High Court Of Andhra Pradesh
Sadula Janardhan (HUF) & Anr. vs. State Bank Of Hyderabad & Anr.
Capital Gains Accounts Scheme, 1988, Paras 7, 9 & 13
Ms. G. Rohini, J.
Writ Petn. No. 3973 of 2006
13th July, 2006
Counsel Appeared
B. Chandrasen Reddy, for the Petitioners : B. Narasimha Sarma & A. Surya Narayana, for the Respondents
JUDGMENT
Ms. G. rohini, J. :
The petitioners herein have deposited a sum of Rs. 40,22,000 with the first respondent-bank under the Capital Gains Accounts Scheme, 1988, to get the benefit of exemption under s. 54 of the IT Act, 1961 with regard to the sale of their immovable properties. As per the scheme the assessee, in order to seek exemption, can deposit the amount either in the form of savings deposit, or in the form of term deposit. Admittedly, the petitioners have deposited the amount in term deposit, which is classified as account B under the scheme. In the month of October, 2005, the petitioners made a request to the first respondent-bank to transfer the funds from their term deposit by opening a savings account, which is classified as account A. However, the first respondent-bank insisted that the petitioners should get approval of the concerned AO for such transfer of funds from one account to another. A letter dt. 1st Feb., 2006, was addressed by the first respondent-bank to the said effect, requesting the petitioners to submit clearance from the concerned AO in Form No. G. Aggrieved by the said action, this writ petition is filed contending, inter alia, that the scheme does not contemplate submission of clearance in Form No. G from the AO, as required by the first respondent-bank. I have heard the learned counsel for the petitioner as well as learned counsel appearing for the first respondent-bank, and perused the material on record.
In exercise of the powers conferred by ss. 54(2), 54B(2), 54D(2), 54F(4) and 54G(2) of the IT Act, 1961, the Central Government made a scheme called the Capital Gains Accounts Scheme, 1988. The said scheme applies to all assessees, who are eligible for exemption under s. 54, 54B, 54D, 54F or 54G of the IT Act, 1961. Para 2 of the said scheme defines “account A” and “account B” as under : “2(b) ‘account A’ means deposit account A mentioned in para 4 of this scheme : (c) ‘account B’ means deposit account B mentioned in para 4 of this scheme.” In para 4 of the scheme, the types of deposits have been specified as under : “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 para 7 and para 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-s. (1) of s. 139 of the Act as is applicable in the case of the depositor.” Para 7 of the scheme permits transfer and conversion of account B to account A, subject to the procedure specified thereunder. The said para 7 runs as under :
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 No. 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-para (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-para (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-para (4) of para 8….”
5. In the case on hand, as noted above, the petitioners made a term deposit in account B, and they wanted to transfer the funds from account B to account A by opening account A (savings account). As per para 4(3) of the scheme, in respect of the deposit made in account B, withdrawal can be made only after the expiry of the period for which the deposit under the said account has been made, except as provided under paras 7 and 9, which provide for transfer of the account and withdrawal from the account, respectively. Hence, it is not in dispute that the petitioners are entitled to seek transfer of their deposit in account B.
6. Coming to the procedure to be followed, para 7(2) provides that the depositor has to apply in Form B together with the deposit receipt for transfer of the amount standing to his credit in account B to account A. Para 7(3)(a) mandates that while making such application in Form B, the depositor shall furnish the requisite particulars of his account A, to which the amount from account B is required to be transferred. If the depositor is not having account A, under para 7(3)(b), he has to state such facts and make a request for opening account A in his name as specified in Form B. Para 7(4) makes it clear that such request of the depositor shall be treated as premature withdrawal of the deposit in account B. Paras 9(5) and (6) also make it clear that such request for transfer of deposit in account B to account A before the expiry of the specified period, for which the deposit in account B was made, shall be treated as premature withdrawal. The said para runs as under :
9. Withdrawal from the account—…… (5) A depositor intending to make withdrawal from his deposit in account B, shall first apply in the manner prescribed in sub-para (2) of para 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-paras (1) and (3) after the amount standing to his credit in his account B has been credited to his account A by the deposit office. (6) In case the application under sub-para (5) is made before the expiry of the specific period for which the deposit in account was made, such withdrawal will be treated as a premature withdrawal, and the amount of interest accrued, if any, shall be calculated subject to the provisions of sub-para (4) of para 8……” The specific case of the petitioners is that they have made a request in Form B for transfer complying with the procedure as noted above. Since the abovenoted procedure does not require clearance from the AO in Form No. G, it is contended by the petitioners that the action of the first respondent-bank in insisting upon such clearance, is arbitrary and illegal. The case of the first respondent-bank is that as per the scheme, transfer from account B to account A is permissible only after closure of account B and since closure of the account under the scheme requires clearance from the concerned AO in Form No. G, the petitioners were asked to submit such clearance. The first respondent-bank placed reliance upon para 13(1) of the scheme, which deals with closure of the account and contended that the application has to be made only with the approval of the AO, who has jurisdiction over the depositor, in Form No. G. Thus, according to the first respondent, unless clearance from the AO in Form No. G is produced, the request of the petitioners for transfer of amount from account B to account A, cannot be considered. Para 13 of the scheme, relied upon by the first respondent-bank may be extracted as under :
13. Closure of the account.—(1) If a depositor desires to close his account, an application shall be made with the approval of the AO 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….” A plain reading of para 13 vis-a-vis para 7, makes it clear that the two provisions are meant for different purposes. Whereas para 7 provides for transfer or conversion of the account from one deposit to another deposit of the same bank, para 13 provides for closure of the account. May be that the petitioners, in the case on hand, wanted to transfer the entire amount lying in account B, however, on that ground it cannot be treated as closure of the account. The word “closure” connotes “an act or process of closing something”. The dictionary meaning of the word “close” is “bring or come to an end”. Even para 13 of the scheme, which provides for closure of the account, makes it clear that consequent on closure of the account, the deposit office shall pay the amount of balance including interest accrued, by means of crediting such amount to any bank account of the depositor. In other words, the account of the depositor under the scheme in that bank would come to an end. On the other hand, the transfer of the account under para 7 would be from one account to another account in the same bank. By resorting to transfer of the account under para 7, the account under the scheme will not come to an end. Obviously, that is the reason why the transfer of account under para 7 did not mention clearance from the AO, but it was made mandatory only for the purpose of closure of the account under para 13 of the scheme. For the aforesaid reasons, transfer of the account cannot be equated to the closure of the account under para 13, even where the entire amount is withdrawn. Hence, the first respondent-bank is not justified in insisting upon clearance from the AO as a condition precedent for considering the request of the petitioners for transfer of deposit from account B to account A. Accordingly, the writ petition is disposed of with a direction to the first respondent-bank to consider the request of the petitioners made in Form No. B for transfer of funds from account B to account A by opening account A, without insisting on approval from the AO in Form No. G, and to pass appropriate orders in accordance with law as expeditiously as possible, preferably within a period of two weeks from the date of receipt of a copy of this order. No costs.
[Citation : 286 ITR 291]
