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2017 (2) TMI 1358 - AT - Income TaxDisallowance of deduction u/s 54 - AO was of the view that Section 54 does not mention that the exemption should be given on loan for the purchase of new property - Held that:- Provisions of Section 54 permits the investment prior to the date of sale of the existing house and thereby the condition of the investment of the sale proceeds cannot be understood in the manner that the investment has to be made only from the proceeds of the sale but it is only the amount of investment which is relevant. If the view taken by the authorities below is accepted then the purchase of the house one year prior to the sale of existing asset cannot be allowed under Section 54(1) - the authorities below have committed a serious error in not allowing the deduction u/s 54 on the ground that the assessee has availed the loan for purchase of new house. Even otherwise when the total investment is much more than the loan as well as the capital gain then the capital gain is treated to be invested in purchase of new house. Hence the claim of the assessee under Section 54 is allowed. - Decided in favour of assessee.
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