TMI Blog2012 (2) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is proprietor of Gas Point, doing business in manufacturing of kitchen stows and equipment as well as related job work. During the year, the assessee admitted income from capital gain on which deduction u/s. 54F had been claimed. According to the assessee he has purchased a plot of land at Jeedimetla from APSFC vide sale deed dated 11.5.2004 for a sum of ₹ 10.5 lakhs. He sold it to M/s. Neo Petcon (India) Pvt. Ltd. vide sale deed dated 21.1.2008 for a sum of ₹ 1,75,00,000. It was submitted before the Assessing Officer that out of the total sale consideration, a sum of ₹ 75,00,000 had been invested in the business of M/s. Gas Point and the balance sum of ₹ 1,00,00,000 had been paid as advance to M/s. Andrew Son ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of the new residential house. Since the assessee had failed to do so, he was not eligible for the exemption. Accordingly, the deduction claimed by the assessee was not allowed by the Assessing Officer. 5. Before the CIT(A) the assessee filed a sale deed dated 21.1.2011 as additional evidence. The CIT(A) called for a remand report from the Assessing Officer. The Assessing Officer vide his report dated 11.7.2011 objected granting of deduction u/s. 54F of the Act. Considering the facts and circumstances of the case, the CIT(A) held that the assessee cannot claim that he has constructed residential house as the assessee purchased residential building on 21.1.2011 at ₹ 1,08,00,000 and thereafter spent an amount of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti v. ITO, 115 Taxman 232 viii. Mrs. Meera Jacob v. ITO, 313 ITR 411 (Ker) 8. According to the assessee the assessee purchased old building of 53 years old constructed in the year 1953 and construction includes dismantling of walls, water proofing, wall finishes, plumbing, kitchen remodelling and furnishing the bedroom to make the house habitable. 9. Now we will look into the provisions of section 54F. Section 54F speaks of capital gain on transfer of certain capital asset not to be charged in case of investment in residential house which reads as under: 1) [Subject to the provisions of sub-section (4), where in the case of an assessee being an individual or a Hindu undivided family], the capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years from the date of transfer of original asset constructed a residential house property within three years from the date of transfer of original asset constructed residential house property. 11. Subject to the fulfilment of the above three conditions, if the investment is more than net consideration, full capital gain is exempt, otherwise proportionate capital gain is exempt. The Department's contention is that the assessee had not constructed a new residential house property. On the other hand, the assessee has only purchased residential property and the renovation of that property does not amount to construction of new residence. 12. In the case of Saleem Fazelbhoy (supra) it was held as follows: The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material used by the builder and, therefore, he may incur the expenditure on improvement of the house. Such expenditure cannot be equated with the expenditure on making the house habitable. Whether the house purchased by the assessee was in a habitable condition or not would depend on the state of condition of the house at the time of purchase. Hence, this aspect would have to be kept in mind while adjudicating such issue. In the present case, the AO as well as the learned CIT(A) had rejected the claim of the assessee on the ground that no expenditure could be considered for exemption under s. 54F which was incurred after the date of purchase. The AO had no occasion to examine the state of the condition of the house purchased by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It is an attempt to discover the intent of the legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human though and as pointed out by Lord Denning, it would be idle to expect every statutory provision to be drafted with divine prescience and perfect clarity . 16. Further in the case of CIT vs. Vegetable Products Ltd. (88 ITR 192) (SC) it was held as under: If the language is plain, the fact that the consequence of giving effect to it may lead to some absurd result is not a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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