the signature of the authorised officer of the deposit office.

(9) In the case of deposit under Account-B, deposit office shall issue a deposit receipt wherein the principal amount of deposit, date of deposit, date of maturity of deposit shall be entered over the signature of the authorised officer of the deposit office.

6. Issue of duplicate pass book or receipt - In the event of loss or destruction of the pass book or receipt referred to in sub-paragraph (8) or sub-paragraph (9) of paragraph 5, the deposit office may, on an application made to it in this behalf, issue a duplicate thereof.

7. Transfer and conversion of the account - (1) A depositor may, if he so desires, apply for transfer of his account or accounts, from one deposit office to another deposit office of the same bank.

(2) A depositor having a deposit in Account-B, may, at any time, if he so desires, apply in Form B or as near thereto as possible, together with his deposit receipt, for transfer of the amount standing to his credit in Account-B to his deposit in Account-A opened under the same section of the Act under which the said Account-B was opened and the request of the depositor may be accepted subject to the other provisions of this Scheme.

(3) (a) A depositor while applying under sub-paragraph (2) shall furnish in Form B the requisite particulars of his Account-A to which the amount from Account-B is required to be transferred.

(b) Where the depositor is not having a deposit in Account-A he shall state such fact and also make a request for opening an Account-A in his name, as specified in Form B.

(4) If the request under sub-paragraph (2) has been made for transfer of amount standing to the credit in Account-B, before the expiry of the specified period for which the deposit in Account-B was made, such request shall be treated as premature withdrawal of amount from deposit in the said Account-B and the amount of interest accrued, if any, in the said Account-B shall be calculated by the deposit office in accordance with the provisions of sub-paragraph (4) of paragraph 8.

(5) If the request under sub-paragraph (2) has been made for transfer of amount standing to the credit in Account-B on or after the expiry of the specified period for which the deposit in Account-B was made, the amount of interest accrued in Account-B shall be calculated at normal rate as specified by the Reserve Bank of India in pursuance of paragraph 8 in respect of a deposit in Account-B.

(6) On receipt of an application under sub-paragraph (2), the deposit office shall calculate the amount of interest, if any, accrued in Account-B till the date on which actual transfer of amount to Account-A is made, subject to the provisions of paragraph 8 and close Account-B after transferring the total amount standing to the credit in Account-B to Account-A :

Provided that where in such case of transfer the depositor does not have a deposit in Account-A, an Account-A shall be opened in the name of the depositor and the amount standing to his credit in Account-B shall then be transferred to Account-A as so opened.

(7) A depositor, if he so desires, may apply in Form B together with his pass book, for opening an Account-B in his name, by way of transfer of the whole or any part of the amount standing to his credit in Account-A, under the same section of the Act under which his Account-A has been opened.

(8) After the conversion of Account-B to Account-A or vice versa in the manner specified above, the interest in newly opened account or accounts, as the case may be, shall accrue with effect from the date of opening of such account or accounts.

8. Interest - (1) Interest at such rate as may be specified by the Reserve Bank of India, from time to time, shall be allowed for each calendar month on the lowest balance at the credit of a depositor under Account-A, between the close of the 10th day and the end of the month and shall be credited to the account at the end of each half-year.

(2) Interest at such rate, as may be specified by the Reserve Bank of India, from time to time, shall be allowed in respect of deposit in Account-B. In case of cumulative deposit in Account-B, the amount of interest accrued will be deemed to have been reinvested and in case of non-cumulative deposit in Account-B, the amount of interest will become due and payable at quarterly intervals.

(3) Interest due at the end of each half-year in respect of Account-A will be credited only when the amount is Re. 1 or more and the total amount of interest payable in respect of Account-A or Account-B will be rounded off to the nearest five paise.

(4) If a depositor applies under paragraph 7 or paragraph 9 or paragraph 13 for conversion of the account or withdrawal from the account or closure of the account, as the case may be, before completion of the period for which the deposit in Account-B has been accepted by the deposit office, the rate of interest payable in respect of such deposit shall be the one applicable to the period for which the deposit remained with the deposit office less one per cent penalty for a premature withdrawal on account of such conversion or withdrawal or closure, as the case may be, and any adjustment required to be made on account of such premature conversion, withdrawal or closure with respect to amount of interest already credited to the account of the depositor, shall be made by the deposit office against the amount lying to the credit of the depositor in Account-B.

9. Withdrawal from the account - (1) A depositor having Account-A may, at any time after making the initial subscription, if he so desires, apply in Form C or as near thereto as possible, together with the pass book to the deposit office for the withdrawal of amount from the balance to his credit in Account-A, subject to the other provisions of this Scheme.

(2) On receipt of an application under sub-paragraph (1) the deposit office shall, subject to the provisions of sub-paragraph (3), permit the withdrawal and enter the amount withdrawn in the pass book.

(3) At the time of any withdrawal from Account-A, other than the initial withdrawal, the depositor shall furnish in Form D in duplicate the details regarding the manner and extent of utilisation of the amount of immediately preceding withdrawal. The deposit office will retain one copy of Form D and return the other copy to the depositor after duly authenticating it.

(4) Where the amount of withdrawal referred to in sub-paragraph (2) exceeds rupees twenty-five thousand, the deposit office shall make payment to the depositor, subject to the fulfilment of the conditions prescribed in sub-paragraph (3), by way of crossed demand draft drawn in favour of the person to whom the depositor intends to make the payment.

(5) A depositor intending to make withdrawal from his deposit in Account-B, shall first apply in the manner prescribed in sub-paragraph (2) of paragraph 7 for transfer of the amount standing to his credit in Account-B to Account-A and may withdraw the requisite amount in the same manner and subject to the same conditions as stipulated in sub-paragraphs (1) and (3) after the amount standing to the credit in his Account-B has been credited to his Account-A by the deposit office.

(6) In case the application under sub-paragraph (5) is made before the expiry of the specific period for which the deposit in Account-B was made, such withdrawal will be treated as premature withdrawal, and the amount of interest accrued, if any, shall be calculated subject to the provisions of sub-paragraph (4) of paragraph 8.

(7) On receipt of the application under sub-paragraph (5), the deposit office shall transfer the amount due and payable, together with the amount of interest accrued, in Account-B to Account-A in the same manner and subject to the same conditions as stipulated in paragraph 7 and thereafter allow the request for withdrawal made by the depositor in the same manner and subject to the same conditions as stipulated in sub-paragraphs (1), (2), (3) and (4).

Explanation : For the removal of doubts, it is hereby clarified that the deposit office shall refuse the depositor to withdraw any amount lying in his account, in case of failure on his part to furnish all the details as required by sub-paragraph (3).

10. Utilisation of the amount of withdrawal - (1) A depositor, withdrawing any amount out of the deposit made in pursuance of sub-section (2) of section 54 or sub-section (2) of section 54B or sub-section (2) of section 54D or sub-section (4) of section 54F or sub-section (2) of section 54G, shall utilise the whole or any part of the amount so withdrawn for the purposes specified in sub-section (1) of the section in relation to which the deposit has been made.

(2) The amount withdrawn shall be utilised by the depositor within sixty days from the date of such withdrawal for the purposes specified in sub-paragraph (1) and the amount or any part thereof which has not been so utilised shall be re-deposited in Account-A immediately thereafter.

11. Nomination by the depositor - (1) A depositor may nominate in Form E or as near thereto as possible, one or more persons but not exceeding three to receive the amount standing to his credit in Account-A or Account-B, as the case may be, in the event of his death before the amount has become payable or having become payable, has not been paid.

(2) No nominations shall be made in respect of an account opened on behalf of a minor or a Hindu undivided family or a firm or a company or an association of persons or a

(3) A nomination made by a depositor may be varied by a fresh nomination in Form F or as near thereto as possible, by giving notice in writing to the deposit office in which the account stands.

(4) Every nomination and every cancellation or variation thereof shall be registered in the deposit office and shall be effective from the date of such registration, the particulars of which in the case of a deposit in Account-A shall be entered in the pass book and in the case of a deposit in Account-B shall be entered in the Deposit receipt, issued by the deposit office.

(5) If the nominee is a minor, the depositor may appoint any person to receive the amount due under the account in the event of the death of the depositor during the minority of the nominee.

(6) Where the nomination is in favour of more than one person, the nominee first named shall alone have the right to receive the amount standing to the credit in the account of the deceased depositor.

(7) Where the nominee first named has predeceased the depositor and depositor has not cancelled the nomination or substituted the nomination, the nominee second named shall be entitled to receive the amount standing to the credit in the account of the deceased depositor and so on in respect of other successive nominees :

Provided that if any nominee is dead, the surviving nominee or nominees shall, in addition to the proof of death of the depositor also furnish proof of death of the deceased nominee or nominees, as the case may be.

12. Charge of alienation - The amount standing to the credit of any depositor in any account shall not be placed or offered by him as security for any loan or guarantee and shall not be charged or alienated in any manner whatsoever.

13. Closure of the account - (1) If a depositor desires to close his account, an application shall be made with the approval of the Assessing Officer who has jurisdiction over the depositor to the deposit office in Form G or as near thereto as possible, and the deposit office shall pay the amount of balance including interest accrued, to the credit in the account of the depositor by means of crediting such amount to any bank account of the depositor.

(2) If a depositor in respect of whose deposit account a nomination is in force, dies, the nominee, if he desires to close the account or accounts and obtain the payment of the balance standing to the credit in the account of the deceased depositor, shall make an application to the deposit office in Form H or as near thereto as possible with the approval of the Assessing Officer who has jurisdiction over the deceased depositor, and the deposit office shall pay the amount of balance, standing to the credit in the account of the deceased depositor including amount of interest accrued, by means of crediting such amount to any bank account of the nominee.

(3) If a depositor, in respect of whose deposit no nomination is in force, the legal heir of the deceased depositor shall make an application to the deposit office in Form H or as near thereto as possible, with the approval of the Assessing Officer who has jurisdiction over the deceased depositor, and the deposit office shall pay the balance standing to the credit in the account of the deceased depositor including the amount of interest accrued, by means of crediting such amount to any bank account of the legal heir:

Provided that where there are more than one legal heir of the deceased depositor, the legal heir making the claim individually may do so by producing the letter of disclaimer or letter of authorisation from other legal heirs in his favour :

Provided further that before granting the approval for closure of the account under this sub-paragraph, the Assessing Officer shall obtain from the legal heir a succession certificate issued under Part V of the Indian Succession Act, 1925, or a probate of the will of the deceased depositor, if any, or letter of administration to the estate of the deceased in case there is no will in order to verify the claim of such legal heir to the account of the deceased depositor.

(4) The depositor or the nominee or the legal heir, in order to obtain payment of the amount standing to the credit in the account shall, while applying in Form G or Form H, also submit the pass book of Account-A or Deposit receipt of Account-B, as the case may be, to the deposit office.

(5) The payment made by the deposit office to the depositor or the nominee or the legal heir in accordance with the provisions of this paragraph shall constitute a full discharge to the deposit office of its liability in respect of the deposit.

(6) Nothing contained in this paragraph or in paragraph 11 shall affect the right or claim which any person may have against the person to whom any payment is made under this paragraph.

FORM A

[See sub-paragraph (1) of paragraph 5]

(To be submitted in duplicate)

.............................................................

[Name of the Deposit Office]

Serial No. .............................

Application for opening an account under the

Capital Gains Accounts Scheme, 1988

The Manager,

..........................................................................................

[Name and address of the Deposit Office]

I, ................................................................................................ aged ..................... years..............................

[Name and address of the *applicant/*depositor]

hereby apply for opening *Account-A *and/*or Account-B under the Capital Gains Accounts Scheme, 1988 (in terms of section *54/*54B/*54D /*54F/*54G of the Act) *in my name/*in the name of ........................................................................................................................... [Name of the depositor]

of whom I am the *guardian/*karta/*authorised officer, and tender herewith the amount of Rs. ........................... in cash/by way of *crossed cheque/*demand draft, towards deposit as per details below :

1. (a) Amount deposited

Rs. ......................................................... [in figures]

Rs. ......................................................... [in words]

*in cash/by *crossed cheque/*demand draft No. ................................... dated.................. drawn on

(b) Address of the depositor

**2. *I wish to make a nomination in respect of the amount to my credit in the said account/*I do not wish to make a nomination in respect of the amount to my credit in the said account, at present.

3. (a) Applicant’s relationship with the depositor

(in case the depositor is minor)

(b) Whether applicant is natural guardian/guardian appointed by Court, for the minor depositor

4. Depositor’s permanent IT Account No./District/Ward/Circle/Range where assessed

5. Previous year From............. to month.............

(as applicable in case of the depositor)

6. Assessment year in respect of which deposit is to be 19....

made

7. (a) Whether deposit is to be made under Account-A or Account-B or under Account-A and Account-B

(b) In case the deposit is to be made under Account-A and Account-B

(i) Amount to be deposited under Account-A Rs. .................................................... [in figures]

Rs. .................................................... [in words]

(ii) Amount to be deposited under Account-B Rs. .................................................... [in figures]

Rs. .................................................... [in words]

(c) In case of Account-B

(i) Period for which deposit is to be made

(ii) Whether the deposit is made as *Cumulative/*Non-cumulative

			.................................................................
			Signature/thumb impression
			of the depositor of the*
			guardian/karta/authorised
			officer of the depositor
			...............................................................
			Additional specimen
Date...........................			...............................................................
Place.........................			...............................................................

for the use of deposit office

1. (a) Account-A No. ............................... has been opened on................... with Rs. ...................... in the name of ............................................................................................................................................. [Name of the depositor]

(b) Pass Book No. ................................... has been issued to the applicant/depositor.

2. (a) Account-B No. ............................. has been opened on........................ with Rs. .......................... in the name of.................................................................................................. [Name of the depositor] as *Cumulative/

*Non-cumulative deposit.

(b) Deposit Receipt No. ................................. for Rs. ................................... dated............................... has been delivered on................................... to the *applicant/*depositor.

3. Cheque No. ........................................ dated......................... for Rs. ....................................... drawn on ............................. tendered by the *applicant/*depositor, has not been realised, hence, account has not been opened.

Date. .................................

Officer-in-charge

Notes:

1. *Delete what is not applicable.

2. Option with respect to type of account/accounts intended to be opened and amount to be deposited and other details (in case two accounts, i.e., Account-A and Account-B are to be opened) must be mentioned under the respective columns.

3. **Nomination Form E must be submitted alongwith this application in case of individual depositor intending to make nomination otherwise the applicant should delete the portion under column 2 of the form, whichever is not applicable.

4. Column 3 is for deposits made on behalf of a minor.

5. If space provided under the columns is not sufficient to furnish any detail the same may be furnished by way of using separate enclosure and making reference of the same in respective columns.

FORM B

[See sub-paragraphs (2),(3) & (7) of paragraph 7]

.............................................................

[Name of the Deposit Office]

Serial No. .................................

Application for conversion of accounts under the

Capital Gains Accounts Scheme, 1988

The Manager,

.........................................................................................

.........................................................................................[Name and address of the deposit office]

I, ....................................................................................................... [Name of the applicant*/depositor*]hereby apply for..............................................

*2. Transfer of the principal amount of Rs. ................................ [in figures] (Rupees...........................................) [in words]together with the amount of interest accrued in Account-B No. ........................., (Deposit Receipt No. ................................................) maintained with your office in *my name/*the name of. ................................................................................................. [Name & address of the depositor]

(a) *to Account-A, No. ......................................, Pass Book No. ............................ maintained with your office in *my name/*the name of aforesaid depositor;

(b) *to a new Account-A which may please be opened *in my name/*in the name of aforesaid depositor.

I submit herewith the aforesaid Deposit Receipt No. .......... for the purpose of transfer of said amount to aforesaid Account-A *which is maintained with *your office/*which is to be opened.

*3. (i) Opening a new Account-B in *my name/*in the name of......................................................

................................................................................................................................................. [Name and address of the depositor] for a period of ......................................... days/month/year with effect from.................................... [date] and to transfer the sum of Rs. .............................................. [in figures] (Rupees........................................) [in words] to the credit in such new Account-B, out of the balance standing to the credit in Account-A, No. ......................... (Pass Book No. ......................), maintained with your office *in my name/*in the name of said depositor.....................................................................

[Name of the depositor]

(ii) I submit herewith the aforesaid Pass Book No. ............................... for the purpose of transfer of said amount to a new Account-B.

4. *The application is made by me as guardian on behalf of aforesaid.............................................. [Name of the depositor] who is a minor.

5. *The application is made by me as karta of the aforesaid............................................. Hindu undivided family.

6. *The application is made by me as authorised officer of the aforesaid *firm .............................../...........................*company/*Association of persons/*

Date......................	.............................................................................
Place....................	Signature/thumb impression of
	the depositor/the guardian/
	karta/authorised officer of
	the depositor
	...............................................................................
	Additional specimen
	............................................................................... ...............................................................................

FOR THE USE OF DEPOSIT OFFICE

*(1) The deposit in aforesaid Account-B No. .................... Deposit Receipt No. ............... has been allowed to be withdrawn*before maturity/*on maturity/*after maturity and total sum of principal amount of Rs. .............................. [in figures] (Rupees...............................) [in words] and the sum of Rs. .......................... [in figures] (Rupees...............................) [in words] of interest accrued in

said Account-B No. ......................... has been transferred on....................to Account-A No. ......................................................... [date]Pass Book No . ..............................................*which is already maintained/*which has been opened on....................................................................... [date] in the name of the aforesaid depositor.................................................................... [Name of the depositor] *and the Pass Book No. ........................................ of the newly opened Account-A No. ................. has been delivered on............................................... [date] to the abovementioned *applicant/ *depositor.

*(2) A new Account-B No. ......................................... Deposit Receipt No. ................................ for sum of Rs. ............................................ (Rupees......................................) has been opened

[in figures] [in words]

on.................................. for a period of...................................... days/month/year/s in the

[date]

name of the aforesaid depositor........................................................................................................

[Name of the depositor]

and the sum of Rs. ................................ (Rupees...............................) has been transferred

[in figures] [in words]

to said new Account-B No. .............................. on.................................. out of the balance

[date]

standing to the credit in the aforesaid Account-A No. ......................................... of the said depositor.

Date...........................

Officer-in-charge

Notes:

1. *Score out whichever is not applicable.

2. If space provided in a column or columns is not sufficient to furnish the requisite details, same may be furnished by way of using separate enclosure and referring the same under the respective column.

FORM C

[See sub-paragraph (1) of paragraph 9]

.............................................................

[Name of the Deposit Office]

Serial No. ...............

Application for withdrawal of amount from Account-A under the

Capital Gains Accounts Scheme, 1988

The Manager,

.................................................................................

[Name and address of the Deposit Office]

I, .............................................................................................. son of............................................ residing at

[Name of the *applicant/depositor*]

...................................................................................... wish to withdraw a sum of Rs. .....................................

[Address of the *applicant/depositor*] [in figures]

(Rupees.......................................................), from the Account-A No. .............................. (Pass Book

[in words]

No. ..................................................................) maintained with your office, in* my name/*the name of.......................................................................................................................................

[Name and address of the depositor]

2. I hereby declare and confirm that the amount sought to be withdrawn is proposed to be utilised in terms of the provisions of *section 54/*section 54B/*section 54D/*section 54F/*section 54G of the Act for the following purposes:

**(i) ...........................................................................................................................................................................

(ii) ...........................................................................................................................................................................

(iii) ...........................................................................................................................................................................

(iv) ...........................................................................................................................................................................

(v) ...........................................................................................................................................................................

(vi) ...........................................................................................................................................................................

(vii) ...........................................................................................................................................................................

3. I request you to please pay the aforesaid amount of withdrawal in the following manner :

*(i) Amount of Rs. ............................ (Rupees.....................................) may be paid in cash for

[in figures] [in words]

the purposes mentioned at serial No. .............................. of column 2 hereinabove ;

(ii) Amount of Rs. ............................... [in figures] (Rupees....................................................) [in words]may be paid to ...........................................................................................................................................................................

[Name & address of the party to whom payment is to be made]

by way of pay order/demand draft for the purposes mentioned at Serial No. ....................... of column 2 hereinabove.

4. The application is made by me as guardian on behalf of aforesaid depositor....................................................................................... who is a minor.

[Name of the depositor]

5. The application is made by me as authorised officer of the aforesaid depositor *firm......................................../............................................... *company/Association of persons/

6. The application is made by me as karta of the aforesaid depositor............................................. Hindu undivided family.

			....................................................................................
			Signature/thumb impression of the
			depositor/the guardian/karta/
			*authorised officer of the depositor
			...........................................................
			Additional specimen
Date ............................			...........................................................
Place ...........................			...........................................................

FOR THE USE OF deposit office

1. Withdrawal for total amount of Rs. ...................* allowed/*not allowed because the depositor has not furnished the requisite details in respect of his preceding withdrawal/not allowed in terms of the provision of sub-paragraph (4) of paragraph 9 as the withdrawal has been sought in cash.

2. Amount of withdrawal has been made as per below :

(a) Cash Rs. ......................................

(b) Cheque/Demand Draft issued .................................................................................

[Details may he noted]

Date....................

Officer-in-charge

Notes :

1. *Delete whatever is not applicable.

2. Please mention the details of purpose for which amount is sought to be withdrawn.

3. Please mention the details of amount sought to be paid in cash and by way of pay order/demand draft with reference to the specific purpose and serial number at which such purpose has been mentioned under column 2 of the application and also the name of the party, account number (if any) of the party in whose favour demand draft/pay order is sought to be issued.

4. Columns 4, 5, 6 pertain to deposits made on behalf of a minor, a company, a firm, a Hindu undivided family, association of persons,

5. Details pertaining to column No. 2/3 may be furnished by way of Annexure or Annexures if the space provided in the columns is not sufficient to furnish the details.

FORM D

[See sub-paragraph (3) of paragraph 9]

(To be submitted in duplicate)

...........................................................................

[Name of the Deposit Office]

Serial No. ................

Details regarding the manner and extent of utilisation of the amount withdrawn

from account under the Capital Gains Accounts Scheme, 1988

The Manager,

................................................................................

[Name and address of the Deposit Office]

I,............................................................................................... s/o .................................................... residing

[Name of the applicant/depositor]

at .................................................................. am furnishing in terms of sub-paragraph (3) of para-

[Address]

graph 9, the requisite details regarding the manner and extent of utilisation of the amount of Rs. .......................................................................... (Rupees...............................................................)

[in figures] [in words]

withdrawn by me on ................................................................. out of the balance to the credit in

[date]

*Account-A No. ........................... (Pass Book No.) ......................................, maintained with your office in *my name/*in the name of aforesaid.............................................................................................

[mention the name & address of the depositor]

2. Manner/purpose for which amount withdrawn, mentioned hereinabove has been utilised :

Purpose	Amount	Party to whom payment	Voucher No./Receipt No.
	Rs. P.	has been made	(with date)

3. I hereby declare and confirm that the amount withdrawn, which is mentioned hereinabove has been utilised partly and the balance of Rs. .................................................. was redeposit on................................................. to the credit of aforesaid account/*wholly, for the purpose mentioned hereinabove under column 2.

4. This declaration is made by me on behalf of the aforesaid minor depositor ......................................... of whom I am guardian.

5. This declaration is made by me on behalf of the aforesaid *firm/*company/association of persons*/

6. This declaration is made by me as karta of the aforesaid..................................................., Hindu undivided family.

	.............................................................................................
	Signature/thumb impression of the
	depositor/the guardian/karta/
	*authorised officer of the depositor
Date..............................	.............................................................................................
Place............................	.............................................................................................
	Additional specimen
	.............................................................................................................

PAN and Distt./Ward/Circle/Range where assessed

FOR THE USE OF deposit office

Withdrawal of Rs. ..................................... *permitted/*not permitted as the details in respect of total amount of Rs. ...........................................withdrawn on................... have not been furnished.

*Applicant/*Depositor has been advised to furnish the details.

Date...........................

Officer-in-charge

Notes :

1. *Delete whatever is not applicable.

2· Columns 4, 5, 6 pertain to deposit made on behalf of a minor, firm, company, a Hindu undivided family, association of persons,

3. If space provided under column 2 is not sufficient to furnish the requisite details, same may be furnished by way of using separate enclosure and referring to the same under the respective column.

FORM E

[See sub-paragraph (1) of paragraph 11]

(To be submitted only in case of individual depositor)

................................................................

[Name of the Deposit Office]

Serial No. ......................................

Form of nomination under the Capital Gains Accounts Scheme, 1988

The Manager,

..................................................................................

[Name and address of the Deposit Office]

I,................................................................................. son of ............................................................................

[name of the depositor]

........................................................ residing at .........................................................................................

[address]

hereby nominate the person(s) mentioned below to whom, to the exclusion of all other persons, in the event of my death, the amount standing to my credit in Account-A No. ............................................ Pass Book No. ......................../Account-B No. ....................... Deposit Receipt No. ...................................... under the Capital Gains Accounts Scheme, 1988, would be payable :

Sl. No.	Name(s) of the	Relationship	Full	Date of birth of
	Nominee(s)		Address(es)	Nominee in case of
				minor
1.
2.
3.

*As the nominee(s) at Serial No.(s)....................................... specified above is/are minor(s), I appoint Shri/Smt./Kumari................................................................................................................................ ...............................................................................................................................................................................................

[Name and full address]

as the person to receive the sum due under the said account(s) in the event of my death during the minority of the nominee(s).

Signature of witness....................................	................................................................
Name and address.......................................	Signature/thumb impression
	of the Depositor
Date............................	................................................................
Place.........................	PAN and Distt./Ward/
	Circle/Range where assessed
Signature of witness................................
Name & address.........................................
Date.................................................................

for the use of deposit office

The above nomination has been registered on................................................ and entry has been made in the Pass Book No. .......................... for Account-A No. ............................../Deposit Receipt No. ..................................... for Account-B No. ........................................

Date.................................

Officer-in-charg e

Note : *Delete whatever is not applicable. If space provided under the columns hereinabove is not sufficient to furnish the requisite details, the same may be done by way of using separate enclosure and referring to the same under the respective column.

FORM F

[See sub-paragraph (3) of paragraph 11]

................................................................

[Name of the Deposit Office]

Serial No...............................

Application for cancellation or change of nomination

previously made in respect of account under the

Capital Gains Accounts Scheme, 1988

The Manager,

....................................................................................

[Name and address of the Deposit Office]

I, ................................................................................................... son of............................................................. residing at..............................................................................................................................................................

[Address of the depositor]

hereby cancel the nomination made by me in respect of my Account/Accounts men- tioned under column 2 hereunder :

2. Details of Account/Accounts :

(1) Account-A No. ........................................................

Nomination made on..........................................

in favour of..............................................................

(2) Account-B No. .......................................................

Nomination made on..........................................

in favour of...............................................................

3. *In the place of the cancelled nomination referred to under column 2 hereinabove, I hereby nominate the person(s) mentioned below to whom, to the exclusion of all other persons, in the event of my death, the amount standing to my credit in the account/ accounts mentioned under column 2 hereinabove would be payable :

Sl. No.	Name(s) of the	Relationship	Full	Date of birth of
	Nominee(s)		Address(es)	Nominee in case of
				minor
1.
2.
3.

4. As the nominee(s) at Serial No.(s)...................................... stated above is/are minor(s), I appoint Shri/Smt./Kumari............................................................................................................................ ...............................................................................................................................................................................................

[Name and full address]

as the person to receive the sum due under the said account(s) in the event of my death during the minority of the nominee(s).

Signature of witness....................................	................................................................
Name and address.......................................	Signature/thumb impression
	of the Depositor
Date............................	................................................................
Place.........................	PAN and Distt./Ward/
	Circle/Range where assessed

FOR THE USE OF deposit office

The nomination referred to under column 2 hereinabove has been cancelled* and fresh nomination as per column 3 hereinabove has been registered on.................................... and accordingly entry has been made in the Pass Book for Account-A No. .......................................... Deposit Receipt No. .............................................. for Account-B No. .................................... referred to under the column 2 hereinabove.

Date......................

Officer-in-charge

FORM G

[See sub-paragraph (1) of paragraph 13]

(To be submitted by the depositor)

...............................................................

[Name of the Deposit Office]

Serial No. ....................

Application for closing the account under the

Capital Gains Accounts Scheme, 1988

by the depositor

The Manager,

....................................................................................

[Name and address of the Deposit Office]

I, ..................................................................................................... ...........................................................

[Name of the depositor/*applicant]

son of........................... residing at..............................................................................hereby apply

[Address of the *applicant/*depositor]

in terms of sub-paragraph (1) of paragraph 13 of the Scheme, to close the *account/ accounts mentioned below, which *is/*are maintained, with your office* in my name/*in the name of.............................................................................................................................................

[Name and address of the depositor]

2. Details of account/accounts :

(i) Account-A No. ..................................................... Pass Book No. ........................................................

(ii) Account-B No................................................ Deposit Receipt No. ..................................................

3. I tender herewith the *Pass Book/*Deposit Receipt mentioned hereinabove.

4. The application is made by me as guardian on behalf of aforesaid depositor who is a minor and whose date of birth is.............................................

5. The application is made by me as authorised officer of the aforesaid depositor, the *firm................................................ *company, Association of persons...........................................................

6. The application is made by me as karta of the aforesaid depositor......................................., a Hindu undivided family.

	.......................................................................................
	Signature/Thumb Impression of the
	Depositor/Guardian/Karta/Authorised
	Officer of the Depositor
	.................................................................................
	Additional specimen
Date...........................	.................................................................................
Place.........................	.................................................................................

APPROVED

[Signature (with date) and stamp of Assessing Officer having jurisdiction]

FOR THE USE OF DEPOSIT OFFICE

[Details of *Account/*Accounts closed and total amount paid may be recorded]

1. .......................................................................................................................................................................................

2. .......................................................................................................................................................................................

3. .......................................................................................................................................................................................

4. .......................................................................................................................................................................................

5. .......................................................................................................................................................................................

6. .......................................................................................................................................................................................

Date......................

Officer-in-charge

Notes :

1. *Delete whatever is not applicable.

2. Columns 4, 5, 6 pertain to deposit made on behalf of a minor, firm, company, Association of persons,

FORM H

[See sub-paragraphs (2) and (3) of paragraph 13]

(To be submitted by the Nominee/Legal heir of the deceased depositor)

................................................................

[Name of the Deposit Office]

Serial No. .....................

Application for closing the account under the Capital Gains

Accounts Scheme, 1988 by the nominee/legal heir

of the deceased depositor

The Manager,

....................................................................................

[Name and address of the Deposit Office]

I/We..................................................................................................................................................................................

[Name & Address of the nominee/legal heir of the deceased depositor]

hereby apply in terms of sub-paragraph (2)/(3) of paragraph 13 of the Scheme to close the *account/*accounts mentioned below, which *is/*are maintained with your office in the name of the deceased depositor............................................................................... ................................................................................................................................................

[Name and address of the depositor and PAN and Distt./

.................................................................................................................................................................................................

[Ward/Circle/Range where assessed]

2. In terms of *sub-paragraph (6) of paragraph 11, I, ........................................................................ ........................................., aged........................................... years, son of...........................................................

[Name of the nominee]

....................................................................., (.............................................................) am entitled to obtain

[full address]

payment due to the credit in the *account/*accounts mentioned under column 4 hereunder. (In case application is made by the nominee).

3. I, ................................................................................., aged.................................................................. years,

[Name of the legal heir]

son of............................................................................ resident of.............................................................am

[full address]

making this application to obtain the payment due to the credit in the *Account/ *Accounts mentioned under column 4 hereunder and submit herewith the letter(s) of disclaimer given by all other legal heirs.

4. Details of *Account/*Accounts

(i) Account-A No. ............................................................... Pass Book No. .............................................

(ii) Account-B No. ........................................................ Deposit Receipt No. ..........................................

5. *I/*We tender herewith the *Pass Book/*Deposit Receipt mentioned hereinabove.

			..............................................................................................
			Signature/Thumb Impression of the
			Nominee/Legal heir of the Deceased
			Depositor
Date........................			..............................................................................................
			..............................................................................................
Place.....................			Additional specimen

APPROVED

[Signature (with date) and stamp of Assessing Officer having jurisdiction]

FOR THE USE OF DEPOSIT OFFICE

[Details of Account/Accounts closed and total amount paid to

the nominee/legal heir, may be recorded]

1. ......................................................................................................................................................................................

2. ......................................................................................................................................................................................

3. ......................................................................................................................................................................................

4. ......................................................................................................................................................................................

5. ......................................................................................................................................................................................

Date ...............................

Officer-in-charge

Notes :

1. *Delete whatever is not applicable.

2. Pass Book/Deposit Receipt, as the case may be, should be enclosed.

3. Column 2 pertains to claim made by nominee and column 3 pertains to claim made by legal heir(s). Hence, the column which is not applicable may be scored out.

Notification : No. GSR 724(E), dated 22-6-1988.

notification 2

In pursuance of clause (e) of paragraph 2 of the Capital Gains Accounts Scheme, 1988, the Central Government hereby authorises all the branches (except rural branches) of the banks specified in column (2) of the Table below to receive deposits and maintain accounts, under the said Scheme :

TABLE

Sl. No.	Name of the Bank
1.	State Bank of India
2.	State Bank of Bikaner & Jaipur
3.	State Bank of Hyderabad
4.	State Bank of Indore
5.	State Bank of Mysore
6.	State Bank of Patiala
7.	State Bank of Saurashtra
8.	State Bank of Travancore
9.	Central Bank of India
10.	Bank of India
11.	Punjab National Bank
12.	Bank of Baroda
13.	UCO Bank
14.	Canara Bank
15.	United Bank of India
16.	Dena Bank
17.	Syndicate Bank
18.	Union Bank of India
19.	Allahabad Bank
20.	Indian Bank
21.	Bank of Maharashtra
22.	Indian Overseas Bank
23.	Andhra Bank
24.	Corporation Bank
25.	New Bank of India
26.	Oriental Bank of Commerce
27.	Punjab & Sind Bank
28.	Vijaya Bank

Explanation : For the purposes of this notification, a rural branch, in relation to the bank specified in column (2) of the Table, means a branch which is situate and is functioning at a centre, the population whereof, in accordance with the 1981 Census is less than ten thousand.

Notification : No. GSR 725(E), dated 22-6-1988.

437. Capital Gains Account Scheme, 1984 - No penalty/interest to be levied in cases where due date of filing return of income is 30th June and assessee makes deposit and furnishes return by 31-7-1988

1. Under sections 54, 54B, 54D, 54F and 54G, the capital gains earned by a taxpayer from the transfer of a long-term capital asset is exempt from tax if the taxpayer complies with certain conditions. Under section 54(1), the capital gains arising from the transfer of a residential house is exempt from tax if the taxpayer has within a period of one year before the date of transfer or two years after the date on which the transfer took place purchased or has within a period of three years after the date of transfer constructed a residential house. Where the amount of capital gains earned on the transfer is less than the cost of acquisition of the new property, full amount of capital gains is exempt. Where the amount of capital gains is more than the cost of the new asset, the exemption is given on a proportionate basis. The Finance Act, 1987 introduced a new sub-section (2) which makes it obligatory on the part of the taxpayer to deposit the amount of capital gains not yet utilised for the purpose of purchase or construction of a residential house, in any bank in accordance with a Scheme framed by the Central Government for this purpose. A provision similar to sub-section (2) of section 54 was incorporated in sections 54B, 54D, 54F and 54G of the Income-tax Act by the Finance Act, 1987. The Capital Gains Accounts Scheme, 1988 was notified in the Official Gazette on 22-6-1988. The Scheme applies to sections 54, 54B, 54D, 54F and 54G.

2. To avail of the exemption provided for in the abovementioned sections, taxpayers have to deposit the unappropriated amount of capital gains in the specified banks by the due date of furnishing the return of income laid down in section 139(1). For a large number of taxpayers the due date for furnishing the return of income is 30th of June. Taxpayers whose returns of income had to be filed by 30th of June and who intended to avail of the benefit of the capital gains tax exemption by depositing the capital gains in the specified banks may not have been in a position to do so. For the benefit of such taxpayers who had to furnish the return of income by 30th of June, the time limit for the deposit and the due date for the furnishing of the return of income has been extended up to the 31st of July, 1988. In cases, where the due date of furnishing the return of income is 30th of June and the taxpayer makes the deposit and furnishes the return of income by 31st July, 1988, no penalty and interest should be levied and the deposit itself will be treated as having been made in time and the concession in respect of tax on capital gains will be allowed.

Circular : No. 520, dated 11-8-1988.