Payment of tax is sufficient to allow withdrawal from Capital Gain Account Scheme; HC directs AO to issue NOC

Case details: Rashesh Shirish Sanjanwala v. ACIT - [2022] 134 taxmann.com 104 (Gujarat)

Judiciary and Counsel Details

• • M.R. Soparkar and B.S. Soparkar for the Petitioner.
  • Rashesh Shirish Sanjanwala
  • MS. Sonia Gokani and MS. Nisha M. Thakore, JJ.

Facts of the Case

The assessee was an individual and practising advocate before the Gujarat High Court. During 2018-19, he claimed exemption under Section 54F by depositing the amount of Rs. 4.67 Crore with the Bank of India in the Capital Gains Accounts Scheme, 1988.

Later, the assessee could find any viable opportunity and sought to withdraw the money deposited with the Bank. As a No Objection Certificate (NOC) from Assessing Officer (AO) was required to withdraw money, the assessee paid capital gain tax through an advance tax of Rs. 1.25 Crore and submitted a letter with AO for issuance of NOC.

However, AO rejected the issuance of NOC on the ground that the same cannot be done until the return of income for Assessment Year 2022-2023 is filed by the assessee. Aggrieved-assessee filed the writ petition before the High Court.

High Court Held

The Gujarat High Court held that the assessee had shown his inability to purchase any residential house. Thus, on tax payment, he sought to close the account and permit the withdrawal of the remaining amount.

There was no reason for the AO not to allow this request. More particularly, when the entire amount of the advance tax, i.e., Rs.1.25 crore, had already been paid. By way of an affidavit, the assessee also stated that he shall not claim the set-off of any business/professional loss against the Capital Gain that he may offer in the Assessment Year 2022-2023.

It has been undertaken further that while filing the return of income, a physical copy of the same shall also be deposited with the concerned AO. With all possible loopholes plugged, cementing the same with the affidavit, the action of the AO denying the issue of NOC for the balance withdrawal of the deposit isn’t justified.

Thus, AO was directed to issue NOC and allow that from the part of the amount deposited in the Capital Gain Account Scheme, the remaining amount shall be legally withdrawn.