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2014 (10) TMI 932 - HC - Income TaxEntitlement to benefit of Section 54(1) in respect of the land sold - Held that:- When a property, residential house is sold, the sale consideration includes the value of the land and the value of the construction. Though there is no two sale transactions involved for the purpose of the Act, in order to calculate the capital gains as rightly done by the Assessing authority, he has treated the sale of land on which the residential house is constructed as a long term capital gain and he has treated the building as short term capital gain. If, for levying tax under the Act, such a distinction could be made, we fail to understand why that distinction should not be kept in mind in extending the benefit under Section 54(1) of the Act. If the land on which the building is constructed is a long term capital gain and the amount received towards the sale of such land when it is assessed a s a long term capital gain and taxed. In view of Section 54(1) if that consideration from the sale of the land is utilized in acquiring a residential house, the bene fit from exemption is to be extended. Otherwise, the section looks absurd. The land which is adjoining the residential house is entitled to benefit under Sect ion 54(1) of the Act but the land on which the residential house would not be entitled to such benefit, we cannot impute any such intention to the legislature. On the contrary, the legislative intent is manifest. The assessee is entitled to the benefit of Section 54(1) of the Act in respect of land and building. That land may be the land on which the residential house is constructed or the land appurtenant to the residential house. - Decided in favour of assessee
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